May 3, 2021
The Daily Chase: Bridging Finance rocked by OSC claims; Buffett points to Canadian as successor
By Noah Zivitz
Court orders PWC to take over Bridging Finance after scandal
VIDEO SIGN OUT
PricewaterhouseCoopers has effectively taken control of Bridging Finance Inc. after a remarkable sequence of events late last week and into the weekend involving allegations of conflicts of interest, misappropriated funds and multiple breaches of securities laws. The sworn affidavit of an Ontario Securities Commission senior forensic accountant includes tales of one corporate borrower allegedly being “forced” into a loan that "left him with 'a bad taste [in his mouth]'"; $19.5 million in undisclosed payments that allegedly went into the personal banking account of BFI's CEO for (among other things) hundreds of thousands of dollars in luxury car expenses; legal threats from NinePoint Partners co-CEO John Wilson; and allegedly suspect transactions with the now-infamous Gary Ng.
Paul Bagnell will have plenty of details and we'll look into where this leaves investors in BFI's funds (which count close to $2 billion in assets under management) and the mid-market borrowers that've flocked to BFI. Have to underscore that the allegations haven’t been proven or tested and that BFI CEO David Sharpe has not responded to our emailed request for comment.
THE WORLD ACCORDING TO BUFFETT AND MUNGER
Warren Buffett and Charlie Munger had plenty to say on hot topics at Berkshire Hathaway’s virtual annual meeting Saturday. Most interestingly for us, Buffett gave strong indications (and did so again today on CNBC) that Canadian Greg Abel is on deck to succeed him as Berkshire’s CEO. Other than that, Buffett said Berkshire at one point took a look at buying Canadian Pacific Railway. He also described SPACs as “a killer” for deal valuations, fessed up that trimming Berkshire’s stake in Apple last year “was probably a mistake”, and warned that there’s more inflation “than people would have anticipated six months ago.” The spiciest commentary came from vice-chair Charlie Munger, who blasted Bitcoin: “I don't welcome a currency that is so useful to kidnappers and extortionists,” he said.
VALUING WEALTHSIMPLE
The Bay Street disruptor has locked in $750 million in a new round of financing that comes at a valuation of $5 billion. That’s more than triple the most recent valuation of $1.5 billion from October. Interestingly, the latest round of financing is a star-studded affair, with Drake, Michael J. Fox and Ryan Reynolds in involved. We’ll catch up with Wealthsimple CEO Mike Katchen at 10:40 a.m.
TRACKING THE LOONIE
The Canadian dollar is holding above 81 cents U.S. this morning, though it has drifted into the red after posting gains in overnight trading. This remains a priority agenda item for us and we’ll keep gathering insight on what comes next for the loonie and the ramifications for consumers and business leaders across the country.
OTHER NOTABLE STORIES
- Bank of Nova Scotia announced it’s boosting its stake in Scotiabank Chile to 83 per cent after agreeing to pick up an additional 7.0 per cent from the Said family.
- Ballard Power Systems and Linamar announced this morning they’re going to team up on the development of fuel cells for light vehicles. Linamar CEO Linda Hasenfratz is talking up the alliance as “transformative for the future of mobility”.
- Bombardier could be a stock to watch today after the business jet maker forecast first-quarter revenue ahead of the average estimate and a shallower cash burn (US$405 million versus estimate of US$674.9 million). Something else to watch: in a separate release, Bombardier refuted a creditor’s claim that certain covenants have been breached.
- David George-Cosh has a scoopy piece about the Ontario Cannabis Store throttling the flow of deliveries to its warehouse due to COVID public health measures. As Dave reports, the move will likely result in some top-line pain for cannabis producers. Read all about it here
- Aphria and Tilray today confirmed the so-called New Tilray will start trading as a combined entity as of May 5.
NOTABLE RELEASES/EVENTS
- Notable data: ISM U.S. manufacturing index
- Notable earnings: Suncor Energy, MEG Energy, Gibson Energy, Parkland, Nutrien, CargoJet, Iamgold, Mosaic Co.