Tuesday, March 2, 2010

Power Corp's Putnam is number two rated wealth destroyer

Wow! These folks at Power Corp. sure have a knack for destroying other people’s wealth. First it was the pivotal role that Power Corp’s Paul Desmarais Jr. played in lobbying Harper to kill income trusts that cost innocent Canadians to lose $35 billion of their wealth and all taxpayers to lose $1.5 billion a year from the foreign takeovers of 51 Canadian businesses in tax revenue so Power Financial could sell more of its inferior investment wares. Then it was Power Corp’s ill-fated investment in Putnam Investments, that would never have been permitted had Power Corp been an income trust since income trusts wisely don’t do acquisitions that are non-accretive, that cost Power Corp shareholders to lose $1.0 billion when Power Corp wrote off that portion of their failed investment (gee who woukd have thunk, after all it was non-accretive?) a short 18 months later, and now we learn in this Wall Street Journal article of today that Power Corp’s ill Fated Putnam has the dubious distinction of being the number two destroyer of investors wealth, which to quote the Wall Street Journal “shredded $46.4 billion of shareholder wealth”

Wow that’s quite the record! And to think that anyone in Ottawa would be taking advice from serial losers like this. Let’s add it up. Power Corp’s record of wealth destruction:

Canadians income trusts investors: $35 billion
Canadian taxpayers: $1.5 billion a year and counting
Power Corp investors to buy Putnam $1.0 billion
Putnam investment fund investors: $46 billion

Add it all up and it almost becomes a significant amount of wealth destruction. I think it puts the Desmarais' at the top of the heap!

I always thought it was the third generation of wealth that usually blew up money? I guess in Power Corp’s case they decided to start earlier?

Wealth Creators vs. Wealth Destroyers
Looking at Firms' Stumbles Since 2000
Wall Street Journal


To learn that your mutual-fund firm's lineup posted negative returns over a decade is one thing; to realize that almost $60 billion of investors' wealth was wiped out is another matter entirely.

That is what happened at Janus Capital Group Inc. from 2000 through 2009. The mutual-fund giant's offerings collectively saw 10-year asset-weighted total return of minus-1% a year, which translates into $58.4 billion of investment losses.

Janus was the worst "wealth destroyer" in a study released this week from investment researcher Morningstar Inc. Results weren't much better at Putnam Investments, now part of Power Corp. of Canada, which shredded $46.4 billion of shareholder wealth in the period.

1 comment:

Dr Mike said...

I thought it was the trust model that was supposed to stifle innovation by reimbursing the owners with too much of the profits.

I guess the preferred model is the Power Corps & the Manulifes of this country that feel it is their fiduciary duty to blow up investor wealth.

Dr Mike Popovich