A while ago I did some research on private corporations donating money to the current Federal government. Not surprising, Bombardier and SNC Lavalin were disproportionately contributing to the current government parties funding.
The SNC scandal has been covered enough.
But yesterday’s Bombardier announcement was yet again a chilling reminder that, when a government paints a rosy picture of creating jobs by handing over our tax dollars to a corporation, we need to question the math. We need to do some hard-nosed analysis of the rosy outlook provided. Especially when the math involves some political contribution dollars in the background. As Ayn Rand once said “I do not care to be admired by anyone’s heart. Only by someone’s head”.
Bombardier is eliminating 14,500 jobs around the world by the end of next year. Not creating jobs. Its creating unemployment. This, after the executives increased their own compensation by 50% – a nice raise thanks to receiving our $1 Billion dollar “loan”. A “loan” given on the false promise of job growth. How viable is our return of capital on this loan? Would you have loaned your own money to these people if you had a choice? Well, you did!
I do not care to be admired by anyone’s heart. Only by someone’s head
Here we go again
Somebody called into my BNN show yesterday and asked if the stock may become worth picking up at some point. Here’s the clip. The viewer asked if we might expect another bailout. Will you and I once again be forced to throw good money after bad? Thankfully, the current government is now a minority power, and would be hard pressed to convince the opposition to waste more of our money on this dog. The math has never added up, and the investment potential was never there. As a Portfolio Manager, had I invested your money in such an obvious loser, you would question my due diligence process. Had I been wined and dined by the company before I bought the stock for your portfolio (in a similar manner to a political contribution), you might be tempted to sue me for breach of fiduciary duty. But I guess its OK for the government to get away with this type of behavior. I tend to avoid stocks closely tied to a government twice charged with ethical violations.
BBD has been bailed out by past governments. But the most recent one was done at a time when the case was even more obviously against making such a decision. The chart shows us the breakdown is pretty definitive for this stock – its down some 80% over the past year. The company is yet again struggling to remain intact. Now that’s some wise use of our tax dollars, don’t you think? Bottom line: Stocks receiving corporate welfare are not an ideal setup for your personal investment dollars, at least the ones you can control. I continue to avoid this type of situation.
Globe & Mail article on ETF ideas featuring Keith Richards, Brooke Thackray, Jon Vialoux – click here
Bloomberg/BNN MarketCall Tonight full episode with Keith Richards – click here