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You might not care about a billionaire’s family feud, but odds are you’ve got a financial stake in the Rogers corporate drama, whether you know it or not.
The telecommunications giant — which currently has two duelling boards of directors, a stalled multibillion-dollar takeover, a feud among the company’s founding family, and court proceedings in B.C. — is one of the most widely-held stocks in the country.
While the Rogers Control Trust — chaired by Ed Rogers — owns 100 per cent of the company’s A-Class voting shares, non-voting B class shares are held by pension plans, mutual funds, and exchange-traded funds, said veteran investment manager Dan Hallett.
“It’s very widely held. It’s in a lot of mutual funds and ETFs, and index funds. If you own mutual funds of any kind, you’ve probably got some exposure to Rogers,” said Hallett, vice-president of research at Highview Financial.
Various mutual funds run by BMO, RBC and TD Bank have holdings in Rogers shares. BMO, according to data compiled by Bloomberg, holds 25.3 million non-voting shares, through various portfolios. That makes up more than 6.4 per cent of Rogers’ outstanding shares. RBC has 22.1 million, or roughly 5.6 per cent. The Canada Pension Plan Investment Board, the investment wing of the Canada Pension Plan, doesn’t own any Rogers shares directly, but has a $7.7 billion investment in the S&P TSX 60 Index, which Rogers is a part of. The Ontario Teachers Pension Plan doesn’t list any Rogers shares on its latest disclosure, but it only makes its equity investments public if they’re worth $200 million or more.
With the boardroom squabbles at a time when Rogers is still trying to close its $20-billion takeover of Shaw, the company has seen its share price fall, from $64.70 per share in early September, to Thursday’s close of $57.99.
That doesn’t mean, Hallett said, that the bottom will fall out of your retirement funds.
“Even in a concentrated fund, like a technology fund, it’s still likely to only be one of 25 or so stocks. In a broader fund, it’s probably one in a 100. So it’s not going to take down the whole fund,” said Hallett.
Even with the company’s immediate future looking distinctly murky, Hallett said Rogers — not to mention BCE and Shaw — are still solid investments. While they’re in an industry that requires heavy investment in networks for their cellphone, internet and TV, they’re still dependable, Hallett said.
Hallett said the relative lack of competition in the industry, combined with a steady revenue stream, make telecoms an attractive, dependable investment.
“Even if they don’t grow, they’re about as recession-proof an investment as you can get. When people are struggling financially, the things they don’t stop spending on are housing, and then their internet and cellphones,” said Hallett. “The internet and cellphones used to be luxuries, but not any more.”
And with just three major, national players (at least for now), market dominance is, to be blunt, helpful to the companies’ bottom lines.
“Because the level of competition isn’t as intense as it is in some countries, like the U.S., that means it’s going to be easier for the big players to stay ahead of the competition,” said Hallett.
Still, just because it’s a decent investment for the long-haul doesn’t mean it’s a good idea to buy more Rogers right now, warned Desjardins Securities analyst Jerome Dubreuil in a note to investors.
“While we see attractive long-term (3+ years) value in RCI shares from the SJR transaction and the reopening of the economy, the significant uncertainty and likely distraction at the board/management level during such a pivotal period in strategic planning makes it difficult for us to recommend adding RCI exposure,” Dubreuil said, in lowering his rating on Rogers shares to “hold” from “buy,” with a 12-month target price of $68 per share.
The deal with Shaw will be good for Rogers’ bottom line if it closes, but the board-level chaos makes it unclear when that will happen, Dubreuil added.
“We believe the recent events could potentially blur the communication channels between RCI management and the various parties in order to reach agreement on the SJR transaction. We continue to expect the transaction to close ultimately, although the timing is now less certain in our view,” Dubreuil said.
