BNN - Friday, May 24, 2024 - 09:00 a.m. (ET) - Segment #6

big developments we're monitoring this morning at gildan activewear. The company's entire board of directors and its ceo, vince tyra abruptly resigning ahead to the company's annual meeting, essentially conceding defeat after a bruising 5 month battle with an activist investor over the future of the clothing maker. The mass resignation of victory. 4 los angeles based investment firm browning west, which had been pushing to reinstate clench mandy as ceo and replace the board and essentially gets its way for more insight. We spoke with dare to clue at the managing editor of bloomberg in canada. >> One of the one of the biggest signs that it was not going well for the board is what they did in late april, when whole bunch of directors said willie voluntarily, they brought in a new chair, tim hodgson to replace the old chair who had sparred with tuition. Mandy. Usually if things are going well in a proxy fight, half the board doesn't sort of leave on its own. And now to that new slate of directors, they've been in office 3 weeks, but the die was already cast because that shareholder group that browning west lead, but also had backing of big name firms like jarislowsky fraser. You know, they they, they, group that was opposed to some and believing they really cars stuck together and they weren't swayed throughout the whole throw the whole argument. >> And speaking of sticking together, it did seem like there was a no double bass of investors say no. This is largely told through the lens of browning west. But investors several have been killed in shareholders for a long time. Who are still trying to work through why the board in the first place. Now the former board had ousted glenn should mandy from his role. You know what the other corporate stories we've covered in recent months I remember, you know, very different story, but very small board ousts head of open ai and then sparks an outrage. They're so along. There was a conversation around what led to the ouster in the first place as well. >> Yeah, I would say what happened is that many of those shareholders came to not trust the board yeah, there were, there were various things that that went on. There was obviously an argument, it's ideal than over who should mandy successor would be in a what timeline. There were discussions about strategy, acquisitions, you know, that we've reported that have been, you know, been mauled, that perhaps, you know, the board was, was opposed to. But at the end of the the directors probably underestimated glenn chin, mandy's sort personal equity with with this group of big long-term shareholders and how come loyalty he had built up with them. And as a result, when he said he would, you know, come back if they get a new board. You know, they they, they stood by and then I think that's this partly a story of bike personalities and and a clash egos. I think in the boardroom many as one. >> Well, definitely caught our attention. Not that we don't want to talk about and where company all day long. But you know, there was a it was, it was just a very unusual situation. Now, I think for the other dynamic year is that along the way, seemed to invite a lot opinions and perspectives on what is the right strategy for the company. And talked about the mna it was it openly being discussed at the board level. You know, is there a possible sale as part of that? Some people thought that was more strategy than anything else. But I do wonder if now that has to get reflected into this change that. Likely is not going to be some kind of sales process. Clinch a man he wants come back. She wants to run this business the way wants ready as support from some notable do we have to kind of figure out? How that plan that's not going that's going get done overnight, but we have to assess how that plan plays out versus what people thought might happen like, say a sale, the entire company. Yeah, I mean, I think it's west has been pretty clear. They're they're not interested you know, in a sale. And I mean, anything can happen in the future, but the. >> The stated strategy of what will be the new board and and the former. And now new ceo will drive down costs, try to gain margin and also. >> To leverage up the balance sheet. And this is sort of the big difference between the way and iran it before and the way the proposing to run it now to take on debt to buy back stock. And you know, play that game a bit, too, to try to lift the stock price of an asset, a fairly aggressive target. A $60 U.S. stock price of the you know, a couple of years less than a couple of years. It was 35 in change yesterday on on the in the u.s.. They also have some proving to do that they can grow this business that they at the level that they say they can. I guess just a final takeaways for you board room I

don't see behaviour, but just the way boards function in this there's been no shortage of examples of activist investors targeting companies and targeting boards. And in this case, clearly the board had its hands full as well. What are some of the big takeaways for you just in terms of of the way boards think about these companies, these public companies in canada. I mean, I think it was a fascinating case, but I guess one big takeaway succession is really important. Succession is especially important. >> When the ceo has been running the business for decades, you know, was the case here. We heard from gildan executives who said nobody knows this business like glenn its event to bring in an outside co, even though he was you work for food delivery room and all that kind of stuff. That's right. I mean, worked for the loom some, you know, some time ago and had some yeah, some credibility, but a succession is super important thing. And that seems to something the board really underestimated how the shareholders felt about it. Bloomberg's tara to cluett on the guild and story will continue to track that stock on this friday. We're also tracking the road ahead for amazon right now. There's a belief on wall street that come next year. >> It could have more sales on an annual basis. Then walmart will break down the revenue growth story in today's edition of the list. But up next, the time we're seeing more homes on the market across the country has. Buyers have had some reluctance to higher interest rates in the luxury market. There have been some signs of a turnaround will breakdown that story with a broker from some of these international realty in canada. Next. Hi, I'm Jessica Katrichak. Comingp on btv. Very rare to find this type of mineralization in your first couple of holes. So usually copper gold porphyries take maybe 20, 30, 50 plus. Nobody had really systematically looked for these type of deposits in the Yukon. So we're the first movers that are really looking systematically in this terrain for copper gold projects. Watch us online or here on bnn Bloomberg. The future is zero Carbon. Mayfair Gold is developing Canada's first carbon neutral gold project with offsets funding residential solar panel installation across the country. Mayfair Gold. Harvest Healthcare leaders Enhanced Income etf. Maximize your monthly cash flow from Canada's leading healthcare etf. More income from Healthcare Leaders. Harvest ETFs, income happens here. Inez, you're using Head & Shoulders, right? Only when I see flakes. You should use it every wash! Otherwise , the flakes will come back! He's right you know. Is that Tiny Troy? There's no itchiness, dryness or flakes down here! I love Tiny Troy. Make Every Wash Count. - [Narrator] The Ninepoint Energy Fund managed by Eric Nuttall. Generating long-term alpha in the energy sector through conviction and access. Number one Energy Fund in the Morningstar energy equity fund category for 3, 5, 10, and 15-year performance. Available under ticker nnrg. 5e Advanced Materials is a fully permitted project in the central Mojave in California. Our commodity of focus is boric acid with a lithium carbonate byproduct. We have just begun commercial production in early 2024. We have a small scale facility that is currently ramping up to commercial scale production. So to be part of that and bring a mining project online in the us is is what excites me. >> There's been a big increase in the number of homes for sale in canada last month. The total number of properties on the market rose 6 and a half percent, the second fastest monthly gain we've ever seen. Experts say it's because homebuyer demand has been dented amid stubbornly high interest rates. But in toronto's luxury market, where prices started around 4 million dollars, sales have been steadily rising. For more on the numbers, we're joined in studio by all shaped. He's a broker with sotheby's international realty in canada. Thanks very much for stopping good morning, jon. Thank you for having so obviously, there's all sorts of categories with in real estate. But when it comes to the luxury category, what which is specialty area would have been seeing recently? >> Well, in toronto redefined in terms of housing is 4 million and above. Condominiums at 3 million dollars and above there has been and this past quarter in the 4 million dollar price range. However, there's been a

flight to quality. So people are looking for top dresses, top condition, turnkey, fully renovated or new construction. >> And you know, as a as sticker shock is that might be for for some the reality of the city like toronto is wouldn't necessarily get you as much as a would have some years ago as well. When I mentioned the, the broader theme that we're seeing, the housing market right now is across the country. You've got more homes on the market and people are testing the waters in the spring season and the higher interest rate environment may be has changed. How a buyer's move. Can you walk us through a little bit more that dynamic that you're seeing in the luxury market? Absolutely. So buyers and it also means of the market have some pause. They have the luxury of time now. >> There's no rush to make a decision. So with higher interest rates, people are, they're proceeding with their purchase. There's an expectation, I think market-wide amongst buyers rates will and buyers, I think on mass will engage when rates will fall. However, now buyers are engaging and they're the only ones of the offer table. It is a more civilized approach to the negotiations. And buyers aren't in a particular rush to make a decision. >> Paul in it in a market in in the luxury market in a city like toronto, prices can go. How, how are we talking 10 million bucks. So the luxury market would be defined as between 4.10 and the uber luxury market over 10 k. That market is flat over 10 million dollars. There's very little activity occurring. >> That is predominantly due to the foreign buyer with the introduction, the foreign buyer band and the extension of the we don't anticipate the over 10 million dollars segment to improve until that foreign buyers ban has been lifted. Interesting. And then on the interest rate. >> Issue itself because it has felt like in this unique economy. We've heard about a lot of luxury brands that are still doing relatively well. You're in many cases talking about a buying class that is. Less susceptible to the ups and downs of interest rates to see some of that in pockets of the luxury housing market. Excellent are calm and there's a there's a misconception that the luxury segment is not impacted by interest rate. >> A lot of people who own luxury homes owned businesses down cottages, ski chalets. They have investment portfolios if they leverage their primary residence in greater toronto or whatever city they live in to purchase those additional in fact, they are interest rate sensitive, but maybe perhaps for other reasons, that a million dolars by or maybe price interest rate sensitive. So definitely the luxury segment is interest rates sensitive. Interesting. And then in terms of the kinds of properties that >> Catching the eye of of buyers right now. You talked about some of the specifics around that. What, what are the kinds of deals that are getting done right that's a great question. Were seen 2 ends of the spectrum. So on one and is picture perfect magazine quality renovated. A brand new sells very well because people are time starved. They are working 60 hours a week at the office, they're busy with their families and their kids. They don't have time to undertake a renovation of the crawl or eat about is the other end of the spectrum value orange and buyers that are buying the fixer uppers. Those also are doing well. It's houses that are in the middle that are half renovated. Those are more problematic to sell. The demand seems to be up to 2 ends of the spectrum fully renovated, fully turnkey move in ready or homes that you complete renovation. For the circle back to what you're saying before, sort of the connective tissue the luxury buyer who might have all sorts of other properties as well. A lot of people been talking about the capital gains tax >> Has that come up in conversations with any possible homebuyers are home sellers recently, is that a consideration that sir, creating some buzz these days absolutely the. However, our asset class real estate it as an asset class is not as liquid. >> As perhaps a stock portfolio. So in order to liquidate or real estate asset, it's probably, let's say, for months on average. The nothing is nothing has occurred in terms of the june 25th deadline is just too fast. But what we're seeing is people are having conversations are having conversations with their lawyers, with their tax advisors, with the real letters and other other professionals. It's causing conversations and families, but it's too quick for people to react in the real estate sector. All right, interesting in saint paul, thanks very much for sure. Some time this morning. Appreciate it. My pleasure. Happy to be here. All marches a broker and a senior vice-president with 70's international realty here

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