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Gold/Mining/Energy : Barrick Gold (ABX) -- Ignore unavailable to you. Want to Upgrade?

To: Daniel Chisholm who wrote (1314)	8/3/1999 8:58:00 PM
From: Enigma	Respond to of 3558

I think you're missing something - in addition to their hedging programme Barrick has a call strategy - the mechanics of which I do not understand at all - which when last explained to me enabled them to participate in 60% of any upside - above the price of forward contracts. Also I do believe that Barrick is a true hedger - in no sense of the word is it a short seller. You could run your theory past someone in the company and I think you'd get an explanation, and a rebuttal - but I don't speak for the company. dd

To: Daniel Chisholm who wrote (1314)	8/4/1999 7:41:00 PM
From: Exsrch	Respond to of 3558

Dan, Thanks for your reply. I would have to agree with the simplicity; however, you forget one crucial data point. That simply no one else does this "easy" hedging (shorting call it what you will) on the scale and produce significant cantango so consistently. Compare ABX's financial results to anyone including GE, Gillette and other gold companies. They simply kick ass in terms of shareholder value creation and return on invested capital. While working as a consultant at McKinsey I saw alot of companies benchmark competitor capabilities and determine that it is easy; however, you'll note in every industry there happens to be a consistent winner who executes sound strategy with astounding regularity while others wollow. If it is that easy why isn't anyone else replicating the same result? There are a variety of reasons but let me just say yes it is simple but simplicity is the magic of it all. Cheers, Exsrch

To: Daniel Chisholm who wrote (1314)	8/4/1999 8:04:00 PM
From: Exsrch	Respond to of 3558

Dan, An interesting data point on ABX's performance can be found in a new McKinsey book just published by an old associate of mine from the Toronto office. The book centers around GROWTH. The kind that produces shareholder value and that exceeds the cost of capital. I don't remember the exact title; however, the authors name is Mehrdad Baghai (you can get the book from Amazon.com). I did not work on the book project while at McKinsey; however, I have talk with Mehrdad in passing on his thoughts on ABX before the book was published. I think you'll find many worthy perspective about growth and perticulary ABX within its pages. Cheers, Exsrch