Pattison's Path to Sole Ownership of $16B Empire and Astonishing Silver Saga
How Jimmy Pattison played the stock market to build a conglomerate and took it private when the market soured. Plus, getting caught up with the Hunt brothers.
He's often called Canada's Warren Buffett. Jimmy Pattison's $16B (Forbes) empire employs 50,000 people. His incredible story includes becoming sole shareholder, and at 94, he still tap dances to work.
At the age of 39, Jimmy was a burgeoning car dealer and owner of two local radio stations when he made a bold move in the stock market. He acquired a 20% stake in Neon Products through a hostile takeover in 1967, and rebranded the company as Neonex International.
Capitalizing on the late '60s stock market boom, Neonex went on a buying spree, acquiring 18 other companies in just 18 months. The market was ecstatic, and the company's stock price reached $45 per share the following year.
But the bubble burst in 1970, and Neonex's stock plummeted to 80 cents. Even as the company struggled to regain its footing throughout the turbulent '70s, Jimmy's private businesses continued to generate cash. He sold a Winnipeg radio station in 1975 and invested $2 million to purchase a 46.5% stake in Neonex. Two years later, he successfully acquired the rest of the company from stockholders at $3 per share, a 20% premium, using $11.6 million in loans and personal funds.
Pattison's Neonex privatisation cut costs and fuelled growth of his empire, which snowballed in success. From humble beginnings selling used cars, Jimmy’s unwavering passion for business and sound decision-making has made him one of the wealthiest men in the world.
There's a joke in mining that if goldbugs are crazy, then silver enthusiasts are truly deranged.
The boldest silver investors ever were oil billionaire brothers, Nelson Bunker and William Herbert Hunt, who tried to corner the market in the late '70s as a hedge against inflation.
This sent silver prices soaring from $6 per ounce a year earlier to $50 per ounce in January 1980. However, the US government stepped in and the market crashed quickly. The Hunt Brothers lost an estimated $1.75 billion and faced numerous lawsuits and legal battles.
Bunker Hunt and Jimmy Pattison hit it off at a commodities trading seminar in Dallas in the ‘70s.
Jimmy's speculation in commodities began with an investment of $25,000, which grew to $800,000 within one year.
He reminisces, "I got caught up in the excitement, the fun of the trading… Soon I was trading precious metals in London and Hong Kong too so I could trade around the clock; some nights I’d wake up at three in the morning to call London.”
As the Hunt brothers drove up the prices of silver, Pattison's leveraged speculations soared in value.
He was "so in love with the soft, white lustrous metal" that Pattison took delivery of 2 million ounces of silver in Christmas 1979.
Maureen Chant, Jimmy’s secretary, flew home from New York City with freely tradable silver certificates worth $60 million hidden under her clothing.
A month later, his $25 thousand investment was worth $78 million!
But Pattison stubbornly held out for $100 million, at which point he was going to cash in and buy a big jet. It never came.
Looking back, Pattison said he ignored the warning signals when the Comex declared an emergency, and silver crashed to $34 in a day. By March, it bottomed at $10.20.
On the way down, Pattison sold but kept jumping back in. "That's when I was plain stupid." Facing repeated margin calls, his $78 million was gone. "Shut down our positions," Pattison told Chant. He couldn’t sleep that night. "After that, I told myself, 'Let's get on with it.'"
At the office later that week, Pattison was surprised to find $6.6 million on a financial statement he didn't know he had. When he asked Maureen about it, she confessed to not telling him the truth.
"I hid that money. Because as long as you knew you had it, you'd still be meeting your silver margin calls."
Saved from himself by his trusted secretary, Pattison profited $6.6 million in the silver market, a far cry from $78 million but still a significant sum considering his $25,000 starting stake.
Read next: Call me Jimmy (2010)
Sources: Jim Pattison Group, Jimmy (1986 Autobiography)