CIAM: Activist investing in Europe on promising start

Summary

In this interview, Anop DL, co-founder of French asset management firm CM, discusses the company's event-driven investment strategy, which has yielded a remarkable 133% return in 2014. CM focuses on mergers, acquisitions, and activism, exemplified by their successful intervention in the Cled acquisition, challenging inadequate offers and potential conflicts of interest. Unlike the U.S., activist investing in Europe is still emerging, allowing CM to leverage its local expertise. The firm offers investors a concentrated portfolio, low market correlation, and a strong track record, positioning itself uniquely in a landscape poised for increased corporate activity.

Takeaways

• 😀 CM is a French asset management firm specializing in event-driven investments, particularly in mergers and acquisitions.
• 😀 The firm adopted an activist investment strategy to secure fair value for their investments through corporate events.
• 😀 After launching the fund four years ago, CM experienced strong performance until the Euro crisis in 2011, which led to a slowdown in M&A activity.
• 😀 In 2013, CM broadened its investment mandate to include pre-merger and post-merger activities, resulting in improved performance.
• 😀 As of September 2014, CM reported a remarkable 133% return for the year, highlighting successful investment strategies.
• 😀 An example of CM's activism involved challenging an inadequate acquisition offer for Cled, which they deemed insufficient.
• 😀 CM's intervention led to the suspension of the original offer, giving other potential buyers time to enter the negotiation.
• 😀 Activist investing in Europe is still in its infancy compared to the U.S., characterized by more private negotiations rather than confrontational tactics.
• 😀 CM differentiates itself through a unique activist approach focused on corporate events, which has shown to be effective in the European market.
• 😀 Key benefits for CM investors include a focused portfolio, low correlation with major equity markets, extensive merger arbitrage experience, and strong returns.

Q & A

What is the primary focus of CM as an asset management company?

CM specializes in event-driven investments, particularly in mergers and acquisitions, and also emphasizes corporate activism within European companies.

How did CM's investment strategy evolve after the Euro crisis?

After the Euro crisis slowed down mergers and acquisitions, CM expanded its investment mandate to include pre- and post-merger activities and increased its activist efforts to better address market opportunities.

What was the initial performance of CM's fund after its launch?

Initially, CM's fund performed well, with many mergers and acquisitions occurring from its launch until the spring of 2011, but performance declined during the Euro crisis.

What notable activism example did Anop DL provide during the interview?

Anop DL discussed CM's involvement in challenging an inadequate takeover offer for Cléd, which led to a regulatory suspension of the offer and resulted in a more favorable offer from another company.

What are the main points of CM's activism strategy in Europe?

CM's activism strategy involves private discussions with management rather than public confrontations, focusing on corporate events rather than broader corporate governance issues.

How does CM's performance compare to broader equity markets?

CM's correlation to the S&P 500 is 30%, and to Eurostoxx is 21%, indicating that its performance is relatively decorrelated from the wider equity markets.

What was the performance of CM's fund by the end of September 2014?

By the end of September 2014, CM's fund had achieved a remarkable return of 133% for the year and had recorded a 15% gain over the past year.

What are the unique advantages CM claims to offer its investors?

CM offers a concentrated portfolio of around 15 positions, low correlation to broader markets, an activist investment approach, extensive experience in event-driven strategies, and strong performance results.

How does activist investing in Europe differ from that in the United States according to DL?

Activist investing in Europe is in its infancy compared to the U.S., where it tends to be more aggressive. In Europe, CM focuses on discreet discussions with management rather than public confrontations.

What is the outlook for mergers and acquisitions according to Anop DL?

Anop DL expects that the trend of mergers and acquisitions will continue to grow, predicting that 2014 will be the best year for M&A activity since 2008, driven by a recognition of the need for external growth among companies.