GAM Holding may be more vulnerable to an activist campaign now than two years ago when it was targeted by Swiss activist RBR Capital. The asset manager’s shares have lost around 60% over the past 12 months, following a crisis precipitated by the dismissal of star bond trader Tim Haywood for misconduct, including dubious investments in illiquid bonds. The sacking led to severe outflows, a liquidation of a flagship bond fund and the departure of CEO Alexander Friedman. When RBR was seeking board changes on a cost-cutting platform, shares were trading at around 14 Swiss francs; now they trade a little higher than 4 Swiss francs.

GAM’s troubles attracted investors with a different profile, such as distressed, event-driven and activist funds, who may be more willing to express discontent; at the annual meeting in May fewer than 50% of the shares present approved of the board’s performance.

Krupa Global Investments, a Czech Republic-based fund known for its opposition to the buyout of AmTrust Financial Services, where Carl Icahn led a successful M&A bumpitrage campaign, has accumulated a 1% stake in GAM and is putting pressure on the firm to come up with a detailed plan on how it intends to resolve the crisis, and suggested, among other things, it should pursue Haywood for compensation. Although a more pointed campaign might have higher chances of success now than in 2017, Juraj Krupa, a portfolio manager at the namesake investment firm, told me a proxy contest is out of the question.

The key question from an investing standpoint is whether Haywood is worth more than half of the company’s market capitalization. Krupa certainly does not believe so. Nor does George Soros, whose U.K.-based arm SFM UK Management bet big on a strong recovery. “Asset management is a reputational business. It’s normal to get scared and want to redeem if you read in the Financial Times that $10 billion of your assets were invested in illiquid bonds,” Krupa told me in an interview.

Indeed, publicly-listed asset managers are a very fragile bunch, as the value often resides in a few key people, while the track record of the activists in this area has been sketchy at best. Activists and shareholders have trodden carefully since Steel Partners’ victory at BKF Capital Group in 2005 led to massive capital outflows and the destruction of shareholder value.

Krupa believes GAM’s margins are good and its managers are outperforming the market, something that may in time attract inflows. Yet he argues management has failed to articulate a clear plan to arrest outflows and return GAM to a path of growth.

The activist said the stock could recover to 8-10 Swiss francs per share over the long-term if the company is not snapped up by a larger investment manager sooner. A less conspicuous scenario is one in which GAM invests in Krupa, with the activist noting there are “certain synergies with our asset management” operations. A meeting with the company’s top executives, including its chief financial officer, is expected to be held in August, Krupa said.

Any strategic changes will require the approval of anchor shareholders Silchester International Investors and Killtearn Partners. Krupa told me he is engaged in discussions with Silchester and is likely to have a meeting in August or September. GAM declined to comment on Krupa’s letter and whether its executives are expected to meet with the activist.

Elsewhere in the news:

This week’s in-depth story takes a look at comeback campaigns launched by top executives. While there have been considerably fewer such actions in the first half of 2019 compared to the same period last year, the campaigns were more global, with key proxy fights initiated in the U.K. and Japan.

Bill Ackman is getting his own activist investor, after U.K.-based Asset Value Investors expressed concerns over his plans to raise $400 million through the private placement of 20-year bonds for his listed Pershing Square Holdings.

Land and Buildings initiated a proxy contest for two board seats at Brookdale Senior Living and urged the firm to split its operations from its property company. Brookdale said it already reviewed the breakup proposal with external advisers and concluded it is “unlikely to generate additional value.”

Activist investor Amber Capital called on French utility company Suez to “reset” its strategy by selling mature assets and investing in new projects.

Robert Ophèle, the head of French market watchdog Autorité des marchés financiers (AMF), called for slightly tighter rules for short sellers and activist investors at both the European and national levels.

PPG Industries reported falling sales and downgraded its sales growth guidance, raising the prospect of an activist campaign by Trian Partners.

Carrizo Oil & Gas is selling itself to Permian Basin peer Callon Petroleum, months after Lion Point Capital called for a transaction.

Velan Capital and Altiva Capital succeeded in blocking the re-election of two directors to the board of Progenics Pharmaceuticals, after launching a withhold campaign following the board’s rejection of their six-person slate.

Di Costa Partners, a provider of solicitation services for mutual funds and ETFs, expanded its team with the addition of senior hires Steve Messinger and John Bibas.

Aimia is likely to head into a tumultuous chapter after several large shareholders expressed discontent with the chairman’s conduct at the recent annual meeting, as well as the use of proxies for Mittleman Brothers’ large stake.

Elliott Management disclosed a 5.1% stake in embattled British travel and insurance firm Saga.

Shareholders in Australian casino operator Donaco International overwhelmingly voted in favor of ousting directors and brothers Joey and Benjamin Lim, following a meeting requisition by James Spenceley.

The nineteenth episode of The Activist Insight Podcast is now available to stream or download. Activist Insight’s Elana Duré speaks with our in-house journalists about the key trends in shareholder activism this half of the year. You can listen to this episode on iTunes, Spotify, or YouTube.

As always, Activist Insight Online reporters will be diligently covering all developments in activism around the world, and Iuri Struta will be highlighting the most remarkable stories in this roundup. If you have suggestions for improving our coverage, or a tip, you can contact us at