(Financial News) The staying power of George Soros was demonstrated in May this year when news the billionaire investor had bought a stake in GAM sent the asset manager’s stock soaring. Now, though, shares in the crisis-stricken company are below where they were when Soros bought in, leaving him nursing a paper loss.
Soros built a 3% stake in GAM via his SFM UK Management subsidiary, worth around 18.3m Swiss francs (about $18.5m), based on Financial News calculations. The move by one of the world’s most prominent investors, which was disclosed in regulatory filings to the Swiss stock exchange, boosted GAM’s share price by more than 15%.
However, the subsequent decline in the investment company’s share price, which has dropped by around 24% since May, means the 89-year-old has a paper loss of around CHF4.4m (about $4.5m).
SFM UK Management could not be reached for comment.
The share price of Zurich-headquartered GAM has plummeted by more than 80% since the onset of the Tim Haywood saga in July 2018, which led to the suspension and later sacking of the star fund manager.
The scandal led to the liquidation of a suite of bond funds worth billions of dollars, heavy investor withdrawals and the exit of Alexander Friedman, the then-chief executive.
The appointment of former BlackRock managing director Peter Sanderson as chief executive in September has also led to some significant changes, most notably senior departures.
Matthew Beesley, group head of investments, is leaving following an overhaul of his team, while Clare Forster, global head of operations and business change at GAM, is also on the way out.
The asset manager is reportedly considering cutting 40% of its 863-strong workforce, and last month opted not to renew employment contracts for almost 30 staff.
Some have taken advantage of GAM’s depressed share price to make an investment.
In August, Krupa Global Investments, a Czech Republic-based activist investor, tripled its stake in GAM to 3%. Krupa made the decision following a meeting with Richard McNamara, GAM’s chief financial officer, who said GAM believed the Haywood episode was a “one-time mistake”.
Pavol Krupa, chair of Krupa Global Investments, said in August that the appointment of Sanderson as chief executive was a positive step.
“Bringing new CEO Peter Sanderson to GAM will solve reputational damage and will increase the image and credibility of GAM funds, which we welcome,” Krupa said.
“In my opinion, GAM shares are undervalued, with significant takeover potential as we will see significant market consolidation in the asset management space in coming years.”
On December 4, Switzerland’s regulator accused GAM of failing to properly disclose financial liabilities related to its $217m acquisition of quant hedge fund Cantab Capital Partners in 2016 — a claim GAM has rejected.
Other fellow BlackRock staff to join Sanderson include Steve Rafferty, who joined in November as chief operating officer. Jonathan Mullen, the former head of corporate communications for Europe, the Middle East and Africa at BlackRock, has been acting as a communications adviser to GAM on a part-time basis since September.
