Investors have shunned GAM since the Swiss asset manager suspended a star fund manager, with little explanation. Now, the stock is enjoying a revival. Why?
GAM is a «toxic takeover candidate,» finews.com wrote two months ago. The move followed a sharp drop in the Zurich-based asset manager's market capitalization as a result of its sudden suspension of star fund manager Tim Haywood.
The drop wasn't sharp enough for Since then, the company has confirmed that it is dealing with the fallout from a whistleblowing report, as reported exclusively by finews.com. The disclosure has removed some uncertainty to what one investment banker said was a classic «falling knives» scenario: the company’s troubles are still shrouded in too much mystery for buyers to make an informed decision about its value.
Share Surge
GAM shares seem to be finding more favor with investors: on Wednesday, the stock climbed as much as 15 percent after «Bloomberg» reported that industry rivals in France and Italy were mulling a takeover. The news agency cited sources saying that talks have been held with the firm, which is led by CEO Alex Friedman.
Even if the uncertainties surrounding GAM appear diminished, it isn't clear which potential buyer would fit the Swiss firm's niche strategy. To be sure, GAM's eventual acquisition by a larger rival is a foregone conclusion for some market watchers.
Analysts at Swiss-based KK Research said last month: «Mea culpa – we didn't see GAM's problems coming, and they cannot be resolved in the short term. Salvation is likely to come in the form of a takeover.»
