The arrival of a new CEO for GAM three months ago was meant to mark a return to normal for the battered asset manager. Instead, CEO Peter Sanderson already faces investor pressure just after taking the helm.
Last month, activist investor Bluebell Capital aired its displeasure to GAM Chairman David Jacob: the asset manager's board needs to demonstrate a turnaround or face potential dismissal, the hedge fund demanded.
Bluebell is now joining up with another activist unhappy with the Zurich-based company's handling of the fallout from a whistleblower saga which blasted into the open last July. Krupa Global Investments told GAM it wants to see a specific improvement plan by full-year results in February, or it will also go on the attack of GAM's board, according to «Financial News» (behind paywall).
Radical Remedies
GAM CEO Peter Sanderson doesn't seem to be ruling out dramatic measures: the company is weighing job cuts of as much as 40 percent of its staff, according to the British trade publication. Sanderson flagged more spending cuts eight weeks ago, after a torpid third-quarter.
The asset manager was put on a strict diet by Jacob, when he ran the firm for roughly nine months until Sanderson took over in September. The cuts sparked numerous exits including that of investment chief Matt Beesley as well as Christopher Jarman, trading head for foreign exchange and fixed income.
Bungled Handling
The attack illustrates that GAM remains fragile, even after burying 18-month-long scandal surrounding its erstwhile flagship product. GAM bungled disclosure of the affair by signaling mismanagement and scaring off clients, Bluebell investment head Giuseppe Bivona told «Institutional Investor».
The asset manager's share price has slumped by 80 percent since the scandal became public. Even if Krupa and Bluebell join forces, it isn't clear whether the two activists can marshal the support needed from other investors to oust directors. Krupa said it holds nearly 3 percent of GAM; it isn't known how large Bluebell's stake is.
Billionaire Exit
In contrast to Bluebell and Krupa, billionaire George Soros has already exited a three percent stake in GAM, after a six-month dalliance with the asset manager's turnaround. Soros' hedge fund, which is run by former UBS starDawn Fitzpatrick, lost $4.5 million on the trade, according to «Financial News».
