Still reeling from a whistleblowing scandal, asset manager GAM surprised investors with a full-year break-even – earlier than expected.
The Zurich-based money manager is likely to break even for the year, following a net loss of 929.1 million Swiss francs ($963.6 million) in the prior period, it said in a statement on Friday. Analysts, which had forecast another loss-making year, said the result is likely underpinned by slashing spending and winning more performance fees.
With ex-Blackrock executive Peter Sanderson as its new CEO, GAM is struggling to recover following an 18-month crisis sparked by a whistleblowing complaint. Sanderson pledged a strategy update for February 20, when the asset manager's results are due. Hundreds of jobs reportedly are at risk, and the Zurich-based company has been repeatedly circled by suitors including most recently – and most tangibly – Generali of Italy.
Bulky Size
GAM said assets dwindled to 48 billion francs in its investment management arm, from 56.1 billion francs at year-end. By contrast, assets in GAM's private fund labeling business rose to 84 billion francs at year-end, from 76.1 billion at the end of 2018.
The company cannot successfully recover if it cannot lift its assets sustainably. Overall, GAM said its assets will stand at 132 billion for the year, a shade lower than the 132.2 billion it managed one year before.
The February strategy update is key for at least one activist fund targeting GAM. The asset manager still employs 869 people – which analysts view as far too many, particularly in middle- and back-office functions outside of portfolio management and sales, for the amount it manages.
