One of the Swiss bank’s longest-standing heavyweight backers is retiring. Her steadfast support of Credit Suisse represents a «key detractor» in an otherwise stellar money management career.

Zurich-based Credit Suisse’s institutional shareholders are incredibly loyal – and most like Saudi Arabia’s wealthy Olayan family or Qatar’s sovereign wealth fund are enormously secretive or even reclusive.

The exception is Natixis-owned Harris, where portfolio manager David Herro has been a vocal agitator for change, especially in 2020 and this year. Last month, the Wisconsin native publicly supported Chairman António Horta-Osório, who was caught breaking quarantine rules, twice.

Rare Misstep

The Swiss bank’s third-largest shareholder, Dodge & Cox, belongs to the former camp. The San Francisco-based mutual fund manager has been invested since before 2010, and never comments on its stake through countless ructions.

For portfolio manager Diana Strandberg, due to retire at year-end after 34 years at the $325 billion asset firm at year-end, the long-standing stake represents a rare misstep.

The bank has lost more than one-quarter of its market value since last March, when its twin disasters Greensill ($10.1 billion of funds) and Archegos (more than $5 billion of outright losses) hit. Credit Suisse's shares, which closed at 9.58 francs on Thursday, last breached 20 Swiss francs seven years ago. 

Upping The Ante

Dodge & Cox listed Credit Suisse as a «key detractor» in the most recent report of its international stock fund. The fund’s 12.2 percent return still beat an MSCI benchmark of Europe, Australia, and the Far East (8.8 percent) in the first six months of last year. 

Strandberg, a 62-year-old American with a Harvard MBA, oversaw Dodge & Cox’s investment into the Swiss bank following the financial crisis. She upped the ante in 2010, enticed by Credit Suisse’s steep discount to its tangible book value, she told «Barron’s» (behind paywall).

The other part of her «diversified financial» investment is none other than UBS, where she holds a stake of more than $1 billion. It remains to be seen whether the departure of Strandberg, who began her career as an analyst at Credit Suisse First Boston before joining Dodge & Cox in 1988, will change the mutual fund’s stance on the Swiss investments. 

Veteran Investment Team

The international fund’s remaining six committee members remain unchanged following her exit – and their average tenure at the firm is 22 years. At mid-year, Dodge & Cox’s more than 96 million shares in Credit Suisse were valued at just north of $1 billion.

It isn’t clear at what price the fund manager first bought the stock. The shares traded north of 30 Swiss francs in 2010, when Strandberg and her team elected to buy more.

Singed By Credit Suisse

She has held fast since then. «We believe the funds’ European and U.K. financials investments represent some of the best long-term opportunities available today,» Dodge & Cox wrote to investors in 2019 – the same year it registered more than three percent in Credit Suisse with Switzerland’s stock exchange.

The bank lists the fund house at 4.99 percent, including the previously mentioned stake. Dodge & Cox, which is Credit Suisse’s third-largest shareholder, isn’t the only U.S. heavyweight to be singed by Credit Suisse.

Swiss Vs Eurozone

Several American houses including Blackrock, Silchester, and Harris were lured to European financials in the wake of 2008/09. Switzerland, outside of the troubled euro zone, looked unfairly punished for troubles within the bloc's financial services industry.

Harris bought Credit Suisse around 20 francs per share and exited most of it between 60 and 70 francs, Herro told Swiss outlet «Tages-Anzeiger» (behind paywall, in German) last year. It isn’t clear how large the Chicago-based fund manager’s stake in Credit Suisse, now at 5.17 percent, originally was.