Georg von Wyss: «We were in the wrong part of the pond»

Georg von Wyss has seen his share of crises in the past quarter of a century. In an interview, the value investor tells finews. com about the challenging post-pandemic environment.

Mr. Wyss, BWM is celebrating its silver jubilee. But after being in existence for 25 years, your Value investment boutique should really just be called W given that both co-founders Thomas Braun and Erich Müller sold their stake in 2020.


In truth, not much has changed. The investment style is the same. We are still looking for undervalued shares. Our processes were built in such a way that the company can continue operating without its founders.

For example, clients would not notice anything If I were to get run over by a tram after this interview.

We sincerely hope that doesn't happen. Still, the fund management business has a number of self-anointed stars and yet you maintain that you are not integral to BWM?



Of course, the company owes a great deal to the other two co-founders as well. But in the years after we started BWM, we built up a process and structure.

«We were in a deep hole because of Covid»

That forces us to ensure the necessary quality and rigor every day. Our clients are fundamentally buying this process from us.



Does the process count for more than the people behind it?



Well, at the end of the day, someone does have to stick their head up. Occasionally that happens to be me. But when it comes down to it, we all tell the same story.



Never change a winning horse?



We are always doing the same thing. But it is also what we can do. It would be fatal for us when it comes to marketing and performance if we changed something suddenly.



Is it true that your funds have had a difficult time since the pandemic?



We were in a deep hole because of Covid. We have managed to recover since but we did not manage to keep up with the indexes we measure ourselves against. It is clear that we owe clients good performance and we want to return to having a track record that is better than that of the broader market. 

That was not the case in 2022. Your funds lost 20 percent and were clearly well behind the market.



The past year was not a good one for value investing, particularly for undervalued shares unless one was invested in utility and energy. And to a certain extent - in banks.

«You have to keep a share like Credit Suisse in mind»

In other words, the undervalued shares got even more so. Our funds naturally felt that impact. Still, since last September, the cheapest shares have risen. 

What bank shares are investable?

The ones that benefit the most from rising interest rates. Actually - all of them - unless they were dealing with self-inflicted problems.

And Swiss ones?



EFG International is one of our investments. The shares have recovered from their large discount to the bank's intrinsic value and are almost at a fair valuation. As value investors, we will sell when they get there.



BWM was invested in Credit Suisse years ago. The shares are currently near all-time lows. Are you thinking of getting back in?



We have to keep an eye on any shares that are that cheap. But we are watching from a distance as we still believe there isn't enough fundamental confidence in the bank something that was reflected in the client outflows they recorded.

«A frog doesn't have to snap up every fly surrounding it»

If the bank manages to achieve its set objectives, it would naturally have a far higher value. But we see other opportunities that have significantly less risk.

In short, you have no appetite for Credit Suisse shares?



We look at the investment universe from the perspective of a frog. A frog doesn't have to snap up every fly surrounding it to satisfy its appetite. Particularly when the fly in question could turn out to be a wasp.



A year ago, before the outbreak of the Ukraine war, there were chances to buy undervalued shares. Did you make large investments then?



We don't take big steps. Our positions are very transparent and we don't turn over our portfolio constantly. We recently bought shares in German carmaker BMW for our Classic Value Equity fund.

«On average all investment funds lose 10 percent of their managed assets every year»

We also bought lubricant manufacturer Fuchs for our Classic Global Equity fund as well as our Classic Value Equity fund. That is a highly specialized business that has certain oligopolistic characteristics, which will help it to protect margins in a difficult environment.



Are these the best shares for the future?



Let's look at it - again - from a frog's perspective. We were in the wrong part of the pond in the last few years. Value investment was simply not in demand in the market. That made value shares even cheaper than growth shares such as tech, which investors kept buying despite their lofty valuations.

That development has since been corrected. Tech has fallen sharply in the past year. Value shares, on the other hand, have only been rising for the past four months.

Has your positioning led to client outflows?



On average all investment funds lose 10 percent of their managed assets every year. Those are simply fundamental movements of clients who want to use their money in a different way.

«We believe the current problems should be over in about three years»

We saw roughly that with our Classic Global Equity fund and slightly less than that in our Classic Equity Value fund. What we didn't manage to do was compensate for that with new subscriptions. Very few people are willing to invest in a style that has not earned a good deal of money in the preceding three years.



But now the wind is changing?



We indeed started the year well. Both funds have managed to rise more than 10 percent.



Is that enough to say that value investing works?



The long-term shows that value investing works wonderfully. But there have been phases in the past few decades in which it didn't work, such as in the 1970s and the past eight years. But sooner or later there is a turning point as undervalued shares increasingly come into favor because they are so cheap, which is logical.



What do you predict for 2023?



We believe that the current problems that we are seeing - inflation, energy market disruptions, and the Ukraine War, should be over in three years' time. Everything considered I don't believe the world is any scarier than it was 5, 10, 20, or even 25 years ago.

«We committed the most blunders then»

We always had good reason to be worried. The worst for the equity market is usually when everything looks rosy. That is when investors should be really careful. That is what we do at BWM. We buy companies where the short-term perspective is a dark one.



What was BWM's worst crisis in the past 25 years?

The financial crisis of 2008, at least when it comes to the way we managed markets. We committed the most blunders then. But at that time we also learned the most. We became more prudent in regard to balance sheets, debt, and the geographies of markets. At the same time, we will always make mistakes.



Is there a generational difference in your approach internally?



The new partners are not that much younger than me. We want to hire younger analysts when we return to growth. But we are not there yet.  

Can BWM find anyone young given the tight labor market?



That will not be a problem. We always get calls from people who would like to work with us. If you like value investing and you have a knack for it, we are one of the few places in Switzerland where you can do it.

Georg von Wyss started independent asset manager BWM in 1997 with Thomas Braun and Erich Mueller. Over the years, it has become one of the leading international addresses for value investment. It currently employs six staff, of which four are investment experts.