12. 3. 2020

KGI Significantly Reduced Its Position in GAM Holding

Krupa Global Investments (KGI) sold most of its GAM shares after recent full year results announced in February 2020.

KGI reduces its position in GAM Holding after management failed to show meaningful strategy for shareholders. Based on the report, GAM introduced another 40m of cost cutting and forecast 2022  underlying pretax profit of CHF 100m. As we can see from the analysis here, in order to reach this profit target, AUM needs to increase by 20% in next 3 years. The goal is quiet challenging in our view, when GAM still loses AUM every quarter. If we look at the closest competitors such as Amundi, Schroders and Julius Baer, most of them recorded net positive inflow in AUM except GAM Holding. At the moment, we are in a period when markets are at the all time highs, when markets turn negative it might be bad for the GAM.

KGI is willing to come back as significant shareholder with strategic investor or when GAM will actively seek for strategic investor who is necessary for GAM in order to grow AUM, which is the key to GAM´s future success in our opinion. Strategic investor has to come from similar industry such asset management or insurance business, strong PE group or fund won´t help GAM to move forward.

In this market situation, markets are hit with corona virus and its impact on global growth will be significant in following months. Oil prices are hitting lows after price war between Saudi Arabia and Russia. KGI thinks that GAM´s strategic plans are too ambitious to execute at this time.