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One of Europe’s largest activist investors Cevian Capital has made gains of almost 20 per cent this year, helped by the strong share price performance of building materials group CRH, which this year switched its primary listing to New York.
The Stockholm-based investor, which manages $12bn in assets, has gained about 19.5 per cent in its main Cevian Capital II fund in the first 11 months of the year, investors in its fund said, helped by a bumper month in November. That compares with an 11 per cent rise in the MSCI Europe index over the same period. Cevian declined to comment.
One of the biggest contributors to the gains was Irish group CRH, which is up about 56 per cent this year.
Cevian first disclosed a stake in the world’s biggest building materials group in early 2019. Since then the company has changed the majority of its board, moved its primary listing from London to New York to try to close the valuation gap to its peers, exited several non-core businesses and simplified its group structure. The company makes three-quarters of its profits in North America.
Cevian highlighted to its investors an improvement in CRH’s earnings before interest, tax and depreciation margins between 2019 and 2022. The company has returned more than a quarter of its market capitalisation to shareholders since 2018, including a $3bn buyback programme this year.
In June, Cevian was among shareholders that backed CRH’s relisting in New York, a move that has deepened fears over the future of the London stock market. The company switched to the New York Stock Exchange on September 25, retaining an ordinary listing in London, while its shares no longer trade in Dublin.
Also contributing to Cevian’s performance was French electrical equipment distribution Rexel, which has gained 29 per cent, Swiss conglomerate ABB, which is up 28 per cent, and Nordic financial services group Nordea, up 8 per cent.
Cevian buys large minority stakes in European listed companies that it believes have strong fundamentals but are undervalued by the market, and tries to improve their returns through constructive dialogue. This is typically through measures such as encouraging cost-cutting, simplifying complex structures, changing management, divestments and spin-offs.
The fund has a concentrated portfolio of 13 positions, the top four of which are stakes larger than 10 per cent.
Cevian was founded by Christer Gardell and Lars Förberg. Since its 2006 inception, Cevian Capital II has gained 408.8 per cent net of fees, compared with 132.9 per cent for the MSCI Europe Index, according to investors. The fund’s annualised returns are 9.8 per cent since inception, compared with 5 per cent for the index, investors said.
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