Activist investor Third Point acquires stake in Cartier owner Richemont
Activist hedge fund Third Point has taken a stake in Swiss luxury group Richemont, which owns the Cartier and Van Cleef & Arpels watch and jewelry brands, according to people familiar with the matter.
The American fund Artisan Partners, which has been a shareholder in Richemont for many years and holds around 1.2% of the capital, has also lobbied the group to improve its performance, according to one of the people.
Third Point and Artisan did not return requests for comment. Richemont, which will publish its half-year results on Friday, declined to comment.
A militant campaign at Richemont would have to face the powerful president Johann Rupert, who long defined the strategy and chose the managers for the 26 houses that belong to the group. Although the South African businessman owns only 9.1 percent of the capital, he controls 50 percent of the voting rights under a double-class share structure.
Critics argue that Richemont has failed to keep pace with its competitors during a decade-long luxury industry boom, thanks in large part to Chinese consumers. Its market capitalization has increased by 79% over the past five years, while those of LVMH and Hermès have roughly quadrupled.
Analysts also criticized the group’s inability to stem losses from its Yoox Net-a-Porter e-commerce unit, which lost market share to new competitors such as Farfetch and failed to achieve the turnaround. long promised.
It was not possible to determine what Third Point aimed to achieve in Richemont, nor the size of its investment in the company.
But the hedge fund controlled by billionaire investor Dan Loeb may adopt aggressive tactics, such as when it urged Nestlé to sell assets in 2017 and recently when it called for the dissolution of Royal Dutch Shell. It can also be more pragmatic in its investments, such as when it took a stake in Vivendi this year before its spin-out from Universal Music Group, but has not publicly pushed for changes there.
Artisan is a more traditional long-term fund, but has recently taken a more militant approach to some of its investments, such as a public campaign it launched this year to remove Emmanuel Faber as CEO of Danone.
Richemont shares underperformed industry leaders LVMH and Hermès last year, with investors fearing that its jewelry-dependent business would suffer more than others from the Covid-19 pandemic.
But the biggest luxury players have returned faster than expected from the crisis, helped in large part by boiling Chinese consumers who have continued to buy from their homes even though they can no longer travel to shop in European capitals. of fashion.
This helped Richemont shares rise 48% this year, outperforming a 35% increase for LVMH and a 12% increase for Kering, owner of Gucci, but underperforming a 63% increase for Hermès. Analysts attributed the Richemont rally to investors betting it could improve.
Third Point’s investment was first reported by independent fashion publication Miss Tweed.