Ahead of the annual general meeting of the crisis-hit asset manager GAM, an activist fund is taking its demands directly to shareholders. Meanwhile, the CEO is defending his performance to date.

The battle lines are drawn between GAM and the hedge fund RBR Capital under Rudolf Bohli. GAM is ignoring the demands of RBR, allowing CEO Alex Friedman to promote his turnaround efforts and to dismiss RBR’s plans as unrealistic.

Now, RBR has sent a letter, seen by finews.com, to GAM shareholders Monday repeating its demands and proposals to speed up the turnaround and achieve success.

Too Much Wrong

It is public knowledge that RBR wants to make savings of 100 million francs in a short period of time through job cuts, to appoint three new board members as well as to replace Friedman as CEO.

Too much is going wrong at GAM: the turnaround is happening too slowly, margins and assets under management are shrinking and Friedman is being overpaid for his role, RBR argues. The CEO earned six million Swiss francs in 2016, an increase of more than 20 per cent on the previous year.

Loss-Making Deals

RBR is also critical of what it calls the overpriced takeover of systematic trader Cantab. Six months after the completed acquisition, 20 per cent of Cantab’s assets have been lost, the letter says.

In the case of Taube Hodgson Stonex, a British asset manager also bought by GAM, 50 percent of the assets under management went out the door, and two key portfolio managers left the company.

RBR accuses GAM of making these acquisitions too hurriedly. At Cantab, 65 percent of the future performance fees will remain with the management. GAM maintains that Cantab's share of performance fees if 40 percent. The firm confirmed the departure of portfolio managers Cato Stonex and Mark Evans.

He Said, She Said

RBR has also expressed disappointment that the GAM board has not yet examined its proposals. RBR has been trying to contact GAM since last November.
Friedman wants to save 30 million

However, in an interview with «Finanz und Wirtschaft» (article in German, paywall), GAM CEO Friedman has said that Bohli turned down offers he made to talk. Bohli and his hedge fund are only interested in GAM for short-term gain, Friedman claims.

«Didn't Create Problems»

Friedman describes RBRs cost cutting proposal to save 100 million Swiss francs within six months as «plucked from the air». He is sticking to the goal of saving 30 million francs by 2019.

Although GAM’s share price has plunged by 40 percent in two years, Friedman denies that something has gone wrong at GAM under his leadership.

«I did not create the problems at GAM,» he said. «I am working to solve them.»