A dignified approach to activist investing is, what Alex Roepers calls, “constructive shareholder activist.”
Gentle giant among aggressive, public strategy
Roepers is founder and chief investment officer for the $2.3 billion Atlantic Investment Management and advocates a kinder, gentler approach to what is in some quarters an arm twisting, public brawl. Roepers claims to work behind the scenes, providing management assessments of how they can create shareholder value enhancement. The fund manager typically avoids being quoted in the press with negative comments about a board of directors or top management.
“It’s very much a hands-on, respectful engagement with management to find ways to enhance and accelerate value creation,” he said in a recent interview with Bloomberg Briefs. “We are patient and long-term oriented but we will, if necessary, become more confrontational and directly deal with the board.” This confrontation is typically done behind the scenes.
Roepers maintains a unique reason for staying behind the scenes: his ability to get in and out of a position. “Overt activism, with proxy battles and board seats, restricts liquidity,” he said. “Key to us is that we retain our ability to trade around a position and to get out at will, which has contributed significantly to long-term performance.”
Roepers not a follower
Roepers doesn’t like to follow other activist investors, but when they file a 13D their phone can ring as was the case in the situation with Triumph group, as hedge and mutual fund managers wanted to determine the strategy to see if they wanted to pile into the trade.
Roeper’s brand of activism worked well in 2013. Its largest offering, the Cambrian Fund, posted a 2013 gain of 38.3 percent, according to Institutional Investors Alpha. The smaller funds posted gains of at least 20 percent.
When asked by Bloomberg reporter Kelly Bit what he thought of Europe, Roepers wasn’t talking about opening an office, as some activist funds have, but took a longer term view of what is considered a recent trend. “We have been a constructively engaged shareholder in Europe since 2004,” he said in the Bloomberg interview. “At any given time, we hold six core positions in Europe and the opportunity set is outstanding.”
Japan fund up big as Roepers buys on a drawdown
But talk about Japan and Roepers really lights up, coming off stellar performance in his first year with the one year old Cambrian Japan fund, which was up 42.9 percent in its first year. “To us, (Japan) is a candy store of value,” he said, noting a buy on a drawdown strategy. One current core holding of the fund is CO., LTD. (TYO:7276) (OTCMKTS:KOTMF), the largest maker of headlamps for cars. “The buying opportunity came as troubles at its small 50 percent-owned publicly traded affiliate, Koito Industries, which makes airline seats, affected their share price.” As the emotion of the problem pushed the stock price lower than fair value, Roeper’s team snapped up shares. The fund’s primary shorts are in organic grocers, another emotional stock pick this time in the other direction.