Soros bet on Gam hints at case for potential takeover

Room for Swiss manager to be also viewed as a ‘potential recovery stock’

The move by George Soros to place a bet on Gam is seen by many commentators as evidence the troubled asset manager could be the target of a take over in the not too distant future.

According to a regulatory filing with the Swiss stock exchange Soros (pictured) purchased a 3% stake in mid-May through his subsidiary SFM UK Management.

Ryan Hughes, head of active portfolios at AJ Bell, said Soros might have purchased the stricken Swiss manager because he sees it as a potential takeover target.

“It still manages a good amount of assets, it’s still got a brand and he [Soros] may well be seeing it as a potential takeover target.”

The embattled manager is still reeling from a whistleblowing scandal involving its £8.5bn Absolute Return Bond Fund (ARBF) range which resulted in the sacking of one of its star managers, Tim Haywood, and prompted billions of pounds worth of redemptions.

“You have to view Gam now as a special situation and a potential recovery stock,” said Hughes.

Classic Soros

Ben Yearsley, director of Shore Financial Planning, agrees this is a likely interpretation given Soros’ history of buying assets that look vulnerable or distressed.

Gam’s shares have seen 70% of their value wiped in the last year. But they shot up 8% shortly after news of Soros’ stake in the business broke and were up 16% at CHF 4.71 when markets closed on Friday.

Despite the fund group’s cheaper price tag it has been deemed a tough sell.

Hughes agrees that the Swiss manager will need to get certain things in order, like finding a permanent chief executive and setting a new strategy before it is considered an attractive buy.

“There’s quite a journey for Gam to go on,” said Hughes, “but we’ve seen so much consolidation in the asset management space it could easily be a target for someone to pick up the assets at a discounted level.”

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