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Thursday, December 2, 2021

Activist investor Third Point buys shares of Cartier owner Richemont Group

According to people familiar with the matter, the radical hedge fund Third Point has taken a stake in the Swiss luxury goods group Richemont, which owns watch and jewelry brands Cartier and Van Cleef & Arpels.

A person familiar with the matter said that the US-based fund Artisan Partners has been a shareholder of Richemont for many years, owning about 1.2% of the shares, and has been urging the group to improve its performance.

The third point and the craftsman did not respond to requests for comment. Richemont Group, which will announce its half-year results on Friday, declined to comment.

Richemont’s radical movement will have to contend with the powerful chairman John Rupert, who has been 26 for a long time. houses Belong to this group. Although the South African businessman only owns 9.1% of the capital, he controls 50% of the voting rights under a dual-shareholding structure.

Critics argue that Richemont has not kept up with competitors during the decade-long boom of the luxury goods industry, driven mainly by Chinese consumers. Its market value has increased by 79% in the past five years, while the market value of LVMH and Hermes has almost quadrupled.

Analysts also criticized the group’s inability to curb the losses of its e-commerce unit Yoox Net-a-Porter, which has been robbed of its market share by new competitors such as Farfetch, and failed to achieve its long-term promise of turnaround.

It is not yet certain what Third Point’s goal is to achieve in Richemont Group or the scale of its investment in the company.

But hedge funds controlled by billionaire investor Dan Loeb can adopt aggressive strategies, such as when they urged Nestlé to sell assets in 2017 and recently called for the split of Royal Dutch Shell. Its investment can also be more pragmatic. For example, it took a stake in Vivendi before the spin-off of Universal Music Group this year, but it did not publicly promote changes there.

Artisan is a more traditional long-term fund, but it has recently adopted more aggressive strategies for some of its investments, such as a public campaign launched this year that called for the removal of Emmanuel Faber from the position of Danone’s chief executive officer.

Richemont’s stock last year underperformed industry leaders LVMH and Hermès because investors worried that its jewelry-dependent business would be more affected by the Covid-19 pandemic than other companies.

But the biggest player in the luxury goods industry recovered faster than expected from the crisis. This was mainly due to the enthusiastic Chinese consumers who continued to buy domestically even though they could no longer go to the European fashion capital to shop. .

This helped Richemont’s share price to rise by 48% this year, outperforming LVMH’s 35% increase and Gucci owner Kaiyun’s 12% increase, but lower than Hermes’s 63% increase. Analysts attribute Richemont’s rise to investors’ bets that it still has room for improvement.

The independent fashion publication Miss Tweed first reported the third point of investment.

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