Shareholder Activism Bolsters Knight Vinke’s Flagship Fund
Main fund posts 14.8% return in third quarter, boosted by a stake in French electronics company Fnac
Shareholder activism’s on the rise in Europe. For one Monaco investor, it is paying off.
Activist investor Knight Vinke Asset Management, boosted by a stake in a French electronics company that was engaged in a bidding war, posted a third quarter return of 14.8% in its flagship fund. This took year-to-date returns to 49.6.4%, according to an investor letter seen by The Wall Street Journal. The firm, under founder Eric Knight, runs around $1 billion according to latest figures.
By comparison, the average hedge fund returned 4.19% over the year to date according to the HFRI Fund Weighted Composite index. The FTSE World Europe Euro Index was up 3.7% over the third quarter.
Over the first half of the year alone, 64 companies were targets for activists in Europe, compared with 67 for the whole of last year and 51 in 2014, according to research by London-based Activist Insight.
Swedish activist fund Cevian Capital and U.S.-based Artisan Partners have recently been pushing Swiss engineering giant ABB Ltd. to spin off its power grid.
CamberView Partners, LLC, a company that advises boards and management teams of public companies on investor engagement issues last month launched its European business with hires from proxy adviser ISS Europe and BlackRock.
Much of Knight Vinke’s success stems from a major position in electronics company FNAC, which bought another French electronics retailer, Darty, after a bidding war earlier this year. Knight Vinke, which called for the merger, is now one of the largest shareholders in FNAC.
FNAC’s share price increased by more than 10% in September, after the new combined firm was strongly backed by analysts.
Knight Vinke has also disclosed a position in Germany’s power giant E. ON SE, which last month floated more than 50% of Uniper SE, its conventional coal and gas activities.
Mr. Knight told The Wall Street Journal on Sunday that his fund presented an alternative deal structure in August that would have brought well above €2 billion ($2.2 billion) in fresh capital to E. ON and Uniper. However, E. ON decided against the plan.
“We remain significant shareholders of E. ON and will continue to engage with its Board and Management cordially and constructively,” said the investor letter.
Knight Vinke has also added two undisclosed investments. A spokesman for the fund declined to comment.
The activist last year ended two long-running campaigns with Swiss bank UBS and French retailer Carrefour. In the investor letter, it added it would “continue to evaluate the possibility of re-investing in these stocks as their share prices weaken further.”