Cevian Capital, one of Europe’s biggest activist investors, has seen gains of nearly 20 percent this year. This is due to the performance of building materials company CRH which switched its primary listing from London to New York this year.
Investors in the fund said that the Stockholm-based investor managing $12 billion in assets has gained about 19.5% in its Cevian II fund in the first eleven months of this year.This was aided by an excellent month in November. Comparatively, the MSCI Europe Index rose by 11 percent over the same time period. Cevian declined comment.
CRH (Irish group) has seen its share price rise by 56 percent this year.
Cevianfirst revealed a stake in building materials giant, the largest in the world in early 2019. Since then, the company has restructured its board and moved its primary listing to New York in an attempt to reduce the valuation gap with its peers. It also exited non-core businesses, simplified its group structure, and changed its majority. Three-quarters (75%) of the company’s profits are made in North America.
Cevian told investors that CRH’s earnings before interest, tax, and depreciation margins will increase from 2019 to 2022.Since 2018, the company has returned to its shareholders more than one quarter of their market capitalisation, including a $3bn share buyback program this year.
Cevian, a shareholder, voted in June to support CRH relisting on the New York Stock Exchange. This move has heightened fears about the future of London’s stock exchange. On September 25, the company changed to New York Stock Exchange, retaining a regular listing in London. Its shares are no longer traded in Dublin.
Cevian also benefited from the performance of Rexel, a French distributor of electrical equipment, with a gain in 29 percent, ABB, a Swiss conglomerate, with a gain in 28 percent, and Nordea, a Nordic financial services company, which saw an 8-percent increase.
Cevian purchases large minority stakes of European listed companies it believes to have solid fundamentals, but that are undervalued in the market. It then tries improving their returns by engaging in a constructive dialogue. Cevian typically takes measures to improve returns, such as cost-cutting initiatives, simplifying complex structure, changing management and divestment.
The fund’s portfolio is concentrated on 13 positions. Four of them are stakes greater than 10%.
Christer Gardell founded Cevian with Lars Forberg. Investors claim that since its inception in 2006, Cevian Capital II gained 408,8% net of fees compared to the MSCI Europe Index’s 132,9%. Investors reported that the fund has achieved an average annual return of 9.8% since it started, whereas the MSCI Europe Index has only had a 5% return.