Tuesday, 21 July 2020

Activist investor buys Superdry stake, says it supports founder's vision



The news that activist investor Gatemore has built up a 3.4% stake in Superdry has refocused attention on the recovery prospects for the former high-flying company.

The hedge fund is known for expecting positive action from companies in which it invests, such as French Connection and Moss Bros. But it has a positive relationship with companies that are working hard on their turnarounds and said that it fully supports co-founder Julian Dunkerton's vision for Superdry.

Dunkerton engineered a return to the firm last year after a succession of weak results saw the value of the company plummeting. Since then he has worked to return the brand to a more desirable status, but the coronavirus crisis and ensuing lockdown have obviously hurt the potential speed of its recovery.

Yet Gatemore seems to be impressed with managing partner Liad Meidar making encouraging noises about his expectations.

“We look forward to discussing our views further with the board, management, and other shareholders over the coming months,” he added.

Such investors usually buy stakes with the sole aim of creating the conditions to boost the share price quickly. And Superdry shares are certainly cheap by historical standards as they've fallen by almost three-quarters in the past year. Currently changing hands at around 115p each, they cost £14 each five years ago.

Sources linked to Gatemore have mooted the prospect of the share price recovering by as much as 500% in the next two years. 

Gatemore also seems to be happy with the firm’s focus on China via a franchise deal and is on board with its ethical sourcing stance. It thinks this could be an advantage as the fallout from the Leicester garment factory scandal hurts other companies in the fashion sector.

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