Mon. Dec 6th, 2021

The activist hedge fund Third Point has an interest in the Swiss luxury group Richemont, which owns the watch and jewelry brands Cartier and Van Cleef & Arpels, according to people familiar with the matter.

U.S.-based fund Artisan Partners, which has been a Richemont shareholder for many years and owns a 1.2 percent stake, also pressured the group to improve its performance, according to one of the people.

Third Point and Artisan did not return requests for comment. Richemont, who will report his half-year results on Friday, declined to comment.

An activist campaign at Richemont will face powerful chairman Johann Rupert, who has long set strategy and elected managers for the 26. houses belonging to the group. Although the South African businessman owns only 9.1 percent of the capital, he controls 50 percent of the voting rights under a dual-class share structure.

Critics argue that Richemont did not keep up with competitors during a decade-long boom for the luxury industry driven largely by Chinese consumers. Its market capitalization has risen by 79 percent over the past five years, while that of LVMH and Hermes has roughly quadrupled.

Analysts also criticized the group’s inability to stem losses at its e-commerce unit Yoox Net-a-Porter, which lost market share to newer competitors such as Farfetch and did not deliver a long-promised turnaround.

It was not possible to determine what Third Point wanted to achieve at Richemont, or the size of its investment in the company.

But the hedge fund controlled by billionaire investor Dan Loeb can adopt aggressive tactics, such as when he encouraged Nestlé to sell assets in 2017 and recently when he asked for the break-up of Royal Dutch Shell. It can also be more pragmatic with its investments, such as when it is a game this year in Vivendi before its outgrowth of Universal Music Group, but did not publicly insist on changes there.

Artisan is a more traditional long-term fund, but has recently taken a more activist grip on some of its investments, such as a public campaign it increased this year to remove Emmanuel Faber as Danone CEO.

Richemont’s shares outperformed investors last year than sector leaders LVMH and Hermès tormented that its jewelery-dependent business would suffer more than others under the Covid-19 pandemic.

But the biggest players in luxury have cut back faster than expected from the crisis, largely helped by exciting Chinese consumers who continue to shop at home, even though they can no longer travel to shop in Europe’s fashion capitals.

This helped Richemont’s shares rise 48 percent this year, better than a 35 percent rise for LVMH and a 12 percent rise for Kering owner Kering, but underperformed a 63 percent rise for Hermès. Analysts have attributed the Richemont rally to investors who bet it has room to improve.

Third Point’s investment was first reported by independent fashion publication Miss Tweed.

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