Major shareholder quits Credit Suisse

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David Herro’s (62) disappointment must have been huge. The American is the Vice President and Chief Investment Officer (CIO) of Harris Associates. Until a few days ago, the US investment firm was one of the biggest investors in troubled bank Credit Suisse (CS). As the “Financial Times” reported, Harris has now left completely.

Hero transfers his disappointment to the newspaper. The future of the bank is “questionable”, he talks about a “troubled kid” who gives him a lot of work. However: Harris has already made good money with CS. The investment house joined CS in 2002 with a share price of 30 francs. After sales more than double the price in 2008, Harris bought it back from CS in 2009 for 23 francs per share. After a brief spike in price, CS shares have been in a steady decline ever since. So Harris sold the shares.

More peace in the bank

Despite slaps from overseas, the activist who continues to openly shoot at the CS board room should be secretly happy to get rid of a rebellious investor. “These times must end,” says Andreas Venditti (50), an analyst at Bank Vontobel. “He is not known for speaking to the media about his investments from Saudi Arabian and Qatari investors.” However, they are very likely to maintain close contact with management behind the scenes.

Hero was less cautious in this regard and did not always succeed. He supported the CEO of the time, Tidjane Thiam (62), in the shadowing incident and demanded the resignation of Urs Rohner (63). The President was able to hold on, Thiam had to leave in February 2020. Just days ago, Herro described the bank as an affordable “takeover candidate”.

Invoice rarely works

The activist investor in CS may have been wrong one last time. Because nobody in the market believes this story, otherwise the price will have to go up. Even breaking up the bank wouldn’t do much good for a buyer, Venditti says. “I’m not a fan of the argument that the individual parts can be more valuable than the whole.”

The problem: Venditti says it’s relatively easy to estimate the value of the good parts like a Swiss bank, but the costs of removing the bad parts like an investment bank are often underestimated.

In other words, the outcome for a CS buyer may be as minimal as it might have been for the frustrated investor Herro of Harris Associates.

Source :Blick