Shareholder of the day: Patrick Degorce

The Children’s Investment Fund sounds so cuddly, doesn’t it? And in fact it

does give a large chunk of its profits to charity. But it gets those profits

by buying up stakes in undervalued companies and forcing management to shake

them up – and the latest

target is ABN Amro.

TCI was founded by Christopher Hohn, but the formal

letter to ABN Amro, which is reprinted at Alphaville, was written by TCI

partner Patrick Degorce. He’s not pulling punches:

Since the current chairman of the Managing Board was appointed in May 2000

ABN AMRO has given shareholders a cumulative share price return of 0% (excluding

dividends) compared to (a) the ABN AMRO selected peer group of approximately

44% and (b) the Dow Jones Euro Stoxx Banks Index of 44% (all numbers are for

the period 1 June 2000 to 31 January 2007).This terrible shareholder return

is a function of the fact that ABN AMRO’s underlying earnings per share

has been broadly flat for around 6 years, during a time when nearly all banks

globally have enjoyed a period of strong earnings growth.The Managing Board

has presented several restructuring strategies over the last 6years which

were supposed to accelerate earnings growth which would be reflected in a

higher share price. In 2006 they again committed to cut costs and they have

so far failed to deliver.

Degorce reckons that breaking up ABN Amro could "justify a price significantly

in excess of EUR30 per share" – which isn’t all that much higher

than the €27.25 the bank is trading at in the wake of Degorce’s letter

becoming public. But the real impetus behind the letter, I think, is not to

split up the banks in ABN Amro’s "home markets" of Italy, Holland,

Brazil and the US Midwest. Rather, it’s to force ABN Amro to get its own house

in order before embarking on a foolish and expensive acquisition of Capitalia.

On the other hand, other parts of ABN Amro, such as the capital markets and

asset management businesses, might well get sold off, along with its Asian holdings.

Either way, Degorce has managed, with one letter, to increase the value of ABN

Amro by over $3 billion in one day, which is pretty impressive.

This entry was posted in Econoblog. Bookmark the permalink.

11 Responses to Shareholder of the day: Patrick Degorce

  1. Gari N. Corp says:

    The management of ABN Amro has always been a mystifying and impenetrable clown circus. Sort of like Cirque Du Soleil without the imagination. In the US, we’ve seen groups founded and abandoned with reckless abandon, sometimes within the space of weeks, unwieldy multiple cross-border reporting lines, and an inability, over TWENTY-EIGHT YEARS LATER, to even attempt to integrate New York corporate banking with LaSalle’s Chicago-based people. I’m surprised they assembled their wits for long enough to even produce some accounts.

  2. We are the best designer bags online ,welcome to buy

    , miu

    miu bag, are from original can choose the bags hot

    2010,,mulberry bag,




    ,fendi handbags,,gucci handbags,,loewe handbags,,

    ,miu miu

    handbag,,Roberto cavalli bags,,ysl handbags,and you can also pick the , mbt

    shoes,, leger

    dress, , and other designer products.welcome

    login and have a good shopping.

  3. Buy latest shoes and sneakers from the top fashion designers shoes in china, cheap discount

    ,footwear,leather,shoes,boots,cheap discount

    prada shops and stores. Wonderful Prada shoes collection: Prada

    from our nike shoes online store, get free shipping ! get

    and nike shox ! Shopping is the best place to comparison shop for

    Compare products, compare prices, read reviews and merchant ratings. Compare prices on

    in Babies & Kids with bizrate. Buy

    from top rated stores. Comparison shopping for the best price. Buy Women

    , 40-70% Off. Cheap Nike Women Shox, Free Shipping! Buy

    for Women Now! Nike released a new athletic Nike Shox shoe – the

    , as part of the … Here is the Nike Shox R4 kids, you can feel the best in the


    The latest GHD hair, GHD Straighteners, GHD Hair Straighteners products on sale now.

    the uk .

Comments are closed.