Shares collapse at Gam as it prepares for huge full year loss, pinning hopes on turnaround strategy
Fund manager Gam saw its share price plummet by 28 per cent today as it warned shareholders that it is staring at a heavy net loss for the full year.
The Swiss firm predicted a net loss of SFr 925m (£736.8m), after recording a profit of SFr 123.2m last year, embarking on a turnaround strategy to recover from huge fund outflows in 2018.
Opting not to pay a dividend this year, Gam added that its 2019 financial results would be “materially below” its 2018 results.
Massive writedowns – including for its acquisition of a UK-based hedge fund – were behind the loss as Gam attempts to stem the bleeding it has experienced in 2018 as investors took millions in funds out of the company.
Group assets under management slipped almost five per cent to SFr 139.1bn between September and November as Gam suffered net outflows of SFr 4.2bn. It had already seen funds fall from SFr 163.8bn in June to SFr 146.1bn in September.
The company is now restructuring to support future profitability, saving at least SFr 40m by the end of 2019 by cutting around 10 per cent of staff and general expenses.
Group interim chief executive David Jacob said: “With today's announcement we are seeking to give our shareholders and our clients the clearest assessment of our financial situation. We are taking decisive action to rebase costs and support profitability, whilst maintaining our focus on client service and control functions.
“We are determined to do everything it takes to rebuild the trust of our stakeholders. We are fortunate to have excellent talent across our business, the ability to continue to invest in areas of strength and an attractive product range to build upon as we reposition Gam for future sustainable growth.”
The embattled fund manager saw a huge outflow of assets following the suspension of star fund manager Tim Haywood, who looked after absolute return bond funds, after a review found risk management and record-keeping issues.
Chief executive Alex Friedman stepped down after Gam revealed huge losses in its third quarter last month.
Gam has also been hit by a profit warning over its purchase of Cantab, a UK fund manager.