Activist investors are currently increasingly at work again. For example, Sachem Head Capital recently bought into Delivery Hero and Starboard Value invested USD 500 million in the software company Autodesk. This type of investor is not known for simply watching, but rather wants to influence the company in order to steer it in what they consider to be a more profitable direction. Ultimately, the aim is to boost the share price. The Swiss company Baloise has already achieved this with its investment. Since Cevian Capital bought a 3% stake in the insurer a month ago, the share price has risen sharply. The Swedes have just increased their stake even further - which has set the rumor mills buzzing about the future development of Baloise.
Baloise shares are currently up by around a fifth since the start of the year. However, the initial impetus for the rise did not come from Cevian Capital's investment in mid-May, but from the Annual General Meeting at the end of April. At the shareholders' meeting, 78.2% voted in favor of the proposal by investor zCapital to abolish the existing 2% restriction on voting rights and registration. This regulation has prevented unwelcome advances by investors in recent years. Chairman of the Board of Directors Thomas von Planta was combative after this vote and claimed that hostile takeovers were "not an issue".
If only he was not mistaken, as Cevian Capital's current aggressive approach speaks a different language. Just a few weeks after taking a stake, the Scandinavians, who also have a holding in UBS, increased their stake to around 5%. According to reports, the activist financial investor now wants to assert its influence through its status as a major shareholder and is aiming to become a member of the Board of Directors. According to observers, however, an imminent sale of the insurance group to a foreign counterparty is also a conceivable option. "Last but not least", it cannot be ruled out that other hedge funds will position themselves at Baloise.
All this speculation is currently driving the mid-cap and has just catapulted the share to a fresh 2-year high. What sounds like a strong performance is put into perspective on closer inspection. On the one hand, the shares are still in the red on a 5-year horizon despite the rise, and on the other, Baloise is lagging far behind competitors such as Swiss Life and Zurich Insurance.
Baloise is not only lagging behind on the capital market, it is also struggling operationally. While Zurich, for example, reported rising premium income and the highest profit in the company's history in 2023, Baloise's balance sheet was spoiled by higher-than-expected claims expenses for natural disasters such as hailstorms. Profit fell by 3.3% and premium income was also down due to the strength of the Swiss franc.
In order to get the Group back on the road to success, CEO Michael Müller has announced a change in strategy. In future, the focus is to be placed more on the traditional insurance business. The "ecosystem strategy" propagated around 6 years ago, in which customers are also offered other services from a single source along with insurance, will therefore be scaled back. "I am convinced that we will generate added value in our core business," said the CEO when presenting the figures. Müller is sticking to the goal of generating a total of CHF 2 billion in cash between 2022 and 2025. However, the manager backed away from the forecast of acquiring 1.5 million new customers in this period. New targets are to be presented at an investor event on September 12. The analyst consensus is already confident and believes that the Group will see rising profits over the next three years.
A lot of time will pass before the new targets are made public, during which a lot can happen - especially with regard to the shareholder structure. In addition, demands from financial investor Cevian Capital could gradually come to the table. The Swedes already demonstrated their power at ABB in 2021 when they worked towards a far-reaching restructuring, including company sales and a change of management. So there is plenty of (share price) fantasy at Baloise. However, as the future is also characterized by uncertainties, partial protection cannot hurt when investing in the insurance stock. Leonteq has combined security with the chance of outperformance in a new bonus certificate. The financial product is designed to generate an attractive profit even if prices rise moderately.
In detail, the certificate works as follows: Holders of the certificate participate in rising prices of the underlying security from the bonus level at 100% of the starting level with a leveraged participation rate of 125% up to the cap. This is called in at 130% of the starting level, resulting in a maximum redemption amount of 137.5% of the nominal value. If Baloise ends up trading below the initial level, the investment does not automatically end with a loss. This is ensured by the barrier, which is set at 69% of the starting value. Only if this threshold is breached during the 2-year term can there be a discount.
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