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A high-profile shareholder in Abrdn dumped the stock after losing faith in management’s ability to turn the flagging UK asset manager around, adding to pressure on chief executive Stephen Bird.
US investment firm Harris Associates, which has more than $100bn in assets under management, “sold the stock last year as [we] lacked confidence that management could repair the business”, David Herro, the firm’s deputy chair, told the Financial Times.
Figures from Bloomberg show Harris Associates started to reduce its position in Abrdn during 2022, when it was a top 30 shareholder, before offloading its entire stake in the middle of last year. Herro said the firm owned shares in Aberdeen Asset Management before its landmark merger with Standard Life in 2017, the deal that created Abrdn.
Herro’s comments underscore the extent of the challenge facing Bird, a former Citigroup consumer banking executive who has been seeking to revive the investment manager since his appointment in 2020.
Abrdn dropped out of the FTSE 100 last August, and its shares have fallen by a fifth over the past year, underperforming its peers. Shares in Abrdn have shed two-thirds of their value since the merger with Standard Life.
Bird acquired consumer investment platform Interactive Investor for £1.5bn in 2021 in an attempt to diversify the asset management business. But Herro questioned whether Abrdn “overpaid” for the business, which was the only division to generate net inflows in the past six months of 2023. One person close to Abrdn said Interactive Investor was worth much more than £1.5bn.
Herro added that Abrdn also suffered from a “lack [of] strong product with good track records”. Abrdn closed the flagship Global Absolute Return Strategies fund last year, which was worth £53bn at its peak in 2016. The asset manager has also restructured, closed, or merged more than 250 of its investment funds.
Abrdn said that “industry change, combined with market conditions, has put the investment management sector under intense pressure in recent years” and that it had “recently announced a new transformation programme” that would “help drive improved profitability in Abrdn’s investments business”.
Bird unveiled a fresh round of cuts last month in an attempt to slash £150mn of costs by the end of 2025, as the asset manager battles net outflows. The company added that Bird had “substantially reshaped the company” to create a business “with more opportunities for growth”.
Other long-standing shareholders have also cut ties with Abrdn. JO Hambro Capital Management severed its 10-year relationship by selling out of Abrdn last year. The fund managers James Lowen and Clive Beagles said the timing was due to a rally in the asset manager’s share price.
“Whilst this has been a challenging investment in recent years, over the 10 years we owned the stock it was a material positive contributor,” they added.
David McCann, an analyst at Numis, noted that a large portion of the fund group’s investors were “not well engaged”, with most of them constituting retail investors and passive funds.
Harris Associates was previously one of Credit Suisse’s longest-standing shareholders, owning as much as 10 per cent of the bank’s shares in the year before it collapsed.
But Herro told the FT weeks before the bank was forced into a rescue deal with Swiss rival UBS last March that Harris had lost patience with Credit Suisse’s strategy and disposed of the firm’s entire stake, warning that there was “a question about the future of the franchise”.