On an investor conference call for the €193 million Henderson HF Pan European Alpha fund, the Citywire Alternative Ucits A-rated manager said the ‘unprecedented measures’ undertaken by UBS to address its investment banking arm had forced him to invest.
On October 30, UBS announced it would close its fixed income arm as part of plans to streamline its operations, as well as removing ‘uneconomical’ parts of its business.
Due to these measures, Casson said he has taken UBS as the largest single position in his portfolio, a move which he accepted was a ‘very contrarian’ bet. The bank now makes up 3.5% of the entire fund.
Casson said: ‘We had been picking up signals over the last few months that the board and the investors were very unhappy with the investment banking arm of UBS and all the good work of the private bank and wealth management teams was being undone.'
‘We saw last month with the very dramatic moves they took to close down their fixed income department, closing around 1,000 jobs, which was quite simply huge. It was huge for a big bank to close down a whole unit like that.’
‘Now we can go back to looking at a business which is much more predictable, much more transparent and it has come through the financial crisis in very good shape.’
Casson said he expects there to be a ‘good re-rating story’ surrounding UBS and expects the stock to trade a lot higher multiple once the rest of the market begins to acknowledge how important the restructuring could be for UBS’ future performance.
Speaking to Citywire Global earlier in the year, Casson had been vehement in his criticism of the European financials sector due to the unpredictability that had been caused by measures such as the LTRO stimulus package.
The Henderson HF Pan European Alpha fund has returned 13.8% over the past three years. This compares to his Citywire benchmark, the STOXX Europe 50 CR EUR, which has risen 2.62% over the same period.