ASI's founder and constructivist Michael de Tocqueville takes aim at AMP's share price

At Advocate Strategic Investments, as value-driven Constructivist investors, we engage directly with investee companies and their shareholders where possible with the intent of acting as a catalyst to drive better decisions and outcomes for shareholders.

With the above in mind, ASI Founder and Constructivist Investor Michael de Tocqueville announced today he had accumulated a large personal stake in AMP Limited.

AMP's struggles

Michael first took a position in AMP in 2019 through ASI Mutual. Since then, Michael has witnessed the decimation of AMP shareholder value due to what he describes as a well-publicised, sorry tale involving poor governance, mismanagement and sexual misconduct accusations.

Whilst most of the above matters are in the past, Michael believes it's time for minority shareholders to stand up and take action to protect the future value of AMP.

According to Michael, "Recent asset sales and other so-called transformative simplification activities have done little to improve the company's share price value in any meaningful way, while the company's future strategy to grow shareholder value remains obscure, to say the least."

Michael is not the only individual who is concerned about AMP's diminishing reputation. As Elizabeth Knight recently wrote in the Sydney Morning Herald, "As case studies go, AMP provides a textbook example of how to turn a large business into a small business. The downsizing of AMP has been a painfully slow and incremental process, marked by strategic missteps, poor judgement calls by various management regimes, ill-fated profligate acquisitions and scandals unearthed by the royal commission into financial services.

For many of those that have occupied its board and executive ranks, AMP has been career poison. While those who took shares as part of the demutualisation more than 20 years ago, the stock has been cursed.

Over the last two decades, AMP has lost more than 92 per cent of its value, much of its brand value and its prominence as a key pillar of the Australian Financial System."

Michael notes, "AMP is currently distracted with finalising contracts for recent divestments, and overseeing and providing instruction regarding prevailing class actions, which continue to play out in the Federal Court of Australia. This is taking up valuable board and management time. From my recent experience in shareholder litigation, AMP's defence of class actions against it will drag on, with lawyers arguing every point until mediated or settled in court. The final result will most likely have little effect on AMP's strategic value."

Drawing from his many years of experience in concentrated equity investing, Michael adds, "Over the past year or so, AMP has seemingly re-structured the board and management team, improved its balance sheet through unrelenting asset sales, paid down debt, and spent a billion dollars or more of its shareholder funds on enforced client remediation and others. But what does that all mean in terms of restoring AMP's 173-year-old name and reputation in the marketplace? In my opinion, AMP may well find it a tough ask!"

Is there hope for recovery?

Michael is curious to know what plans AMP has for restoring its brand and shareholder value over the next three to five years. He believes that aside from hearing some carefully created words and phrases from AMP mentioning simplification, transformation, diversity and inclusion, there is very little AMP's shareholders can sink their teeth into in terms of a well-articulated strategy.

"Unfortunately, there is little evidence the AMP board, in conjunction with the Managing Director and other of AMP's critical business unit CEOs, have produced a meaningful forward-looking corporate strategy that an ordinary shareholder could readily and easily understand, particularly the long-term suffering ones hanging out for a dividend," says Michael.

Redefining AMP

What does AMP consist of now it has financially shrunk itself and lessened its prominence as a key pillar of the Australian Financial System?

AMP itself states that it is focused on retail wealth management and banking business operating in Australia and New Zealand, supporting approximately 1.5 million customers and employing more than 4,100 people.

In late 2021 AMP announced the launch of a new investment-focused advertising campaign that recognises the importance of investing for all Australians. It is unclear how this PR campaign will drive up AMP's revenue, as shareholders are yet to see any form of attribution analysis.

The company is currently listed on the Australian Securities Exchange ("ASX") and has a market value of AUD$3.6Bn or USD$2.52Bn.

From available information to shareholders, which is not entirely clear, ASI estimates AMP will, by the end of 2022, hold cash (shareholder funds) in the order of AUD$2.1 billion or USD$1.47 billion. These shareholder funds represent approximately 60% of AMP's current market value.

According to Michael, AMP has said as it downsizes and streamlines, it has a strategy to reposition and simplify the company's operations while exploring new growth opportunities, which it believes will ensure the company is well positioned for the future as a more straightforward, client and customer-focused purpose-led business. However, in regards to this, Michael says he is yet to see from AMP a crystal clear, strategically driven value maximisation plan complete with significant initiatives that will develop the full potential of the company.

"AMP needs to communicate its forward-looking strategic plan in full and measurable detail to its shareholders," he says, "This is desperately needed to restore confidence in this once mighty stalwart of the Australian financial services industry."

Michael may have more to say about his investment in AMP in future updates. To find out more, contact ASI via info@advocatesi.com.au.

257 Collins Street
Level 3
Melbourne VIC 3000
Australia

Phone:
+61 3 8375 9634

Media:
Michael de Tocqueville
mdet@advocatesi.com.au

About ASI
In 2021 Advocate Strategic Investments (ASI) was mandated by its founder Michael de Tocqueville to direct its investment management capabilities on an alternative investment strategy focused on constructive shareholder activism. As a result, ASI developed the Constructivist shareholder activism strategy.

Michael has personally seeded the company's newly formed Constructivist Investment Strategy.

ASI has a Board of Directors with significant expertise across multiple industries, including financial services.

Michael, together with ASI's Board, is realising the potential for a more direct approach to shareholder activism in Australia after witnessing the growth of activist funds in the US, Europe, Canada and now in Japan.

From real experience and anecdotally, there continues to be a problem with listed company performance, with corporate boards and their executive teams not being properly held to account by shareholders. That has been the main driver for establishing ASI's Constructivist investment strategy. The times are right for an investment strategy that can champion the rights of shareholders and unlock significant value for them and ASI.

And perhaps the biggest realisation is knowing Michael and the ASI Board can help unlock value by engaging with boards in a constructive and meaningful way; hence, the name, the 'Constructivist investment strategy.

Advocate Strategic Investments Pty Ltd ("ASI") (ABN 77 101 691 598, AFSL 224 560) ("ASI") or ASI Investment Management is not licensed to provide personal financial product advice to retail clients. The information provided via ASI's release on this website contains general financial product advice only. The advice has been prepared without taking into account your personal objectives, financial situation or particular needs. Therefore, before acting on any advice, you should consider the appropriateness of the advice in light of your own or your client's objectives, financial situation or needs. Prior to investing in any securities, you should obtain independent advice. The information set out in ASI's release on this website has been prepared in good faith and while ASI reasonably believes the information and opinions to be current, accurate, or reasonably held at the time of publication, to the maximum extent permitted by law, ASI: (a) makes no warranty as to the content's accuracy or reliability; and (b) accepts no liability for any direct or indirect loss or damage arising from any errors, omissions, or information that is not up to date.

This release was published on openPR.