I’m not going to spend a ton of time on this because frankly, the Deutsche Bank jokes are about as worn out as the David Einhorn jokes at this point, but it certainly bears a quick mention.
New York-based Hudson Executive Capital has decided to take a flyer on the embattled bank’s shares, in the form of a 3.1% stake. The news was first reported by the Wall Street Journal. The activist fund, run by JPM veteran Douglas Braunstein, is effectively betting on Christian Sewing’s turnaround plan.
To say those type of bets have not panned out over the past several years would be to grossly understate the case, so we wish Braunstein the best of luck in this endeavor. Apparently, he thinks the bank is “misunderstood and undervalued”.
To be sure, it probably is “undervalued” and you don’t need to run an activist hedge fund to know why – all you need to do is look at a chart.
As to the “misunderstood” part, that’s the crux of the issue, now isn’t it? Because the market seems to think the only way to “understand” the bank is in the context of Lehman, a characterization that is probably absurd, if for no other reason than the prospect of Deutsche going under is so unthinkable from a systemic risk perspective that it would never be allowed to happen.
As Bloomberg notes, this means Sewing “will need to work with another top investor [as] Hudson joins Cerberus, HNA and the Qataris with the largest stakes in the company.”
For his part, Sewing “appreciates” the support. Here’s what he said in a brief statement on Thursday:
Doug Braunstein and Hudson Executive come with deep backgrounds investing in financial services companies. We appreciate Hudson Executive’s confidence in our ability to execute on our strategic objectives.
In other words: “Cool! I’ll take whatever I can get.”
The shares are up sharply on the news after hitting an all-time low late last month.