Europe's New Raiders

The tension between a manager's long-range plans and a stock trader's natural desire for instant gratification is very much on the mind of CEO Marcus Wallenberg these days. His Stockholm investment company, Investor, seems a prime example of Old World capitalism. Though it is publicly traded, shares are split into voting and nonvoting classes. Wallenberg's family interests (primarily two non-profit foundations) control about 45% of the company's votes, while owning just over 20% of the firm's capital. Essentially a listed stock portfolio, like Warren Buffett's Berkshire Hathaway, the firm allows the Wallenbergs — a dynasty that shaped Sweden's economy over the 20th century — to maintain their influence at some of the country's best-known companies, such as Ericsson and AstraZeneca.

For Wallenberg, the point of Investor is to help nurture the companies in its portfolio by fostering contacts between them and bringing management expertise to their boards. "You can't be involved in a company like AstraZeneca or Ericsson unless you have a long-term view of the business," he says. This approach mostly works: though Investor shares have dropped sharply recently, its average total return over the past five years is a healthy 15%. But for some outside shareholders, Investor has another, simpler attraction: it usually trades at a steep discount — these days about 22% — to the net asset value of the shares it owns.

Swiss money manager Martin Ebner, perhaps the most successful activist investor in Europe, wants to close that gap. His BZ Group, based in the tiny town of Wilen, manages four mutual-fund-like investment companies. Ebner goes for the strategic strike — his Spezialitäten Vision portfolio, for example, holds just five stocks — and the size of his individual stakes gives him substantial sway over the companies in which he's invested. Ebner sticks around longer than Bolloré, but the goal is the same: to get the share price up. In the late 1990s, for example, Ebner dogged Union Bank of Switzerland, of which he was the largest shareholder, into a merger with Swiss Bank Corp. that cost 13,000 employees their jobs. This year, he amassed 11% of the voting shares of Investor.

Ebner wants Investor to pump up its stock by either buying back some of its shares or splitting the firm into two parts, with one devoted to core holdings like Ericsson and the other to Investor's group of technology and health-care start-ups. These slimmed down portfolios would be easier for investors to understand, so they might be more willing to pay something close to net asset value for the shares.

"I do not intend to debate my shareholders in the media," says Wallenberg. "I think they have a complete right to their opinion." But Wallenberg is not planning any changes. Breaking the group up would mean severing Investor's business network. And a buyback would permanently shrink Investor: because it has no real business operations of its own, it would be difficult for the firm to go back to the stock market to raise cash later. "When we buy back shares, it's a form of liquidation," says Wallenberg.

Chances are, Ebner won't win this skirmish outright — it's tough to beat the Wallenbergs' 45% vote — though he could help push up the share price just by drawing the market's attention to the fact that Investor may be too cheap. And that may be the point. It takes a long-term investor to build a company, but sometimes you need a speculator to tell you what it's worth.