How Long Did You Be at Eliot?

One of our goals with this podcast is to get to know new markets, new situations, and new investors who bring dynamism to all markets. A great example of this is the new generation of activist investors in Europe.

Students of mine have heard me say for some time that Europe has been ripe for activism. I believe that with structural changes in European capital markets, combined with the state of global markets, a new wave of activism is happening and will be quite transformative.

My guests today, Florian Schuhbauer and Klaus Roehrig of Active Ownership Corporation (AOC), are one of the most exciting names in the current European activist scene. They have been making headlines with groundbreaking campaigns and change they are bringing to European Capital Markets. AOC has built a remarkable record over the last five years, beating the Europe ex UK Small Cap benchmark by a factor of almost three since inception.

AOC is an independent, partner-managed investment company acquiring significant minority stakes in publicly listed, undervalued small- and mid-size companies in German-speaking countries and Scandinavia. AOC follows an active ownership approach and fosters value creation through operational, strategic, and structural improvements.

Florian Schuhbauer is a founding partner of AOC and has more than 20 years of relevant experience. Prior to establishing AOC, Florian was a Partner at Triton Partners where he built up the Public Equity practice. Klaus Roehrig is also a founding partner of AOC and has more than 20 years of relevant investing experience. Before founding AOC, he was at Elliott Associates, responsible for the funds’ investments in the German-speaking countries.

On this episode, Florian, Klaus, and I discuss their early careers and the unusual paths they took before founding AOC, the mentorship they received along the way, the key pillars of their investment strategy, AOC’s holistic, team approach to their companies, how they manage liquidity differently from other firms, and so much more!

Key Topics:

• Florian’s early career in banking (3:46)
• Learning experiences from Florian’s SaaS startup (4:24)
• How Florian found himself in a 9 to 5 position he didn’t want (5:45)
• Why Florian made the move to private equity (7:17)
• Applying a private equity value creation model to public equity (8:32)
• Klaus’ early interest in business and business builders (10:14)
• The accidental advertising agency (11:03)
• How Klaus became interested in investment banking (12:44)
• Why Klaus developed a focus on risk early in his career (14:25)
• Klaus’ move to the hedge fund industry (16:08)
• Mentorship from great investors at Elliott Management Corporation (18:26)
• Florian and Klaus’ decision to start AOC (20:42)
• The two pillars of AOC’s investment strategy (22:10)
• Using an activist approach as a tactic rather than their strategy (23:44)
• The huge agency issue caused by a lack of active owners (25:33)
• How an underdeveloped shareholder culture created opportunities for AOC (27:18)
• Working with management teams for investment ideas (30:23)
• Idea sourcing from AOC’s library of investment cases (32:01)
• The types of companies AOC considers for investing (33:12)
• Building a broad knowledge base as a generalist (34:54)
• Why AOC values a team approach with their companies (37:34)
• Union and employee representation on the board (39:34)
• AOC’s holistic approach to their investments (42:27)
• How AOC became interested in STADA (43:37)
• Why board seats were crucial for AOC’s strategy for STADA (48:13)
• The proxy fight that erupted from a broken contract with STADA (50:04)
• Internal issues between STRADA’s board members (51:24)
• Bringing the supervisory board and shareholders into alignment (53:31)
• Starting from scratch with STADA’s board (55:41)
• Breaking new ground as dissident shareholders in Germany (57:17)
• Taking STADA private within 18 months (1:00:39)
• AOC’s unique approach to liquidity (1:03:45)
• Managing liquidity on the asset side (1:07:50)
• Time arbitrage opportunities with locked-up capital (1:08:30)
• Florian’s perspective on the next five years for AOC (1:11:23)
• Klaus’ view on the next five years for AOC (1:14:58)
• Opportunities for activism in Europe (1:16:29)
• And much more!

Mentioned in this Episode:

• Active Ownership Corporation
• Value Investing with Legends | Jan Hummel – The Rare Advantage of Real-World Experience

Thanks for Listening!

Be sure to subscribe on Apple, Google, Spotify, or wherever you get your podcasts. And feel free to drop us a line at valueinvesting@gsb.columbia.edu.

Follow the Heilbrunn Center on social media on Instagram, LinkedIn, and more!