Entrepreneurs who can spell double trouble

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The Independent Online
Julian Treger and Brian Myerson, the two shareholders agitating for change at Signet, the jewellery group, have made a nuisance of themselves with several management teams in the UK in the past few years as perpetrators of a shareholder activism more common in the United States.

The two investors, both in their thirties, run the UK Active Value Fund, which specialises in making returns from special situations.

Their investors are high net-worth individuals or institutions such as Schroders Investment Management and Jupiter Tyndall, who have so far put in around pounds 200m.

Their targets are often companies with large debts and due for a financial restructuring. But this is not always the case. Mr Treger says the only criterion he looks at is whether he thinks the market has undervalued a company's worth.

The duo scored an early victory in 1992 in the UK when they helped to achieve 40 per cent better terms for preference shareholders, including themselves, in the restructuring of TVS, the television company that ran into problems after its former head, James Gatward, made a disastrous purchase in the US.

Brian Myerson, acting through a separate entity, the Concerto Capital Corporation, forced through fundamental changes the following year at the Liberty stores group when a lengthy campaign resulted in the board eventually enfranchising investors who owned a quarter of the company's votes through previously non-voting shares.

Around the same time the two men had a tactical success at Greycoat, when they used a large holding in the preference shares to defeat an offer for the company by Postel, the pension fund. But, given the stagnation in the property market, it is not clear they have so far made a large financial return from the situation.

Mr Treger says his biggest success has been with a large stake the fund took in the bank debt of WPP, the advertising company that has experienced a revival in fortunes after a lengthy troubled period.

Their holding in Signet - they own 23 per cent of the company's preference shares and recently bought 14 per cent of the ordinary - has yet to result in the sort of corporate changes, such as a break-up of the group, that they would welcome. But yesterday saw some movement in that direction as the board said it would sound out shareholders, including the UK Active Value Fund, about a pos- sible restructuring.

They have been talking for 16 months about the need for the company to be restructured and have so far had little success in achieving that aim.

A source close to Signet said: "I think they have ended up holding Signet shares far longer than they expected."

One man who does not mind expressing his view about the duo's strategy has been Gordon Stevens, chairman of Scholl, the footwear company, the latest group to attract their attention.

Messrs Treger and Myerson, who bought a 5 per cent stake in June, believe Scholl would be better off as a subsidiary of a large international group.

Mr Stevens clearly does not agree. He is reported as describing their analysis as "intemperate, inaccurate and unbelievably simplistic".

One source close to Scholl said the company viewed the duo's stance as that of short-term investors whose only interest was to make a quick turn, a sentiment that would add to the ammunition of critics who describe the two as nothing other than US-style short-termist arbitrageurs.

The UK Active Value Fund is a private vehicle so there is no public information on its financial performance.

Mr Treger, who shuns publicity about himself or his investment vehicle, is not moved to help.

"We cannot go into that," he says with noticeable irritation in his voice.