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Hedge fund investor Elliott calls on NN Group to reset trajectory

12th June 2020 - Author: Matt Sheehan

Elliott Advisors (UK) Limited has released a statement criticising the market valuation and management of NN Group N.V., which Elliott holds a 3% stake in.

nn-group-logoThe firm said that NN Group’s underlying value has “been obscured” and is not properly reflected in its current share price, adding that “NN Group itself is the greatest impediment to unlocking the valuation discount.”

“We have engaged privately with NN Group’s management over several months and we remain of the view that NN Group is worth far more than the market currently ascribes,” Elliott said.

“The attractiveness of NN Group is rooted not only in the strength of its fundamental underlying business – exhibiting historically stable shareholder cash flows – but in its ability to successfully manage risk and deliver stable and sustainable results, irrespective of market volatility, including large changes in market interest rates and evolving regulatory environments.”

Elliott went on to argue that NN Group has traded well below its intrinsic value for years, possibly due to a lack of transparency and insufficient disclosure around fundamentals such as interest rate exposure.

The activist investor further believes NN Group’s upcoming Capital Markets Day (CMD) on 24 June provides an opportune moment for management to address the charges of persistent undervaluation and growing investor discontent.

“The CMD offers NN Group the opportunity to highlight its underappreciated strengths, showcase its robust financial profile, set itself ambitious but achievable cash generation, capital release and capital return targets that collectively demonstrate confidence and conviction in the business, and most importantly, show a willingness to be held accountable for the Company’s future development,” Elliott continued.

If NN Group were to adopt these recommendations, the firm added, it would offer a pathway forward to a materially higher share price, with upside potential of over 80% in the next few years.

Furthermore, Elliott argued these measures could more than double total recurring capital return per share to over €6.5 by 2024.

“Such a result would not only boost NN Group’s market value, but also boost the reputation of NN Group’s management and entire team for showing strong leadership at a time of wider market uncertainty,” it concluded.

“NN Group would finally – and rightly – be recognised and rewarded as one of the most attractive and differentiated insurance investments in Europe.”

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