Fisher Funds' investment in US cosmetics pays off
The global investment market might be going sideways, but Shisedo‘s bid for American cosmetic company Bare Escentuals showed there were still gains to be made at the company level, according to Fisher Funds managing director Carmel Fisher.
Late last week, Japanese cosmetic giant Shiseido launched its acquisition offer for Bare Escentuals which represented a 40% premium to the share price.
The takeover bid should pay off for the three New Zealand funds managed by Fisher Funds which all hold shares in the company.
The net asset value of listed company Marlin Global should rise by $1.7 million under the offer, with further gains for the Fisher Funds International Growth Fund and the Fisher Funds KiwiSaver Growth Scheme.
About 4% of the Marlin Fund was invested in Bare Escentuals and fund manager Ken Applegate said the fund would accept the takeover offer as the takeover price of US$18.20 per share was “an opportunity that was too good to ignore for our investors”.
“I have known Bare Escentuals for a number of years, and introduced it to our funds in August last year because the company had been overlooked by the market and its share price had drifted to absurdly low levels. This takeover offer represents close to a 100% gain over our average purchase price.”
Fisher Funds managing director Carmel Fisher told Bare Escentuals had been undervalued at the time of purchase and the successful investment was a result of buying leaders in niche segments rather than relying on broad share markets to perform.
“This was particularly good news at this time of year when there is not a lot going on. It shows that while the overall market may be moving sideways, there is still a lot happening and plenty of good opportunities at the individual company level.”
Shisedo’s US$1.7 billion acquisition is being made through an all-cash, agreed tender offer and is designed to help expand Shiseido's portfolio into minerals-based cosmetics and strengthen its customer base in the US.