YouGov's poor share price performance has been attributed to management 'missteps'.
Activist investor Gatemore Capital Management has called for the urgent replacement of YouGov CEO Steve Hatch in an open letter to the research firm on the back of "lacklustre" share price performance.
As manager of the Gatemore Special Opportunities fund, which holds 1.5 million shares in YouGov, Gatemore first outlined its concerns regarding the research firm privately last September and subsequently called for a strategic review in November at a public event.
Having received support from shareholders, the activist investor is now pressing for the appointment of founder and former CEO of YouGov Stephan Shakespeare as interim CEO to conduct the strategic review.
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According to Gatemore, since Hatch's appointment as CEO in August 2023, YouGov shares have underperformed the FTSE 250 and AIM All-Share indices by 67 and 56 percentage points, respectively.
In the letter to YouGov's board, Gatemore's managing partner Liad Meidar said several management "missteps", such as budgeting failures and a lack of strategic clarity, had caused a critical gap between YouGov's intrinsic value and the share price performance.
According to data from the London Stock Exchange, YouGov's share price stood at 976p on 1 August 2023, while the firm's share price was 376.5p at the time of reporting.
"In short, the current CEO's first 18 months at the helm have been a disaster, and we believe the market has lost faith in his leadership.
"We must not allow YouGov's extended period of operational underperformance and share price stagnation to persist, as it would further erode what is left of stakeholder trust and impede a successful strategic review. Urgent, decisive action is required to address these issues," the letter stated.
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Touting Shakespeare for the role, Meidar compared the founder's experience and "substantial personal shareholding in the company" with the "minimal" holdings of the current non-executive directors, who collectively own 0.05% of YouGov, which he said "raises concerns about their motivation to take the decisive strategic actions necessary to reverse the company's fortunes".
The letter concluded: "We believe that YouGov presents a compelling opportunity for a financial sponsor or a strategic buyer. With the right management team and strategy, an acquirer could pay a takeover price in excess of 700p per share, or more than 80% above current share price, while still achieving an over 3x multiple-of-money return over five years."
YouGov was contacted for comment.
