Hedge funds are making a significant bet on the future of WPP, the British advertising giant, just as new CEO Cindy Rose takes over. A recent analysis by Panmure Liberum reveals a sharp increase in hedge fund investment in the company, signaling confidence that Rose can turn its fortunes around.
A Fresh Start Amidst Challenges
Cindy Rose, a veteran of Microsoft and a six-year member of WPP’s board, steps into the top job at a crucial time. Her arrival comes less than a month after the company halved its dividend, a move designed to give her the flexibility to overhaul its strategy and capital. WPP’s stock has plummeted by more than half this year, slashing its market value to a mere £4.2 billion ($5.7 billion) from a high of £24 billion in 2017. Despite this, the stock saw a slight uptick on Monday, trading at 394 pence.
According to Panmunjom Liberalism’s research, WPP was the second most popular European stock among hedge funds in the second quarter, trailing only Dutch insurer Argon. Their holdings in WPP surged by an impressive 44%, a move that surprised analysts and suggests they believe significant gains can be made from potential restructurings and asset sales.
A Fierce Rivalry and the Rise of AI
Rose is well aware of the monumental task ahead. In a recent message to WPP’s 100,000 employees, she stated, “I won’t sugarcoat this, we have a lot of hard work ahead and of course it won’t be easy.” Her focus will be on leveraging the company’s core strengths: its people, creativity, and technology.
WPP’s challenges are amplified by its loss of the top spot in the advertising world to French rival Publicis last year. Publicis has surged ahead, winning a net of $5.2 billion in new business during the first half of the year, while WPP saw a loss of $3.2 billion. This success is largely attributed to Publicis’s early investments in technology and data, including key acquisitions and its AI-powered platform, Marcel.
However, WPP isn’t standing still. The company has rolled out its own AI platform, WPP Open. Its core feature, Open Intelligence, is a “large marketing model” that pulls data from over 350 sources. This includes WPP’s own proprietary data, third-party information, media partnerships, and securely accessed client data. Chief Technology Officer Stephan Pretorius noted that this technology allows WPP to use the most valuable data without needing direct access to it. “Clients are evaluating our technology and our AI as much as they are evaluating our people,” he said.
The investment is already paying off. WPP recently secured Mastercard’s media account, a deal worth $180 million annually. Mastercard praised WPP’s global reach, advanced AI, and data capabilities as key factors in their decision, signaling a new era for the advertising giant.
