French conglomerate has a knack for acquiring, building and selling

Through the East 72 Dynasty Trust, Andrew implements his counter-cyclical investment strategy that focuses on investing in family controlled companies. These conglomerates, that are located all over the world, have what he considers to be a high degree of fiscal responsibility and are strategically driven when engaging in acquisitions and disposals of businesses.

One of his favourite companies is Vivendi (EPA: VIV), a media company that is home to some of the most prestigious brands in television and cinema, communication, publishing, magazines, video games, live entertainment and distribution platforms. 

Vivendi recorded €4.7 billion in revenue for the first half of 2023, with €444 million of Group EBITDA and €324 of adjusted net income at the bottom end.

Their largest shareholder at 28% is one of Andrew’s other favourite stocks, Bolloré. Vivendi is most famous for their holding in Universal Music Group, which owns some of the most iconic and influential names and brands in music, including Def Jam Recordings, Capitol Music Group, Virgin Music Group, and prominent Universal subsidiaries such as Nashville.

Andrew’s strategy has led him to companies that understand the industries they operate in very well, know when to sell, are frugal on costs but pay their executives handsomely and have a low white collar turnover. They tend to be very stable and consistent, and outperform over the long term. 

Since June 2014, including dividend reinvestments, Vivendi has racked up around 122.6% of gains, compared to the CAC 40’s 116.4% (the top 40 stocks on the French stock exchange.

However, in the difficult market we are currently in and some might  say continue to stay in for quite some time, there are many opportunities that Andrew has become interested in. He is hunting for deep value on an intrinsic and relative valuation basis, and given his view that Vivendi is in a strong position, he sees a value disconnect and does not believe they should be trading near their 1 year low.

Vivendi made headlines around the world in 2021 for disposing of a few sizeable chunks of their Universal holdings, which includes star’s such as Lady Gaga and Taylor Swift, and spun the rest out to their shareholders, at an opportunistic time in the global economy.

Bill Ackman’s Pershing Square Holdings was one of the buyers, taking a 10% holding in the group for around US$4 billion. Vivendi also sold two tranches of 10% each to Chinese giant Tencent, which now owns 20% of Universal.

Vivendi has also acquired an almost 58% interest in Lagardere, which Andrew states “has three sets of businesses, some minor media and publishing businesses. But it’s two main businesses are one of Europe’s largest book publishers, who own major names like Hachette” .

The second business is one that Andrew describes more or less as a monopoly, because of their dominance in airport consumer operations that often leave people paying exorbitant prices such as $9 for a mars bar.

Vivendi has some exciting upcoming prospects once they consolidate Lagardere’s publishing business, and consistently strong earnings compounded with a clear history of creating shareholder values – Andrew believes Vivendi is an interesting operation.

Click here to view more videos from Andrew Brown‘s The Insider: Meet the Fund Manager session.

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