Hedge funds invest in WPP as Cindy Rose era starts, research shows

By Paul Sandle

LONDON (Reuters) -Cindy Rose took the helm at WPP on Monday tasked with turning around the British advertising group's financial performance, as analysis by Panmure Liberum showed hedge funds had significantly increased their holdings in the company.

The former Microsoft executive, who has been on WPP's board for six years, starts as chief executive less than a month after the company halved its dividend, a move that it said "created room" for her to review its strategy and capital allocation.

Shares in WPP, which owns WPP Media, Ogilvy and AKQA, have more than halved in price this year, cutting its market cap to 4.2 billion pounds ($5.7 billion). As recently as 2017, it was worth 24 billion pounds.

The shares were trading at 394 pence, up 0.7%, on Monday.

Panmure Liberum's analysis showed WPP was the most popular European purchase for hedge funds in the second quarter after Dutch insurer Aegon.

Their holdings of WPP increased 44%, surprising Panmure and suggesting they see opportunities to increase returns, for example from disposals and restructuring.

Rose is under no illusions about the task, even as she highlights its people, creativity and technology.

"I won't sugarcoat this, we have a lot of hard work ahead and of course it won't be easy," she told WPP's 100,000 staff last week.

PUBLICIS OVERTAKES WPP AS BIGGEST ADVERTISING GROUP

WPP lost its crown as the largest advertising group to Publicis last year.

The French group won net new billings of $5.2 billion in the first half while WPP lost $3.2 billion, according to JP Morgan figures cited by Publicis.

Publicis has benefited from early investments in technology and data, including the acquisitions of Sapient in 2015 and Epsilon in 2019, and its AI-powered platform Marcel.

WPP, however, has also invested in technology and has rolled out its own AI platform - WPP Open.

It has created Open Intelligence, a "large marketing model" that taps into 350 sources including proprietary, third-party and public data, knowledge from its media partnerships and clients' data accessed securely.

Chief Technology Officer Stephan Pretorius said it allowed WPP to leverage the most valuable data in campaigns without needing to have direct access to it.

"Clients are evaluating our technology and our AI as much as they are evaluating our people," he said.

It is starting to prove its worth. WPP won Mastercard's media account last month, worth $180 million in annual spend, according to COMvergence.

Mastercard said WPP's global reach, advanced AI and its data capabilities would drive a greater impact across its marketing. ($1 = 0.7402 pounds)

($1 = 0.8542 euros)

(Reporting by Paul Sandle)