Activist investment firm Gatemore Capital Management has used the 2024 Sohn London Investment Conference to publicly call on YouGov, a market research and data analytics company, to initiate a sale process to unlock shareholder value.
According to a press statement, the firm believes that despite YouGov’s many strengths, mismanagement and a lack of strategic clarity have left its share price significantly undervalued.
YouGov, headquartered in London, is a pioneer in online market research with a proprietary data panel of 29 million individuals spanning 55 countries.
Gatemore highlighted several key attributes supporting the company’s potential for long-term growth, including its unique data panel, which it regards as a difficult-to-replicate asset that creates high barriers to entry.
In addition, Gatemore highlighted YouGov’s global reach with diversification across sectors and geographies, and exposure to high-growth markets, as well as its revenue model which sees over 50% of sales coming from a “survey once, sell many times” model, enhancing operating leverage.
Gatemore also believes fragmentation in the $142bn insights industry presents consolidation possibilities.
YouGov has a 15-year track record of revenue growth, margin expansion, and robust free cash flow of – 70% operating FCF over the past five years. Despite these strengths, the company’s shares are down 70% from their 2022 peak and trade at valuations far below industry averages.
Gatemore attributes the decline to several missteps by YouGov’s management, including insufficient and delayed updates on financial performance, which have eroded investor confidence; a lack of clear plans to achieve mid-term targets, leaving a gap between management’s projections and market expectations; and minimal share ownership among non-executive directors (less than 0.05%) which raises questions about alignment with shareholders.
In addition, Gatemore cited YouGov’s listing on AIM as a structural disadvantage, noting the index’s underperformance relative to the FTSE 250 and Russell 2000, alongside significant capital outflows.
Gatemore is urging YouGov to conduct a strategic review, with a potential sale of the business as the most direct path to unlocking its intrinsic value. The firm believes new ownership could better capitalise on YouGov’s strengths while addressing governance and market-related challenges.
