The American Investor Taking On Swatch's Founding Family

Wood published research that shows that family-owned businesses outperform the market over time

- Margot Patrick

When American fund manager Steven Wood set his sights on the storied Swiss watchmaker Swatch Group, he tried a suitably stylish opening gambit. He sent Chief Executive Nick Hayek cigars; a favorite book, "The Luxury Strategy" by Jean-Noël Kapferer and Vincent Bastien; and a handwritten note laying out opportunities he saw for Swatch's luxury brands to recapture market share.

Over coffee, Wood says they discussed marketing strategies, particularly for the high-end brands, and how the company, known for its minimal contact with investors, should share more information.

Wood swapped out a Patek Philippe as his everyday watch in favor of a secondhand Breguet Classique. Within days of the October meeting, he invested more than one-quarter of his $150 million fund into the Swiss company, for around a 0.5% stake.

But the courtship abruptly ended in March, when Wood submitted himself as a board candidate to represent Swatch's minority shareholders.

Sales at Swatch had grown for years thanks to the popularity of its chic brands like Breguet, Blancpain and Omega, but since founder Nicolas G. Hayek's death in 2010, its high-end offerings have lost market share. Last year sales plunged in China, one of its most important markets, and the company's stock is now one of the most-shorted in Europe.

Wood, who runs investment firm GreenWood Investors, reached out to Nick Hayek, the founder's son, in September. The next month, the New York-based investor secured a meeting with the CEO and the finance chief at Swatch's timber-framed headquarters in Biel, Switzerland, where they talked for more than two hours