#62 - The Gentleman Activist: Alex Roepers explains how he extracts better stock performance from overlooked mid-caps

**Stephen Clapham** (0:01)
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This month, I talked to Alex Roepers, who was once dubbed the gentleman activist for his behind the scenes approach to shaking up investee companies. Once a long short manager, now long only he manages three regional funds and one global fund on the same investing philosophy. Find deeply undervalued traditional businesses, which could be an acquisition target for private equity. Suggest capital allocation improvements to management and hold until they are revalued. Roepers' main US fund has delivered 12.3% per annum compound since inception in 1992 That's turned $100 into $4,800 after fees, or $11,000 before fees if my sums are correct.
We talk about his unconventional journey from Dutch engineering intern to activist fund manager in New York. Alex walks through his formative experiences in industrial manufacturing, then conglomerates and M&A, which generated his investment modus operandi.
He explains his philosophy of constructive activism, how to engage with boards and management without being a corporate raider caricature. He explains how he evaluates management quality, capital allocation, and operational improvement opportunities. Alex has decades of business experience, and there was a lot of detail in this discussion, and I'm sure you'll enjoy it.
So Alex, hi. Thank you so much. I'm looking forward to talking to you. We met a couple of years ago from the Value Investing Conference. I always start by asking guests, did you always want to be an investor? I know you didn't because you started in the corporate world. So what first attracted you to equity investing and starting up Atlantic?

**Alex Roepers** (4:20)
Great. Well, thanks first of all for having me. Pleasure to be here.
Started off working in a corporation. It was my internship in 1979 And that led to a two-year stint with that company. It was in upstate New York. It's an electronic manufacturing company.
Was really in the trenches, in the factory dealing with spare parts, dealing with manufacturing and engineers. And helping sell machinery at that time in the early 80s, a company called Universal Instruments. That experience was very different than many of my students that I met later on at Harvard Business School who were in investment banking.

**Stephen Clapham** (5:04)
But you're Dutch though.

**Alex Roepers** (5:05)
Yeah, I grew up in the Netherlands, did my undergraduate degree at the Netherlands School of Business called Nijnrode University. And so the internship in the States in 1979 between junior and senior was kind of pivotal.

**Stephen Clapham** (5:16)
Oh, I see.

**Alex Roepers** (5:17)
And that then led me to apply to MBAs. I was lucky enough to get into Harvard with a deferred admission. And from there, you know, two years of work back to the same company because they were growing very fast. They were helping automate IBM, Texas Instruments, Motorola, Phillips, all these companies that were automating the printed circuit board assembly process.