Sharing their vision of ABC arbitrage
In this section, we invite you to discover the fourteen testimonials, representing a diverse chorus of voices expressing their personal experience with the ABC arbitrage group and a sampling of the values that have been essential in building the company since 1995.
The people interviewed cover a wide range of activities: analysts, journalists, partners, shareholders, administrators, employees, etc.
Discover their very personal impressions to get a better understanding of the reality of our business as it affects people in their everyday lives.
Maria Emilia Marques Dias
Caretaker, 40 rue Notre Dame des Victoires I Function : (Life) quality control
For almost 15 years, you’ve lived on a daily basis with the people of ABC arbitrage. What kind of relationship did you have with them?
We never fell out, which isn’t the case with everyone (laughs). Honestly, they were always kind, energetic, human and respectful. I felt I was part of their team. My husband even worked for them for a few months. For them, I was always Madame Marques and not the concierge. We respected each other’s jobs and we lived harmoniously because, on a day to day basis, we always tried to find a solution.
ABC arbitrage moved in January 2010. It was the end of an era, in a way?
I’ve been the caretaker of the building since 1997 and I’m retiring next year. Our lives have been closely liked, personally and professionally. We won’t see each other every day anymore, but believe me, I’ll think about them every day. And they know they can always count on me.
You co-founded ABC arbitrage with Grégoire Bouguereau in March 1995. Tell us a bit about how the company got started.
I met Grégoire in October 1987, just after the stock market crash. We were beginners in the financial markets. During that very agitated period, we were both amused by the fact that everyone had their own explanation of the crash and their own forecasts. Grégoire and I agreed quickly that there was no point in trying to make forecasts, but above all that we could set up a profitable business without having to predict the future.
So, why have you taken a step back for the last six years?
Grégoire and I don’t like to manage. It isn’t our thing. So, it was great for ABC arbitrage when Dominique Ceolin took over running the company. Today, the group has a management system and a compensation policy enabling everyone to be an entrepreneur within the company. At ABC arbitrage, individual initiatives create value when they contribute to a collective project. I still spend a lot of time at ABC arbitrage and I’m happy that my skills are still relevant enough to be able to contribute and it’s always a pleasure to work with people who have fresh ideas and the energy needed to implement them.
What’s your view of ABC arbitrage today and in the future?
At the start, it was a do-it-yourself type of business, but the principles have stayed the same. Simply, ABC arbitrage has developed rigorous processes and has huge databases, powerful computers and industrial methods. Above all, we now recruit very selectively and the management project encourages long-term commitment to a group project. Personally, I think it’s a key success factor. I can see that the curiosity and enthusiasm Grégoire and I had at the start has been passed on to the current generation.
Let’s just say I participated in getting the company off the ground and that it’s just begun to reach cruising speed. The whole team is currently totally geared to reaching our next goal, Horizon 2015.
Didier Ribadeau Dumas, you’ve been on the ABC arbitrage board since 2000. How did you first come in touch with the company?
DRD : The first time Dominique Ceolin mentioned arbitrage, I didn’t understand a thing. For me, it was a thing of the past and I didn’t see its relevance in the 20th century. I changed my mind when Jacques Chevalier, a financial specialist who already sat on the ABC arbitrage board, explained that arbitrage was a scientific method to make irrational humans more rational and that ABC arbitrage had modernized the business. I joined the board with the idea that arbitrage could help markets to become more rational. I play the role of the observer/hassler, which means I make sure that there’s no bending of words and no operational abuse.
What about you, Jean-François Drouets?
JFD : I’m on the board partly because Didier Ribadeau Dumas had too many responsibilities and preferred to be a non-voting director, rather than an administrator. I come from the world of real estate and I’m useful because I’ve run businesses and I provide some down-to-earth common sense. ABC arbitrage is different from most boards because it’s not made up of a bunch of clones who rubber stamp executive management decisions. There’s a real intention to balance the interests of managers, shareholders and employees. I’m a firm believer in empathy, the ability to see things through other people’s eyes.
DRD : I don’t know if it’s empathy or insomnia! In fact, the entire board is obsessed with risk management and investigating measures to avoid abuse. If you do the work conscientiously, you do spend a few sleepless nights thinking about these things. That’s why I recommended Jean-François for the board. He’s the one who doesn’t sleep and I’m his guilty conscience.
JFD : Rest assured, I don’t suffer that much. There’s a real feeling of confidence between board members, without being complacent. We all share a desire to learn, to think about fundamentals. I always attend meetings with pleasure and come out with a lot of food for thought. It’s never too late to learn!
How did you hear about ABC arbitrage and what were your first impressions?
It must be hard to work on an ABC arbitrage annual report since you have to start from scratch each time.
For over a decade, ABC arbitrage has indeed taken a gamble by producing unconventional annual reports, doing imitations of a sailing logbook or a daily newspaper, etc. No other financial company has taken the risk of breaking the codes the way they have.
So, what is the key of success?
You have to accept the idea of not conforming to any corporate communication standards and, in a way, to be ready to inflict a kind of soft creative violence on yourself. It’s neither natural nor obvious at the start. But, over time, I managed to solve the puzzle. The key to explain their business is to simplify the way you would to communicate to a mass audience. The content must be comprehensible for the layman and the design must provide insight into their rather obscure business.
So, after all this, you’ve understood what arbitrage is all about?
No (laughs). I have to admit that it’s not obvious, at least technically. But maintaining a bit of naivety isn’t a bad thing in my line of work. It keeps you humble. You have to be open to constructive criticism and dare attempt to produce “deconstructed” creativity. The company and the agency really work together on the project and we each contribute our own vision, our sensitivity and our skills. We work as equals and we don’t let our egos get in the way.
You’re the main designer of the new ABC arbitrage offices. What was the key to the project?
They have their own lifestyle, working closely together on a daily basis. They need an open and flexible platform to enable them to interact, but also they need private spaces to allow people to think quietly and a clear and relaxing ambiance so they can concentrate.
Given the nature of their work, they must be pretty prickly about details?
Indeed, we spent a crazy amount of time on each detail, closely analyzing the acoustics or mulling over accessories or minor details. I really got into their mindset, leaving nothing to chance and constantly challenging preconceived ideas. We also worked on a lot of prototypes, which is what they do all the time.
I get the impression you’re talking more about arbitrage than about design.
It’s quite true. But, you can’t avoid that with them. They’re always delving into the minutiae; they’re as obsessed as I am with the hidden effect of things we don’t see, but that influence our daily lives. You find the same thing among researchers, gold diggers or talent scouts. Strangely enough, I think that arbitrageurs are similar to artists because they love the peculiar things that fuel their creativity. I doubt, therefore I am…
How did you discover ABC arbitrage and what were your first impressions?
The first thing I should say is that I’m not a financial specialist. I’m what’s called a stock picker, which means I look at assets in very different areas. I often look at peculiar companies. However, in the case of ABC arbitrage, I admit I was way out of my depth at first sight.
It’s true when one reads your first study in 2007 called “Silence is Golden” and when you talk about ABC arbitrage as a “rearview forecasting model” or a world of “black boxes”, one feels you’re a bit bewildered.
Absolutely. I had to assess a business I didn’t understand, with a secretive culture that had an obscure strategy based on quantitative models that are incomprehensible for common mortals. I was dealing with a few brainy engineers, living in an unbelievably complex mathematical universe way beyond my grasp, condemned to be eternally innovative.
I get the impression you’re talking about science fiction. What did you do?
I understood things in two stages, in fact. Like a lot of people who deal with ABC arbitrage, I first overlooked the hidden and incomprehensible side of the business and focused on things I could see: their positive results from the start, of course, but also their management system. Practically speaking, I looked at their compensation system which tries to align the interests of employees and shareholders, who share profits. I was also convinced by their risk management methods and by the division of responsibilities between operational staff and auditors. Finally, I calculated the chances they had of achieving the goals of their ambitious Horizon 2010 program.
So when did it all make sense?
At some point, I had a flash. I said to myself that even if someone explained some of the mechanics of the business that it wouldn’t really make a difference since I still wouldn’t understand. And, in the final analysis, when I look at a biotech or IT company, I don’t understand their techniques either, but I base myself on results.
ABC arbitrage’s communication is very helpful. My real problem today is to maintain a critical standpoint and avoid writing advertorials. One of my colleagues, who does non-financial assessments looked at their HR policies, governance and ethics. He came to see me and said, “This thing’s not possible, it’s like Alice in Wonderland!” Well, actually, he did find something wrong: they didn't have a woman on their board. But Ms. Sabine Roux de Bézieux joined them. So, .....
How did you first meet ABC arbitrage?
I read their Annual Report in 2002 or 2003 and I was struck by how creative, daring and relevant it was. I’ve read it carefully every year since and I am more impressed each time by their team’s performance and their high dividend yield. What they’ve achieved is really remarkable.
Also, I guess your company has invested in the stock?
Actually, we haven’t, except for a short period when we had a few symbolic shares. Let me explain. Our teams have to comply with very rigorous investment criteria. We only invest in companies we understand and we justify our decisions on the basis of clear data and objective indicators. To better understand the businesses, we always meet the managers and often visit the companies. Whatever we might think personally, we can’t justify investing in ABC arbitrage because we don’t have access to enough hard facts. It’s very frustrating.
Despite this, you have close links to ABC arbitrage?
Absolutely. ABC arbitrage is a corporate model that we find very inspiring, in terms of values, management style, ethics, entrepreneurial energy and independence. When I met Dominique Ceolin, I was immediately attracted by his intelligence and his genuine simplicity. We stayed in touch for years, even if it’s difficult to work together. One day, he asked us if we wanted to support Jean-Pierre Dick, skipper of Paprec-Virbac who in turn introduced us Thomas Normand, a young sailor in his team, who sails on a Mini 6.50m boat. It was love at first sight and finally an opportunity to work on a project with ABC arbitrage!
You’ve become his main sponsor, I think. How did that happen?
When we decided to back Thomas, we naturally asked Dominique Ceolin to be the godfather of the boat. He came to talk to our teams about sailing and values that really touched us because they were the same as those Financière de l’Echiquier: work, creativity and simplicity. Since then, the friendship and synergy between our companies has gone beyond money matters. It’s an “alternative” type of investment we have with ABC arbitrage, perhaps more valuable than any other.
What’s the role of a journalist working for a personal investment publication?
We are, in a way, hidden value hunters. Our role is to discover interesting assets, to summarize their features, analyze them and inform our readers to help them make the right decisions. We therefore have to make the information accessible to people who are interested in business and finances, but who aren’t necessarily experts.
So, it must be difficult to deal with a company like ABC arbitrage?
Indeed, it’s not obvious. They’re in an unknown business, they don’t produce anything tangible, they can’t reveal their strategies publicly and they make money with money. The black box syndrome is always looming.
It’s a challenge to assess ABC arbitrage because predicting where the markets will go is in fact impossible. You therefore have to look at their results, their capacity to adapt, at the moral contract they have with their shareholders and employees and at the constant high dividend yield. Above all, they do what the say, even if they can’t always say what they do.
You manage Jean-Pierre Dick’s sailing team and ABC arbitrage is one of their sponsors. How did the two of you meet?
I read a profile of Dominique Ceolin in the French daily “Le Monde”. The journalist talked about a man who sometimes dreamt of escaping to the sea and who had sailing pictures in his office. I called him and, the first time we met, with Jean-Pierre Dick and David Hoey of ABC arbitrage (who also loves sailing), we really clicked, very naturally and effortlessly, based on simple understanding and mutual appreciation.
But the worlds of sailing and arbitrage aren’t really similar.
No, not at first sight. However, we both have to deal with changing environments, which sometimes become hostile. You have to know how to adjust your sails in stormy weather and stay on course. Jean-Pierre Dick runs a company and we’re very close culturally. ABC arbitrage resembles our team, with passionate people focused on innovation, constantly seeking to improve performance levels and managing people so that they go beyond themselves. Like us, they are very demanding, but humble when they deal with reality. But the main thing is that they are professionals who believe, as we do, that pleasure is an essential ingredient for success.
You’re both recent recruits in the company. Was ABC arbitrage your first choice?
Julien Lavigne du Cadet : Not at all. I came home from London where I’d worked for a small financial company, similar to ABC arbitrage and I was looking to enhance my CV. I had a first offer to work for ABC arbitrage, but I chose to work for a big bank. After a few ups and downs, I called ABC arbitrage to see if I could apply again.
So why didn’t you choose ABC arbitrage the first time?
JLdC : Sometimes, you have to experience different things before you understand what’s not right for you. Maybe, I wasn’t ready. It’s not obvious to make the jump when you’re dealing with a company that has an atypical pay system. I was wary or at least skeptical.
And you, Aurélie?
Aurélie Bernhardt : I wanted to work as an auditor for a small-sized Paris-based company. ABC arbitrage was the only offer I got that met my criteria. But, I still hesitated. It was a bit of a conundrum for me.
AB : Also, because of their variable salary system. I didn’t have any idea of their business and I was wary about taking the risk, especially with a financial company.
What made you change your mind?
AB : Several things. First, I’d say their direct and straight-talking approach. They were the only company I met that didn’t ask trick questions during the interviews. Then I talked to a lot of people in the company and they really seemed to be having a good time on the job. But, I still wasn’t sure.
What tipped the scales?
AB : In fact, I had worked in China during my studies and I had learnt that sometimes you have to move outside your carefully-built little boxes and delve into something unknown to discover yourself.
And you, Julien?
JLdC : I was quite surprised that ABC arbitrage was still OK to hire me, even if I’d refused their offer the first time. The position had changed since the first time and I also had a flash. I suddenly understood that I would never get bored and, believe me, I’m not disappointed.
What does MiddleNext do and what is ABC arbitrage’s role in your organization?
MiddleNext unites listed SMEs who want to influence public policies and regulations. ABC arbitrage is an administrator and one of our most committed members. Key people work with us to move things forward, on internal audits or on the way to present regulated financial information online.
They’re constantly coming up with new ideas, transgressing conventional wisdom, but they’re always relevant. They’re really freethinkers and very non-conformist in their way of acting and thinking. They’re straightforward and laid back. Their people mix has gelled really well.
What kind of militants are they?
They’re direct and pragmatic. A few years ago, we identified thirty French laws and three European directives which were really a drag for our members. They got straight on the case and were convinced they could change these clumsy rules. Today, after a lot of hard work, we’ve modified a great majority of them. With them, you don’t beat around the bush. You just do it.
You run a company and you’re V.P. of Croissance Plus which ABC arbitrage belongs to. What’s Croissance Plus?
Croissance Plus is an association of entrepreneurs who defend an enterprise model that will foster sustainable growth and that shares wealth, knowledge and power within the company. We advocate an alternative entrepreneurial model, to initiate opportunities, create jobs and defend fast-growing companies. We also try to ensure that public policies take account of our needs.
You’re therefore a lobbying group?
Absolutely and I’m not afraid to say so. In fact, we work together to be heard because in France, one often gets the impression that the only economic players are big business and big labor. If we want to have some influence, we have to band together. But beyond the politics, I think that our association is really worthwhile as a forum for entrepreneurs, enabling us to exchange and talk about our experiences.
What role does ABC arbitrage have in Croissance Plus?
They’re one of our most active and outspoken members. They don’t shy away from controversial issues such as defending variable compensation and stock-option schemes. ABC arbitrage certainly livens up our debates and they’re always looking for original solutions. I run an industrial and commercial company that’s very different from ABC arbitrage, but we connect as entrepreneurs and through Croissance Plus, we assert our shared convictions.
How did you first come across ABC arbitrage?
At first, ABC arbitrage was one of our clients. They’ve been using our management software for years. We met in professional meetings and client events. We were struck by their technical knowledge, their rigor and precision. They contributed, with their keen sense of processes, to the improvement of our software and we shared quite a few experiences.
Later, you became a tenant of theirs.
Yes, they had some space available rue Notre Dame des Victoires which we rented. That’s when we really got to know each other. You know, when you run a small company, you have to take care of everything, from corporate strategy to taking out the bins. With ABC arbitrage, we realized on a daily basis that their attention to detail is part of their DNA, that they’re as focused on little things as they are on big issues. It’s good to have a conscientious neighbor for everyday matters.
You have a third link with ABC arbitrage, as an entrepreneur with a similar story.
Indeed, we started out at about the same time, we’re both in technical and financial businesses and we’ve lived through the ups and downs of being listed on the market, recruiting and managing people and so on. In fact our companies really converge on two points. First, we’re both convinced that the key to success is good management and, above all, improving and motivating people. You have to get them to buy into the company’s entrepreneurial drive. Second, we both developed internationally which isn’t the obvious track for a French company, but which we think is essential for future development.
You must miss them since they’ve moved?
Yes and no. We miss not seeing them every day, but we’re very happy to have the space (laughs).
Account director Wellcom, ABC arbitrage individual shareholder I Function : UFO collector
How did you come across ABC arbitrage?
I’ve been a shareholder since 1999. I knew some people at ABC arbitrage and other people who knew the stock early on. The word was that were opening up a new trade, led by a strong and ambitious team. I liked the idea of finding the rare gem and thinking outside the box and to be one step ahead of the game, off the beaten track.
But did you understand that arbitrage was about?
Yes and no, but that wasn’t the issue. What I liked was that they were a sort of UFO in the financial landscape. I was attracted by their company project and their way of dealing in finances differently. I simply believed in their potential, even if I had no guarantee they would succeed.
And your feeling today?
Honestly, I feel very comfortable. For the last ten years the dividends have come in regularly and I’ve seen my investment increase without having to do anything. Frankly, beyond financial considerations, the company has always renewed itself and come up with some pretty amazing things. I know that this may sound pretentious, but I think they’ve shown that finance and ethics can go hand in hand.
Maria Emilia Marques Dias
Caretaker, 40 rue Notre Dame des Victoires
(Life) quality control