By Margot Patrick | Photographs by Lanna Apisukh for WSJ

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.

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 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.

The CEO stopped responding to Wood's notes, and his sister, Swatch Chairwoman Nayla Hayek, responded to a letter but declined to meet. (Swatch says its CEO gets hundreds of messages with ideas each week.) Nayla Hayek's son, Marc Hayek -- also on the board and president for Blancpain and Breguet -- responded to a meeting request from Wood by suggesting a date that was eight months away.

People may think, "this American cowboy, he's going to want to fire Swiss people," Wood said in a video call from his satellite office in New Orleans, where Swiss clocks on the walls display the time zones where his firm, GreenWood Investors, operates. "Totally the opposite."

While Wood failed to win a board seat at last month's annual meeting, he isn't giving up.

Swatch, known for its colorful, plastic watches, could capitalize more on its highest-end brands, Wood said. He said the company could better emphasize scarcity and exclusivity, a strategy that has paid off for luxury giants like Hermès and Ferrari. Collaborations with designers and celebrities could make other lines -- Omega, in particular -- more relevant to younger customers, he says.

Swatch said its CEO wasn't available for an interview, citing the company's earnings quiet period.

In a statement, a Swatch spokesperson said the company has 16 brands across price points and doesn't want to compete only in the luxury market. It also produces almost all of its products in Switzerland. "The future of the Swiss watch industry cannot and will not be just to serve an elite of rich people, even if some financial analysts or investors want us to do so," the company said.

Wood, 42, grew up working the cash register at Playville, his dad's now-closed toy store, in Covington, La. After graduating from Tulane University in 2005 with a degree in economics and international relations, he went to work as a stock analyst at firms including RBC Capital Markets and Carr Securities in New York.

"Swatch was on top of the world," Wood said, recalling his observations of the watchmaker during his early days as an analyst.

He has published research that shows that family or founder-owned businesses outperform the market over time, but minority shareholders may have less ability to exert influence and may have to deal with higher volatility. He is also working on a book that profiles history's greatest value creators.

Wood started GreenWood Investors in 2010 and has taken what he calls a "constructivist" approach of being friendly and engaged, rather than "activist" and demanding. He has invested in companies including Italian defense contractor Leonardo and Portuguese logistics company CTT, where he won board roles and worked from within to modernize and add more transparency.

At Swatch, Wood's idea was to represent the minority shareholders, who have about 20% of the voting power. The company has a dual-class stock structure that effectively gives the Hayek family voting control. Wood says he isn't trying to change that setup, but rather give those minority shareholders an official voice in the boardroom.

Swatch says its board is intentionally lean, and composed of members who understand its Swiss corporate culture.

Swatch founder Hayek Sr. is a national hero in Switzerland, credited with saving Swiss watchmaking in the 1980s from the existential threat of low-cost quartz models from Japan. The introduction of colorful Swatches revived interest in Swiss-made watches.

Breguet's founder designed the Marie Antoinette, considered the world's most expensive timepiece. Blancpain invented a modern diving watch. Omega is the official timekeeper of the Olympic Games and was worn by the first astronauts to walk on the moon.

Hayek Sr., known like his son to smoke cigars at shareholder meetings and during interviews, turned the brands into aspirational personal statements. He died on the job in 2010 at 82. His daughter was elevated to chairwoman two days later; his son had already been made CEO in 2003.

In recent years, the company's shares have underperformed luxury peers and now trade at their lowest level in 16 years. According to S&P Global Market Intelligence, some 27% of Swatch's shares are on loan, a proxy for short interest, indicating that traders see the stock falling further. Net profit declined 78% last year.

Contact with the current CEO convinced Wood that the family's stewardship, combined with his own ideas, could bring change and renewed growth. Hayek "clearly lives and breathes the business, and this is why I love family-owned firms. The business is their life," Wood said.

Wood drilled into Swatch's brand positioning and marketing and shared some ideas with Hayek, as well as with investors in a presentation in late April on GreenWood's website.

In the interview, Wood pointed out examples of how he thinks Swatch could restore its luster in the luxury market. For example, he said Omega's Seamaster could compete more closely with Rolex's pricier Submariner. And prestige brands could celebrate their centuries-old history with more limited editions to mark anniversaries.

Analysts say the family has little incentive to listen to minority shareholders. The Hayeks have voting rights close to 45%.

Nick Hayek has previously said that investors can sell if they don't like the way the company is governed, and that Swatch sells watches, not stock. The 70-year-old made films before entering the family business. He has said his father advised him to stay imaginative, and do the opposite of what stock analysts say.

Ahead of Swatch's annual meeting last month, the family-controlled board urged shareholders to vote against Wood because he isn't Swiss or living in Switzerland, which it said is important for board members.

During the online meeting, the company announced that Wood had, in fact, won 62% of the vote from the minority shareholders. But the company said Wood didn't win enough support overall. Including the other class of shares, he only secured 19.7% overall, Swatch said.

Wood's lawyers have since written to Swatch to complain that the vote wasn't carried out correctly and violated the rights of minority shareholders. The lawyers claim that minority shareholders should have gotten to approve their candidate before the broader vote and that the wider shareholder base didn't have grounds to reject him. Swatch said the vote followed the legally correct procedure.

He is now drumming up support to call for another vote.

Write to Margot Patrick at margot.patrick@wsj.com

(END) Dow Jones Newswires

June 17, 2025 20:00 ET (00:00 GMT)

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