The rumblings which began in 2011 when shareholder Laxey Partners, complained of “five calendar years of consecutive under-performance” demanding a shift to external fund managers and a discount control mechanism be put to a vote, have turned out to be closer on the Richter scale to a lorry driving over a cobbled street for an extended period of timethan the clashing of tectonic plates needed to fundamentally shift the management of the 127-year old company.
That is not to say that nothing has changed, however, but rather that the pace of change is slower than some investors would like, especially having removed long-serving chief executive Katherine Garrett-Cox and chair Karen Forseke.
The changes announced on Thursday largely centre on a shift to a multi-manager approach to investment, whereby Willis Towers Watson will select eight best-of-breed managers to manage a focused portfolio of their top investment ideas. This has resulted in the sale of its investment arm to Liontrust. It has also announced a proactive share buy-back programme to help reduce the discount to NAV on which its shares have and continue to trade.
Winterflood analyst, Simon Elliott was one of those disappointed with the proposals, which he feels fall short of what are needed to achieve the board’s objective of regaining Alliance Trust’s position as a core ‘must have’ holding.
"a certain amount of impatience is understandable given the perennial nature of the disappointment."
At issue for Elliott and a number of other analysts was a lack of some kind of liquidity event such as a tender offer, which would have allowed activist investors like and others to exit their investment.
Likewise he said, if it is to successfully limit its discount to NAV materially, the share buyback programme is likely to have to be considerable.
“In summary, we believe that these proposals are underwhelming and we would not be surprised to see a significant amount of opposition to them or, at the very least, apathy. It is not clear how this vision of Alliance Trust will substantially increase the fund’s appeal and relevance to investment trust investors and, consequently, we believe that further corporate activity cannot be ruled out,” Elliott said.
