Alliance Trust was on the defensive again yesterday after a private shareholder interest group backed Elliott Advisors’ bid to force major change at the Dundee company.
ShareSoc, an independent not-for-profit organisation which claims to stand up for the rights of individual investors, yesterday weighed in to the bitter feud which has erupted between the Trust and its single largest shareholder.
The pair have been at loggerheads since Elliott publicly questioned the Trust’s recent investment performance and requisitioned a vote at next month’s annual general meeting in a bid to have three new non-executive directors appointed to the board.
ShareSoc yesterday said many of its members had stock in investment trusts.
While it said the issues highlighted at Alliance Trust its long-term performance levels and the size of the discount to net asset value (NAV) were not “uncommon” in the sector, the group was generally of the opinion that shareholders should push for action in such circumstances.
Setting aside the arguments between Alliance and Elliott, ShareSoc said it had considered two key points when reviewing the situation.
The first was the share price discount to NAV, which it concluded was “too high for such a non-specialist trust”.
It also looked at the share price total return over the past year and on a longer-term basis, and found it below average.
“Although there was some improvement in the last year, this seems to have partly arisen from special circumstances related to their private equity and mineral rights investments.
“In essence, the performance has been pedestrian for many years,” ShareSoc said.
The group said it therefore seemed “perfectly sensible” for a major shareholder to move for change, and urged shareholders to vote in favour of the Elliott proposal “unless the Trust comes up with stronger arguments than they have to date”.
ShareSoc deputy chairman Roger Lawson said: “I think there are good causes for concern about this Trust, and it is perfectly reasonable for Elliott Advisors to take up their worries with Alliance and propose directors if they feel the issues they have raised are not being dealt with.”
The Trust yesterday said it was “surprised” that ShareSoc had issued a statement before the board had published its circular to shareholders.
“The board reiterates its concern that Elliott’s proposal of adding three non-executive directors to the Alliance Trust board is an attempt to pursue its own agenda, and maintains its belief that these directors cannot be judged to be independent,” Alliance said in a statement.
“The board will therefore recommend that shareholders vote against Elliott’s resolutions.”
The latest spat came as Alliance Trust Savings, one of the two main subsidiaries in the Trust’s portfolio, declared that total assets on the savings platform had breached the £7 billion mark for the first time.
The figure represents growth of just under 10% for the year so far.
“I’m delighted that not only have we reached this exciting £7bn milestone, but we’ve achieved it by adding over £1bn in assets since July last year,” ATS managing director Patrick Mill said.
Given the market challenges during that period, I’m extremely pleased with this performance.”
Mr Mill said he expected ATS to further benefit from forthcoming pension changes.
“The pensions reforms also present us with opportunities to attract new customers to our platform. Our products and services are well positioned for individuals seeking to maximise both their pensions savings and income as they enter retirement.
“I’m excited about the future prospects for our business and remain very confident about its growth potential.”