A lot has been written this year about Alliance Trust, not least by this publication.
My predecessor took a hard line on the company over its battle with hedge fund Elliott Advisors, and I’m inclined to agree with many of his points. Alliance’s last-minute U-turn prior to its April AGM gave it, as Investment Adviser wrote at the time, a 12-month period of probation. Five months through this phase, last Thursday brought the first concrete evidence of the trust’s attempts to reform its behaviour.
Having agreed to the arrival of two Elliott-backed non-execs at the 11th hour this spring, Alliance has now added two more: former Ignis chief Chris Samuel and Oxford Investment Partners founder Karl Sternberg. Elliott’s candidates clearly had a mandate to shake things up, and Alliance’s underperformance in the first half of 2015 has forced its hand further. In the coming weeks, the trust has promised to announce the changes it will make in response to feedback from its shareholder base.
Mr Sternberg and Mr Samuel have already begun their new roles, and though they will have little chance to actively engage with their colleagues before changes are unveiled, Mr Samuel in particular looks a good choice.
There is an argument that non-execs frequently offer little in the way of direction for a businessLike Alliance Trust now, Ignis’s future prosperity was far from assured when Mr Samuel took over in 2009. Much of its subsequent success can be attributed to his ability to ensnare Chris Fellingham from Soros Fund Management, who was at the forefront of the firm’s rapid growth in fixed income.
His other major achievements at Ignis look to me to be even more pertinent to Alliance Trust: he unravelled the company’s unwieldy series of joint ventures and took steps to link pay more closely to performance.
There is an argument that non-execs frequently offer little in the way of direction for a business. But Mr Samuel’s work in these areas is closely aligned with Alliance Trust shareholder concerns over the performance of its subsidiaries and the remuneration of its management.
The trust’s chair, Karin Forseke, said last week that investment is “the key to our future success”. It’s reading too much into this, I’m sure, to suggest the phrasing indicates a move away from Alliance’s platform business – despite Elliott’s gestures in this direction.
Regardless, shareholders will anticipate structural changes this autumn. Simply adjusting the trust’s process once again will not be enough – indeed, the constant tinkering with investment strategy is one particular shareholder complaint.
If Alliance is to right its image in the eyes of shareholders, it could do worse than follow the example of its latest non-exec.
Dan Jones is editor of Investment Adviser
