Alliance Trust investors urge change ahead of vote

Alliance Trust investors urge change ahead of vote

Shareholders large and small have backed calls for change at Alliance Trust, ahead of a crunch vote later this month.

The shareholders have backed resolutions to appoint three new independent non-executive directors to the trust’s board, in the hope of shaking up the lacklustre-performing 127-year-old investment trust.

The resolutions were requisitioned late last month by Elliott Advisors, the UK branch of a US-hedge fund that is Alliance Trust’s largest single investor, after internal talks proved fruitless.

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They have been rejected by the Alliance Trust board, which says Elliott’s interests conflict with those of other shareholders. It has urged shareholders to vote the nominations down at its forthcoming annual general meeting on April 29.

Jason Hollands, managing director of Tilney Bestinvest, which is a prominent Alliance Trust shareholder, said it was “easy to see Elliott as a hedge fund bogeyman” but this did not mean the trust did not “have a case to answer”.

“In particular, the discount has been too high and they need to convince shareholders why a 100 per cent in-house investment model is the right one and explain how developing its own brokerage platform enhances the returns of all shareholders,” he said.

Richard Marwood, manager of the Axa Defensive Distribution fund, which has a stake in the trust, was “not surprised” it was under attack by activists. He said change was needed on the trust, though he has yet to decide on how to vote.

One of Alliance Trust’s thousands of private investors, Robert Mellar, has held shares in the trust for 20 years. He told Investment Adviser he was voting in favour of the nominees’ appointments, since over the past few years “the trust has gone backwards”.

Mr Mellar has reduced his holdings in the trust in the past few years and said it would have been “unwise” of him to keep such a large amount of money in an investment where “the only thing that has gone up is the costs”.

The shareholders’ decisions to back the nominations come after ShareSoc, an independent non-profit body that supports private investors, last week called Elliott’s approach “perfectly reasonable”.

“Requisitioning resolutions is simple democracy upon which shareholders can make their own minds up,” it said in a statement.

“We would have preferred to see a more considered and less hectoring response from Alliance Trust.”

Investment Adviser backs the resolutions

• Having weighed the arguments, Investment Adviser has decided to back AGM resolutions 14, 15 and 16 to appoint the three nominees to the board.

• Alliance Trust’s claims that Elliott Advisors has a hidden agenda behind nominating the three are not based on firm evidence, and are in any event irrelevant.

• The three directors would be obliged under UK company regulations to act independently of any outside influence – including Elliott’s – and focus on what is best for all shareholders.