Laxey calls for change at Alliance Trust
Activist shareholder Laxey Partners insists it doesn't want to unseat Alliance Trust's chief executive Katherine Garrett-Cox, but merely wants the firm to 'update some of its practices'.
Strategy: Laxey claims it doesn't want to unseat chief Katherine Garrett-Cox
Colin Kingsnorth, co-founder at Laxey Partners, yesterday wrote a further letter to the board, urging the trust to set up a mechanism which would ensure it will buy back shares if the price falls below 90% of the net asset value of the group's investments.
Kingsnorth hit the headlines back in 2002-3 when he tried a similar tactic with British Land.
He took on the property giant's all-powerful former boss Sir John Ritblat and won, forcing him to implement a share buyback for the first time in more than 10 years.
The Laxey executive believes he also has broad support from investors in Alliance Trust, arguing that an automatic buyback mechanism would prevent the value of the share price from becoming too low in relation to the underlying investments.
The activist investor has only a 1.3% stake in Dundee-based Alliance Trust but reckons it can win support to secure the 50%-plus majority needed to force a change at the annual meeting in May.
In the wake of last week's defeat of investment group F&C, which was forced to install Ed Bramson from rebel shareholder Sherborne as its new chairman, company directors are all too aware that activists can punch above their weight.
Laxey doesn't have the necessary 5% to force resolutions to be put to the vote. It has got round the problem by setting up 100 subsidiary firms containing at least one share.
This means it can demand a resolution is voted upon based on the '100 shareholders' rule. Kingsnorth said the firm was being 'less aggressive' than Sherborne in its attempts to persuade firms to tweak strategy.
'It is not about firing people,' he said, in reference to the fund's boss, 'City superwoman' Garrett-Cox.
Alliance Trust shares (up 1.9p to 368.7p) are trading at a 16% discount to NAV, with Kingsnorth saying they 'stand out a mile as having a big discount'.
Chief executive: Katherine Garrett-Cox
Market value: £2.4bn
12-month share price: Up 19%
Number of retail investors: 50,000
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