Frugal bargain hunter eyes Alliance Trust
Colin Kingsnorth's hedge fund is agitating for a share buyback at investment group Alliance Trust. Interview by Lucy Farndon.
Rich rebel: Colin Kingsnorth claims money is not his prime motivation
Every activist is different, says millionaire hedge fund boss Colin Kingsnorth, lolling back in his second-hand chair.
There are no trappings of wealth in this office, even though the co-founder of activist fund Laxey Partners could afford solid gold chairs if he was that way inclined.
'This table is from eBay, the furniture comes from the Millennium Dome, the trading desk came out of Enron when it went bust,' says Kingsnorth.
'Oh, and that sofa was from Enron's boardroom,' he adds, waving his hand around. He finds it 'a lot more fun' to get bargains on the cheap.
Though Laxey operates out of smart glass-walled offices on London's Jermyn Street - around the corner from Fortnum & Mason and numerous upper crust gentlemen's shirtmakers - Kingsnorth and his business partner Andrew Pegge say they'd rather invest cash in undervalued companies than spend it on fancy accoutrements.
Their latest target is FTSE 100 investment group Alliance Trust, where Kingsnorth is agitating for a share buyback after snapping up a 1.6% stake in the group.
'We are generally pretty tight. Everything is reinvested. There are no yachts, no daft toys - it is not that we don't like them, it just brings us out in a rash,' he says.
'We'd rather give money to charity than waste it on four new cars, if you know what I mean.'
All very noble. Of course, such sentiments are easier to come by when you are already exceedingly rich and were brought up with the advantage of a top-notch education at the expensive Haileybury boarding school.
And Kingsnorth does confess to having a penchant for racing old cars, as well as refusing to put a figure on his wealth when I suggest it is north of £10m.
That said, he does seem 'different' from most activist hedge funds, if only for his relative openness.
Firstly, he answered my phone call this week and agreed to submit to an hour's grilling without any hesitation - not the behaviour one typically expects from secretive offshore-based investment funds.
He happily posed for pictures, spoke about his wife, and chatted about his previous investments and intentions. Though rather hazy on numbers - refusing to confirm reports that Laxey's funds have $2bn of assets or the names of its backers - he is refreshingly forthright about the industry and its shortcomings.
'The thing about activism is it is really good and useful, as long as it's done properly. It is a real pain in the backside if done wrongly.'
One time that the industry did not cover itself in glory, he concedes, was when Laxey's rival TCI forced Dutch bank ABN amro to put itself up for auction in 2007.
This triggered the near-collapse of Royal Bank of Scotland which over stretched itself with a cash bid, and taxpayers had to foot the bill.
Kingsnorth said activist fund TCI 'probably made loads of money out of it' however, it 'was not obvious that [TCI] had an objective that was worthwhile'.
Target: Alliance Trust board 'aren't wicked, horrible people' but the firm has lost its way, claims Kingsnorth
Laxey Partners on the other hand, prides itself on a less destructive approach.
'Everybody draws their own line in the sand,' Kingsnorth says.
'A lot of activists cut deals for themselves. We see ourselves as much more populist, we like to put things forward that are genuinely good for all shareholders.'
Money is not his prime motivation, says Kingsnorth, who named Laxey after the Isle of Man village where he and Pegge used to live as tax exiles.
'I think it almost helps to be disinterested [in money]. I think you are a better investor because you can hold positions longer and be relaxed if you take a loss.'
At Alliance Trust, Laxey is trying to persuade boss Katherine Garrett-Cox to introduce an automatic share buyback when its price is less than 90% of the value of the underlying investments.
Kingsnorth also wants to change the voting structure of the shares which he believes gives the company more clout when pushing its own views.
Laxey owns less than the 5% share threshold necessary to force resolutions to be put to the vote at the annual meeting. But Kingsnorth has got round this by setting up 100 subsidiary companies so he can demand a resolution is voted upon based on the '100 shareholders' rule.
He argues it is a legitimate route for protest. Laxey did the same with British Land in 2002-03, when it fought and won a high profile battle against its autocratic boss Sir John Ritblat.
'There hasn't been anybody [among Alliance's shareholders] saying we don't like what you are doing,' he says, pointing out that more than 100 shareholders have signed up to its Alliance Trust Shareholder Action Website.
He says 'lots' of shareholders have previously suggested that Alliance Trust embark on a buyback, but that the management 'have blown raspberries at them'.
'The only difference with us, is that we will go through all the hassle and say, "Now we are going to make you",' he says.
Amid the publicity created by Laxey's latest open letter this week, Alliance Trust's chairman Lesley Knox has agreed to meet Kingsnorth on Monday. He reckons she will be under 'a lot of pressure' to make changes.
No doubt the top team at Alliance Trust are all too aware of Laxey's high profile success with Ritblat, who was forced into a share buyback and a split of the chairman and chief executive roles. But a more recent tilt by Laxey at Shaftesbury led to it selling out at a loss in 2009.
The Alliance Trust board 'aren't bad, wicked, horrible people - I wouldn't put them in the same camp as John Ritblat', says Kingsnorth. 'They have just got themselves stuck by not updating themselves.'
He says the firm has 'lost its way' and accuses them of making vague assertions about performance.
'They'll say that their US index beat the US market, and you'll think, "Why have they compared it to a biotech smaller company index?",' he says. 'It is very odd.'
Laxey has already made a profit on its stake that was built up over the last nine months, though Kingsnorth is evasive about the average buy-in price. He is, however, completely open about the fact that he won't hang around for the long term.
Laxey would be happy to sell its stake in the next couple of months 'so long as we achieve what we want to achieve', he says. Which is, presumably, a big fat profit - not that the number will ever be disclosed.
It is a strange existence for a man who claims not to be motivated by money. Yet Kingsnorth has spent more than 20 years working at hedge funds and investment firms. Even at weekends, he says he cannot switch off, confessing he will always talk to Pegge and most of the directors.
His wife, a gardening fanatic who ran an upholstery business until the children came along, keeps him grounded. They live in Blackheath, now resident UK taxpayers.
Kingsnorth says fondly: 'She is very down to earth. She is a much stronger character than me. I come from a long line of weak men.'
Modest he may be, but Alliance Trust would be foolish to believe he has anything other than an iron will.
Name: Colin Kingsnorth, co-founder of Laxey Partners
Age: 47
Family: Married to Jane, children Bill, 14, and Honor, 10
Lives: Blackheath
Education: Haileybury boarding school in Hertfordshire; BSc Economics at University of East London.
Hobbies: Fly fishing, racing old cars
Least likely to say: 'Come and drink champagne aboard my superyacht'
Most watched Money videos
- BMW meets Swarovski and releases BMW i7 Crystal Headlights Iconic Glow
- Mail Online takes a tour of Gatwick's modern EV charging station
- MailOnline asks Lexie Limitless 5 quick fire EV road trip questions
- Skoda reveals Skoda Epiq as part of an all-electric car portfolio
- BMW's Vision Neue Klasse X unveils its sports activity vehicle future
- How to invest for income and growth: SAINTS' James Dow
- 'Now even better': Nissan Qashqai gets a facelift for 2024 version
- Mercedes has finally unveiled its new electric G-Class
- Mini celebrates the release of brand new all-electric car Mini Aceman
- 2025 Aston Martin DBX707: More luxury but comes with a higher price
- Land Rover unveil newest all-electric Range Rover SUV
- Tesla unveils new Model 3 Performance - it's the fastest ever!
- Former Chancellor Nadhim Zahawi to chair Very Group
- MARKET REPORT: FTSE falters despite UBS call to buy...
- How reliable are the most popular used cars? Here's how...
- Taxpayer stake in NatWest falls below 27% as Treasury...
- Cerillion boosted by $11.1m contract with provider of...
- UK Government sells another chunk of NatWest shares
- Anglo strikes out alone - but can it survive a bid...
- Anglo American rejects rival BHP's £34bn second takeover bid
- Police not interested in shoplifting, says M&S as thefts...
- Diploma shares top FTSE 100 risers after firm raises...
- Phoenix Group finance chief to step down from insurer
- A MILLION more people have taken on mortgages they will...
- Used car marketplace Cazoo looking for buyers as it nears...
- Evri issues warning over huge rise in smishing scams -...
- US owner of Boots steps up efforts to find a buyer for...
- I repeatedly bail out my partner from his financial...
- BUSINESS LIVE: Nadhim Zahawi to chair The Very Group;...
- London's 'Mr Super Prime' to take centre stage in...