Alliance Trust is quickly evolving as Chair departs


Originally published at:
The changes at Alliance Trust are more substantial than many believe, after several departures, following the Board’s caving in to an activist investor earlier this year, and the announcement of wide ranging changes to its operating structure last month, but speculation continues on more heads to roll. Karin Forseke, the Swedish Chair of the Dundee…


"speculation continues on more heads to roll"
Really? I think that we have run out of ‘heads’. Every one of the Directors re-elected at the last AGM has either already left, or has an already announced departure date from the main Board. Or are you suggesting that the post AGM appointees are falling out amongst themselves?
No attempt has been made to seek the approbation of the shareholders in general for the changes, and following next April’s AGM the longest serving director on the Board was first elected this April (unless he too vanishes). Substituting an unelected Board for an elected one makes even more nonsense than usual out of the pretence of shareholder democracy. Boards can find it very easy to forget that the shareholders own the Company and are ultimately their only source of authority.


I read it to mean Catherine Garrett Cox @New_Pilgrim, perhaps I’m wrong.

Did you vote against the changes earlier this year? I’m assuming you’re a shareholder.


I think the changes sound reasonable, it needed to change. Were you happy with it as it was @New_Pilgrim ?

I wouldn’t be surprised is it is Katherine the Great who is next to go, it was under her watch it did so badly,actually not badly, more averagely.

What do you think about the point made about what she did for women in fund management @sandradore?


@sandradore and @jonno
Alliance Trust as an Investment Trust had badly lost its way. Trying to run an open-ended investment services business as a part of a closed end Investment Trust just does not work. There are inevitable conflicts of interest, and problems of cross subsidy between the businesses.
Not least it sets the interests of shareholders against the interests of the clients of the subsidiaries, and of the large staff required by the subsidiaries.
The subsidiary businesses, Alliance Trust Savings, and Alliance Trust Investments, have been run at a net cost to Alliance Trust. Further to that, these businesses require a large permanent staff and have constituted the primary activity for the whole Alliance Trust company.
As shareholders we have acquired shares in a moderately successful, low risk, investment Trust Company company, together with an add-on. The add-on is a rapidly expanding, attention demanding, high risk, loss generating, financial services business. To date, neither ATS, nor ATI offer an investment profile that should warrant their inclusion as investments within the AT investment portfolio.
Yes I am a shareholder, yes I did vote for change, and yes the manifesto for change is in a generally helpful direction.
However, I did not expect to see the whole of the re-elected Board plan to disappear by or before the next AGM. It makes rather a nonsense out of all the earlier posturing in the spring of this year.
Of course, for the present KCG remains CEO but she is no longer a member of the main Board. Doubtless, as CEO she will be required to report to the Board, but will of course not be able to vote, or to act without prior authorization from the Board (under the previous Board arrangements KCG together with just one other Director could act on behalf of the whole Board without needing to convene a board meeting, or even to consult the other members). As CEO KCG remains in full control of the day to day operation of the Company.
As for what she has done for women in fund management, I cannot judge. However, the outgoing Board had three women members, the Chair, the CEO and one independent. The new (unelected) Board has no women.
In practical terms, how much has really changed remains to be seen.
The recent aggressive share buybacks have no more than a short term effect upon the discount to NAV, and are not likely to lead to any enduring reduction in the discount. It will take time to build confidence in the investment team, and the full divestment of the subsidiaries is most probably necessary if the discount to NAV is to be substantially reduced.


Thanks for sharing your view here @New_Pilgrim, you’ve made some very interesting points.

We’re discussing this topic on Share Radio this afternoon, I’ll bear in mind what you’ve said and refer to it if I get the chance, if you have no objection to me doing so.


These are very good points. Most Alliance Trust investors invested in a global investment trust, not in a fund management business or stockbroking platform business which they have moved into without consulting shareholders. And anyone who attended the Forum meeting in London will know that they are also now to go into banking (by lending money against investors portfolios). It looks more like empire building by the management than a sensible business strategy because these new subsidiaries have yet to turn a real profit and require continual funding by the parent.

The changes recently announced might be a step to enabling some “rationalisation” of this mess, but we will have to see in due course. As it is I would encourage Alliance Trust investors to support the ShareSoc campaign on this company - see . We have already put these points to the directors.


I sold my Alliance Trust shares but I am looking at them again in light of the changes. Good luck with your campaign @Roger_Lawson and thanks for sharing it with us here.


It’s good to highlight the work that ShareSoc do on trusts @Roger_Lawson because I think most investment trust investors are unaware of your work here.

Until I read the article on here a wee while back interviewing you I didn’t know about it too.

I think more people on these forums and elsewhere should be supporting the work that you do.