Investor Event

Alliance Trust Shareholder Action Group welcomes changes announced by Alliance

PRESS RELEASE 70 1/10/2015

The Alliance Trust Shareholder Action Group (ATSAG), supported by ShareSoc, welcomes the changes announced by the company today. Our comments are as follows:

  1. The separation of investment management operations into a more independent management organisation (Alliance Trust Investments – ATI) so as to make it more accountable is sensible. It is being given a clear mandate to perform and the announcement suggests further changes might be considered, such as outsourcing of investment management, if it does not.
  2. The demotion of Alliance Trust CEO Katherine Garrett-Cox from the main board is to be welcomed as the view of ATSAG has been that the company seemed to be being run more in the interests of management than investors. Having a wholly non-executive board is generally preferable for investment trusts. The prospective appointment of a new CFO is also welcomed as it appeared to us that this position needed strengthening.
  3. The emphasis on reducing costs is also wise. The ATSAG committee recently had a meeting with Alliance Trust Chair Karin Forseke and we made it clear that this was very important. Many long-standing investors in the Trust chose it because of its very low cost structure, and diversified investment portfolio even if performance was never very exciting. More recently performance has been questionable and costs have risen substantially.
  4. It is good to hear that Alliance Trust Savings (ATS) is expected to be profitable in 2016, and we welcome the establishment of a separate board to oversee this operation. However, we question whether it can achieve a good return on capital invested in future and doubt the strategic wisdom of keeping this as part of Alliance Trust, as we expressed to Ms Forseke.  The announcement simply seems to defer proper consideration of the wisdom of retaining this business within Alliance Trust.
  5. The comments regarding discount policy and the active use of share buy-backs are not as positive as ATSAG would have liked to have seen and may not have much influence on the current high share price discount to NAV. More specific levels of discount control or tender offers might have more influence.

In summary, although the changes announced are positive and we welcome that the board has responded to the concerns of shareholders and our own representations on the issues at this company. We see this as step one in an evolutionary process. But it is not clear that these changes will quickly make the Trust more attractive to investors (which is a key to reducing the discount), or ensure that Elliott Advisors do not come back with more demands for changes in the future. 

For further information, please contact:

Roger Lawson
Deputy Chairman, ShareSoc
Telephone: 020-8467-2686  

There is a web page dedicated to the Alliance Trust Shareholder Action Group (ATSAG) that provides more information on the campaign by private investors in the company here:

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