Hedge fund Laxey clashes with new chair of Alliance

HEDGE fund Laxey Partners led a new attack on Alliance Trust yesterday after its demand for its management to be outsourced was dismissed by the new chairwoman.

Activist investor Laxey criticised the “staggering” comments of Karin Forseke after she backed the current management of Alliance on just her second day in the job.

Its latest public outburst, on a day of claim and counter-claim, came after Aberdeen Asset Management chief executive Martin Gilbert said he would be interested in managing Alliance’s £2.9bn portfolio if it was put out to tender.

Sources later distanced Aberdeen from any prospect of taking over the management, saying it would not push out Alliance chief executive Katherine Garrett-Cox and that Gilbert was merely showing interest in winning new business.

Forseke said she felt “very confident” in Alliance and said she was “totally” behind Garrett-Cox. In an apparent dig at Laxey, she said: “There tends to be greater incentive for external managers to focus on short term returns.”

The Isle of Man-based hedge fund, which owns 1.7 per cent of Alliance, hit back at Forseke, who is also deputy chairwoman of the Financial Services Authority.

Laxey said: “How our chairman in her second day in office can dismiss out of hand an approach from Aberdeen shows how little thought has been given to serious legitimate concerns over performance, rating and costs.”

The dispute stems from Laxey’s concern over the discount to net asset value (NAV) at which Alliance’s shares trade. The spat goes back to 2010, and last year Laxey was defeated over its call for the Dundee firm to set up an automatic buyback policy, which would have been triggered when a discount of its shares to NAV was more than 10 per cent.

Since then Alliance has since spent some £250m buying back 67.7m shares – equating to more than 10 per cent of its stock – which has led to a slight narrowing in the gap.

Alliance said the combined cost of dealing with Laxey’s resolutions will be more than £2.5m although the hedge fund questioned the figure as “extraordinary”.

Alliance’s shareholder meeting will take place on 27 April.