Will new Alliance Trust directors bring change to the trust?

The appointment of two new non-executive directors at Alliance Trust should reassure shareholders but pressure remains to deliver improved performance at the trust, experts say.

Alliance Trust announced today that former Ignis Asset Management chief executive Chris Samuel will join the board, joined by Karl Sternberg, a founding partner of Oxford Investment Partners. 

They will substitute current directors John Hylands and senior independent director Alastair Kerr, who will retire from the firm.

The new appointments come after a long dispute between Alliance Trust and its largest investor Elliott Advisors, which cost Alliance Trust £3m, with the latter wanting to place three new independent non-executive directors on the board. 

In April Alliance Trust agreed to appoint two of Elliott’s candidates: former SG Warburg executive Anthony Brooke and former Morgan Grenfell corporate financier Rory Macnamara.

Tilney Bestinvest managing director Jason Hollands says the appointments are “a positive step forward” for the firm when combined with the new directors nominated by Elliott Advisors.

Hargreaves Lansdown senior analyst Laith Khalaf adds that the board change is good for investors, meaning that the uncertainty around the dispute with Elliott Advisors is over.  

He says: “This looks like a fairly straightforward substitution of two directors who are leaving. Given Alliance Trust’s public spat with activist investment group Elliott Advisors earlier this year, some fresh eyes on the board will no doubt be appreciated.

“However the proof of the pudding is still in the eating, and investors will be hoping the changes in personnel at Alliance help to improve performance.”

Hollands adds that four new experienced non-executive directors should “greatly improve the strategic challenge and debate within the board” saying that shareholders should “hang on in there” in expectation of further change to improve returns.

He says: “Areas that the board will undoubtedly be debating are whether the existing wholly-internal asset management model is the right one to deliver improved investment performance, what to do with the future of subsidiaries and what actions might be taken to narrow the discount.”

However, Marten & Co head of research and director James Carthew says the changes at the board will not make much of a difference so investors shouldn’t read too much into the new appointments.

He says: “The only thing I noticed in the directors’ change is that Alastair Kerr was the only one who had experience in running companies, so it is a shame to lose that connection.”

Although Carthew doesn’t expect any major changes to the trust’s future strategy, he says shareholders should wait for “the bigger review” later on this year when the company will discuss its possible “new direction”.