Brewin Dolphin, the third largest investor in the embattled Dundee-based Alliance Trust, has hit out at the management of the investment managers for embarking on a "cynical campaign" to denigrate the three City financiers that the US hedge fund Elliot Advisors is seeking to have appointed as independent directors of the trust.
The strongly-worded comments, made by Brewin's head of investment John Newlands, follow a torrid week for Alliance Trust, one of the UK's largest investment companies, following a call from activist New York hedge fund Elliott Advisors for three independent directors to be voted onto the board of Alliance Trust at the company's AGM to be held at the end of April.
Elliott - which claims that Alliance's investment portfolio has "persistently underperformed" in recent years - is the single largest shareholder in Alliance with a stake of 12 per cent, while Brewin Dolphin owns 4.4 per cent.
On Friday the 127-year old trust, which is now fighting its third shareholder action in four years, responded to the call saying that the directors nominated by Elliott would "pursue a short-term agenda" which would involve "disruptive actions which are not in the long-term interests of our shareholders" and that these would "threaten the very existence" of Alliance.
Alliance Trust chief executive Katherine Garrett-Cox said: "We don't believe any of [the proposed directors] are independent and we pride ourselves on our robust and open process for selecting new non-executives for our board - this process has not been followed".
Newlands, who earlier in the week had quietly supported Alliance Trust while pointing to a number of ways in which the financial management of the trust could be improved, is understood to have changed his mind out of frustration with Alliance Trust's reaction to the bid.
"Alliance Trust is valued by thousands of smaller shareholders, many of whom have held the stock literally for generations and that ethos is rightly cherished," said Newlands. "I certainly don't think it helpful to embark on a rather cynical campaign involving the denigration of senior and experienced individuals who might or might not become involved. In short, we are fans of Alliance but we are also prepared to listen".
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