Alliance investors are still suffering
OH no, not again! Alliance Trust revealed its first-half trading performance lagged miles behind rivals. Just a bit. The company made an investment return of 1.4pc during the period ending June 30, leaving it 29th out of 36 in a ranking of its peers that includes Witan and Scottish Mortgage.
Katherine Garrett-Cox, the £2.7bn fund’s £1.3m a year boss, admitted the results were ‘disappointing’ and blamed a sharp rise in bond yields in June for the poor return.
In the City many believe it’s time for her to walk the plank and call an end to her sevenyear tenure as chief executive. Mark Dampier at Hargreaves Lansdown said: ‘Garrett-Cox has yet to turn this oil tanker around.
‘Time is quickly running out. I think they’ve been bailed out by the fact that they have a very loyal base of retail savers – so they get away with poor performance more. If Alliance had a few more big institutional clients they would have a lot more problems.’
Another fund manager said: ‘The problem is the company is low-achieving but awarding high-achieving pay.’
Garrett- Cox survived a bruising shareholder meeting in May when it reached a last-minute compromise with US-based activist hedge fund and major investor Elliott Advisors. Elliott had criticised her remuneration and was seeking a boardroom shake-up to add three non-executive directors of its choosing. The Alliance Trust board had spent £3m fighting off Elliott’s proposals before caving in at the 11th hour.
Garrett-Cox and Alliance’s performance came under similar attack from Laxey Partners in 2011. The group now plans to announce an overhaul of its operations in the autumn. Hopes that its future might not include the overpaid Garrett-Cox helped the shares firm 1.2p to 495p.
Sellers were all over Aberdeen Asset Man- agement like a rash and the close was 30.4p or 8pc lower at 369.1p. Investors ran for the exit on hearing that the emerging markets-focused fund manager saw net outflows of £9.9bn in the last quarter.
Elsewhere, Pearson closed 25p better at 1234p after finally confirming that it is selling its flagship publication, the Financial Times. After intense speculation, the media giant said it had agreed to sell the Pink ’ Un to Japan’s Nikkei for £844m in cash.
The Footsie otherwise lacked inspiration and fell 12.33 points lower to 6655.01, while the FTSE 250 shed 26.55 points to 17,619.10.
Wall Street remained friendless, falling 119.09 points to 17,731.95 despite reporting the lowest US jobless claims since 1973.
After upping its earnings growth guidance for the full-year, Shire jumped 175p to 5640p. It took dealers’ minds off the fact the drugs giant missed expectations for second-quarter revenues and earnings.
Howden Joinery slumped 43.2p to 474.8p after disappointing first-half figures. Broker N+1 Singer said results were slightly shy of expectations due to investment and costs.
Private hospital group Spire Healthcare improved 4.7p to 370.9p on a Berenberg recommendation and target price of 420p. The broker says there is potential for much greater upside should Mediclinic bid for the remainder of the company after the lock-up expires in December.
Motif Bio eased 1.75p to 64.75p despite hearing that the US Food & Drug Administration has designated its flagship development product, iclaprim, as a qualified infectious diseases product for acute bacterial skin infections. Broker Northland Capital lifted its target price to 114p from 103p.
Vernalis put on 1.25p to 71.5p after broker Rx Securities reported its first cough cold product is on track for a September launch in the US and is likely to be the largest of the five products in the portfolio. It raised its fair value price from 70p to £1 a share.
Scientific instruments specialist Judges Scientific eased 40p to 1605p on profit-taking following a solid trading update. The firm said the first-half outcome will be lower than the corresponding period in 2014 but, given a marked improvement in the order book as at the end of June, the board expects results for 2015 will be in line with market expectations. WH Ireland retains its buy recommendation and 1750p price target.
Fever-Tree Drinks, the developer and supplier of premium mixer drinks, added 1.75p at 347p after Cenkos Securities initiated coverage with a buy recommendation. Up 160pcplus since floating on AIM in November, the broker reckons there is plenty more to come with potential earnings upgrades in the short-term and the likelihood of being targeted by a trade buyer.
After reporting a narrowing of its operating loss in the first half as revenue rose, Totally jumped 37pc to 0.275p. The company which provides solutions to the healthcare sector said profitability is expected to improve in the second half of the year.
STAR fund manager Neil Woodford is a major shareholder of Breedon Aggregates and must have been delighted with the strong interims which helped the shares touch 57.5p and close 1p up at a year’s peak of 53.5p. First-half pre-tax profits surged 92pc to £17.5m on revenues of £160.5m, up 28pc. The board is confident it will beat expectations for the full year. Net debt fell to £58.3m from £63m.