In a note to investors, Wilson Asset Management (WAM) chief investment officer Chris Stott said the company was displeased with the Hunter Hall Global Value (HHV) board’s decision not to proceed with a share buyback, which WAM proposed on 18 January 2017.
“The Hunter Hall Global Value Limited board announced its disappointing decision to reject our request for an equal access share buyback, which would allow all shareholders to exit at fair value following the shock departure of Peter Hall.”
“In our view, the basis for the rejection was illogical and incorrect,” he said.
Mr Hall’s departure from the company followed his shock resignation as chief investment officer of HHV’s parent company, Hunter Hall Limited, on 27 December 2016.
Since the announcement of Mr Hall’s resignation, Hunter Hall Limited has received two takeover offers, from Washington H. Soul Pattinson and Pinnacle Investment Management respectively, both for less than market value.
Mr Stott said the “sudden and unexpected” departure of Mr Hall constituted a corporate governance crisis with negative implications for HHV, and noted the company has not met its investment objectives over both the last year and the last 10 years.
“The company has only outperformed the Index since inception. Until his departure, Mr Hall managed 50.1 per cent of the HHV portfolio while his interim replacement, James McDonald, was entrusted to manage only 14.8 per cent,” Mr Stott said.
“The appointment of Mr McDonald raises significant concerns about the skills and experience of the investment team and the future performance of HHV.”
The board of HHV also said it wouldn’t be able to repay investors wanting to participate in a buyback offer without liquidating assets and potentially affecting the returns of those who wanted to remain invested, but Mr Stott said this was not the case.
“Competent fund managers should be able to liquidate an investment portfolio efficiently and shareholders expect this service in return for management fees,” he said.
Mr Stott said WAM’s advocacy for an equal access share buyback was the only reason HHV shares were “trading at current levels”, noting that “retail shareholders are appalled at recent events” and have been selling.
“As HHV’s largest shareholder we are determined to use our position to ensure all shareholders are given the opportunity to exit at full value. We are particularly determined to see this outcome achieved given we have been inundated with requests from our shareholders who see it as the fair and equitable response to Mr Hall’s departure,” he said.
“We believe the right thing is worth doing and will keep you updated with our progress. Thank you for your support and encouragement.”
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