An underperforming firm in which Woodford Investment Management had held 28.21% before the Equity Income fund suspended is under attack from an activist investment trust seeking to oust almost the entire board.
Crystal Amber slammed ballooning head office costs at US tech incubator Allied Minds and misaligned incentive schemes that saw management rake in bonuses as the share price tanked.
In May 2019, before the Woodford Equity Income fund suspended Crystal Amber held a 2.8% stake in Allied Minds but that has now increased to 16.8%, according to a regulatory filing published on Thursday that requisitioned a general meeting where shareholders would be able to vote to oust Jeffrey Rohr, Fritz Foley, Joseph Pignato and Michael Turner from the board.
Pignato and Turner are co-chief executives of the firm.
Crystal Amber fund manager Richard Bernstein (pictured) wishes to install Mark Lerdal and Stephen Coe as replacement board directors.
Bernstein criticised the CEO for taking a $576,000 bonus in 2018 despite a share price fall of 57.5% that year and hit out at head office costs hitting $7.5m, even though guidance from April suggested these costs would be in the realm of $5-6m.
He noted Allied Minds has only achieved one successful exit out of 40 investments and that its market cap today sits at just £120m despite listing on the London Stock Exchange in 2014 at a valuation of £405m before raising a further £64m via a placing in 2016.
Shares in the company peaked at 725p in April 2015 and now trade at around 50p.
Woodford Investment Management had previously been a significant Crystal Amber shareholder with 17% of the stock for the year ended 30 June 2018. Crystal Amber had also held a large stake in the Woodford Patient Capital Trust but the stake did not feature in the investment trust’s 2019 final results.
What has happened to Woodford’s stake in Allied Minds?
Allied Mind’s 2018 report, published in April, listed Woodford as the largest shareholder with 27.4% followed by Invesco with 19.1%.
Invesco would not comment on how it would vote in the upcoming general meeting. It held 29.9% of Crystal Amber shares at the end of June.
With Woodford now in the process of being wound-up its stake has been split between several managers.
A regulatory filing from 7 June, showed the equity manager had increased his stake to 28.2% since December 2018, but immediately after the Woodford Equity Income suspension sold a 5% stake to free up liquidity.
Based on figures from Allied Mind’s and Woodford Equity Income Fund’s 2018 reports 72.3% of the the firm had been held in Neil Woodford’s flagship fund. The Woodford Equity Income fund held 47,763,367 shares in December 2018 while the Woodford Income Focus Fund, now also suspended while Link seeks a replacement manager, held less than a tenth of that with 4,372,128 shares, according to its annual report to the end of January 2019.
A regulatory filing from mid-October when Link announced it was winding down Woodford Equity Income showed that a 19.78% stake transferred between Woodford Investment Management and the ACD.
Blackrock is responsible for selling the listed companies in the Woodford Equity Income Fund to return cash to unit holders. Portfolio Adviser has reached out to Blackrock to determine how much of the stock it has sold and is awaiting a response.
Likewise, SJP, which held Allied Minds via the segregated mandates Woodford had managed, has been approached for comment. A regulatory filing from August shows its 4.9% stake reduced to 2.5%. The SJP High Income fund is now managed by Columbia Threadneedle and RWC Partners.
Jupiter inherited a 1.58% stake when it took over the Omnis Income and Growth fund. A spokesperson confirmed it no longer holds the stock.
