Ken Wotton’s Strategic Equity Capital trust will live to see another day after a majority of shareholders rejected calls to wind the vehicle up.
During an extraordinary general meeting on Tuesday, 82.2% of shareholders, representing 55.6% of the issued share capital, voted that the trust should be allowed to carry on until the conclusion of the next AGM.
The £113.9m trust’s fate was up in the air after long-term shareholders Ian Armitage and Jonathan Morgan attempted to drum up support for its liquidation.
The pair, who own 7.7% of the trust between them, blamed various missteps by the board for the trust’s widening discount and said there was a “sizeable overhang of shareholders” who were unhappy with its decision to appoint Gresham House as the trust’s manager.
Despite their efforts, only 17.8% of shareholders voted in step with Armitage and Morgan on Tuesday. Naysayers accounted for 12.1% of the issued share capital.
Board promises to address shareholders’ frustration
Strategic Equity Capital chairman Richard Hills said the board was “grateful” a significant majority of shareholders had voted to keep the company going.
“The company’s NAV has risen 33% since Ken Wotton was appointed as lead fund manager in September and the company’s share price is at an all-time high,” he noted.
Despite this Hills said the board “acknowledges shareholders’ frustration” that the discount to NAV remains in the double digits. On Tuesday shares in Strategic Equity Capital were trading at a 16.1% discount to NAV, according to data from the Association of Investment Companies.
“We will be looking at ways to address this,” Hills said without specifying further.
Strategic Equity Capital lags benchmark
Armitage and Morgan previously stated if the trust was allowed to continue a “strict discount control target and mechanism” must be reinstated “as a matter of urgency” and said they would be calling for an overhaul of the board.
They have also raised concerns about Wotton (pictured) being too busy managing his three existing funds, including the £283.9m Gresham House UK Micro Cap, to devote his full attention to the trust.
Wotton took over for longstanding manager Jeff Harris at the start of October months after he transferred from GVQ Investment Management to Gresham House.
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Under Wotton’s leadership the trust has only just outperformed the IT UK Smaller Companies average, returning 38.6% against peers’ 37.8%. But it has failed to beat its benchmark the FTSE Small Cap ex Investment Trusts which returned 52.5% by contrast.
The trust is consistently in the third quartile over one, three and five years.
