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Stockbrokers Research

Date:  May 2018

Publication: Investment Trust Newsletter

Author: Andrew McHattie



We must mention Canaccord’s annual ‘skin in the game’

research on the personal investment of directors and

management, published on 26th April. It’s an excellent

piece of research, affording some real insight into the

industry. Canaccord say “while no guarantee of superior

performance, in order to align interests, investors look for

directors and managers to have a meaningful personal

investment in the companies which they direct and/or

manage. We have never met one investor who has argued

against this, and we strongly believe that skin in the game

sends a clear and powerful message to both existing and

potential investors.”

Significant progress has been made on a number of fronts

since Canaccord’s original review in 2012 and they highlight

that over the past six years, the percentage of women

directors has increased from 10.2% to 22.3%. There are

still 69 all-male boards. The total investment by boards

and managers featured in this report is £2,043m. While the

evolution of the closed-end industry makes comparisons

of limited value, this is double the total of £1bn in 2014

and it was £687m in 2012. Some 58 chairmen or directors

have an investment in excess of £1m while 67 managers

or management teams have a personal investment

in excess of £1m. Surprisingly, 14% of directors have

no investment, and 30 current chairmen, who have

been on their respective boards for at least five years,

currently have a shareholding valued at less than

their annual fee. A total of 17 chairmen (6%) have no

investment in their company. The report features 1352

directorships, of which 93.5% are independent. This

compares with 93% in 2014 and 91% in 2012.

The investment companies where all board members

have current shareholdings equivalent to more than

two years’ fees are: Bluefield Solar Income Fund , EP

Global Opportunities, Fundsmith Emerging Equities,

Independent Investment Trust, Jupiter European

Opportunities, Majedie Investments, Mid Wynd

International, Miton UK Microcap, Personal Assets,

Seneca Global Income & Growth, Utilico Emerging

Markets, and Warehouse REIT.

In contrast, the boards have no investment at all

in Carador Income Fund, Ground Rents Income,

CVC Credit Partners European Opportunities, or

Honeycomb Investment Trust.