Stockbroker 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.