Wilson Asset Management has called on the directors of Hunter Hall to “do the right thing” following their rejection last week of an equal-access share buyback. Recent market activity reflects retail investors exiting, corporate manoeuvrings and Wilson’s buying, the manager said Friday.
The response by Wilson Asset Management, a significant shareholder in Hunter Hall’s listed global value fund (HHV), to the proposed buyback ended a week of drama in which Pinnacle Investment Management entered the fray with a bid for Hunter Hall at $1.50 a share, compared with the $1.00 a share that founder Peter Hall had sold 19.9 percentage points of his 46 per cent stake to Washington H. Soul Pattinson just before Christmas. Pinnacle’s offer will rise to $2.00 a share under certain plausible conditions.
In his weekly letter to clients, Chris Stott, Wilson Asset Management (WAM) CIO, said Friday that the HHV board’s rejection of the proposed buyback, which would have allowed “all shareholders to exit at fair value” after the shock departure of Peter Hall was “illogical and incorrect”.
HHV is WAM’s largest single holding plus many WAM shareholders have invested directly in HHV, Stott said. WAM is also HHV’s largest shareholder.
“The current HHV share price is only trading at current levels (closing at $1.21 Friday) because we are publicly advocating for the HHV board to allow shareholders to exit at NTA,” Stott said.
“The volume of HHV shares has doubled because retail shareholders are appalled at recent events and are selling, while the demand reflects our purchasing as well as arbitrage-focused and corporate investors accumulating positions…
“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.”
Stott described Peter Hall’s departure as a “corporate governance crisis”. He noted that Hall had managed 50.1 per cent of the HHV portfolio personally and his interim replacement, James McDonald, was entrusted only with 14.8 per cent prior to December’s ructions.
“The appointment of Mr McDonald raises significant concerns about the skills and experience of the investment team and the future performance of HHV,” Stott said.
Hunter Hall, which markets itself under the socially responsible investing banner, has also actively sought NZ investors over a number of years.
* Greg Bright is publisher of Investor Strategy News (Australia)