If the new Trump era has a theme, it’s one of quixotic disruption with random consequences. In that spirit, stand by for more interventions from activist shareholders seeking to electrify sluggish businesses while making fast bucks on the way through.
The first episode over here was the attack by the New York investor Boaz Weinstein on seven London-listed investment trusts, in which he acquired stakes and forced shareholder votes to replace board members, with the aim of taking the trusts’ assets under the management of his own firm, Saba Capital.
‘Go home! You’re selfish and wasteful,’ shouted one headline after Weinstein was emphatically defeated in all seven polls. But his response was to launch a new action against two of the same trusts plus two others, while posting videos of athletes who fought back to win. In the meantime, he still holds stakes the trust boards can’t ignore – and having spurred their share prices, he’s sitting on ‘greenmail’ profits.
So he’s not going home soon. But is he merely a blundering Trumpist? His tactics ‘look like those of a general who has not properly recced the ground’, says Jonathan Davis, author of The Investment Trusts Handbook. ‘But his targets will lose the battle in the end unless they convince remaining shareholders they’re worth saving. That will only happen if they admit the merit of his complaints about complacency and poor performance.’
And Jonathan Simpson-Dent – chairman of Edinburgh Worldwide, the last of the seven trusts to vote Weinstein down – almost agrees: ‘To stay relevant and viable, boards and managers need to excite shareholders with properly differentiated strategies… Me-too mandates and mediocre performance will not be tolerated.’ On balance, I’d say Weinstein has given the sleepy old trust sector a useful kick in the butt.
Drill, BP, drill!
Next in line: BP, the limping energy giant in which Elliott Management – another activist investor from New York, but with a more convincing track record than Weinstein – has built a reported 5 per cent stake. Elliott is expected to urge an accelerated re-focusing on BP’s core oil and gas business and a retreat from the net-zero-chasing wind and solar projects that critics say have depressed its share price. There may also be pressure to oust BP’s Norwegian chairman Helge Lund who (along with former chief executive Bernard Looney) is associated with the pivot towards renewables.
Some pundits think shareholder disgruntlement may even push BP towards a merger with its rival Shell, creating a national champion of energy security in the old-fashioned style. The combination would also be a bastion against the possibility of an aggressive takeover by a US oil major such as Chevron or Exxon. An American bid would be urged on by the Trump White House with chants of ‘Drill, baby, drill!’. But BP could expect no support at all from our own Secretary of State for Energy Security and Net Zero, Ed Miliband, who would presumably prefer to see BP focus on faraway fields under foreign ownership, or just wither and die.
One way and another, Looney’s successor Murray Auchincloss – with Elliott lurking menacingly at his shoulder – has some tricky questions to address at BP’s ‘capital markets update’ next week.
Own-goal Rachel
I’m delighted to introduce my ‘Rachel Reeves own goal of the month’ competition. But before you rush to nominate her alleged misuse of company credit cards in an earlier career, consider her misfired attempt to quell the ongoing car finance scandal.
In October, the Court of Appeal ruled it illegal for car dealers to receive commissions from the lenders who finance 80 per cent of new UK car sales without revealing the commission to the customer. A tsunami of compensation claims looms for lenders such as Close Brothers, Lloyds and Santander if the decision is upheld by the Supreme Court in April. Last month, the Chancellor warned that a final judgment in the claimants’ favour could cripple the car loan market, trigger a slump in sales and hold back the economic growth she so ardently seeks.
Shares in Close and Lloyds jumped in response, while Santander scotched rumours that, having provided £295 million against car loan claims, it planned to quit the UK altogether. But on Monday the Supreme Court rejected a Treasury application to present Reeves’s plea at the forthcoming hearing. Down came lenders’ share prices again; back up towards £40 billion went estimates of the total compensation bill. All in a day’s work for our disaster-prone Chancellor.
Goddamn Zoom
Here’s another competition: could you name the bosses of any major UK bank, or pick them out in a police lineup? In a so-far relatively quiescent decade, car finance apart, the big characters – the Fred Goodwins, the Bob Diamonds – have all gone, making it much harder for your columnist to bring their milieu to life on the page. So thank goodness for the unrestrained voice from across the Atlantic of Jamie Dimon, chairman and chief executive of JP Morgan Chase since 2006, unscarred by the 2008 crisis, unbowed by heart surgery, famously crypto-sceptic, the world’s undisputed top banker and still not ready to name his own successor.
Most recently he’s been holding forth on the subject of stay-at-home Gen Z-ers. Here’s an abbreviated version: ‘A lot of you were on the fucking Zoom and you were looking at your mail, sending texts, not paying attention… You don’t do that in my goddamn meetings… If you don’t want to work [here], that’s fine with me. It’s a free country. But I’ve had it with this kind of stuff.’
Sensitive creatures our young colleagues may be, but that’s the way to tell ’em.
Join Martin Vander Weyer on The Spectator’s trip to Champagne in April – visit spectator.co.uk/tastings for details.
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