More women in the boardroom? Never mind the equality, watch the performance
Successful businesswomen may scoff at the proposal of quotas for women in boardrooms — and many men will dismiss it as Euro-correctness gone mad (see Matthew Lynn, page 17). But I suggest that anyone who hopes to collect a private pension should welcome the idea, for purely selfish reasons.
A report by former trade minister Lord Davies of Abersoch this week was expected to call for ‘voluntary targets’ to bring the proportion of women directors of FTSE 350 companies up to one in four by 2015, compared to current ratios of one in eight for the top hundred companies and one in 13 for the next 250. The word is that if voluntary action doesn’t break the glass ceiling for the ladies, statutory quotas could follow.
This means upwards of 600 new senior posts for women over the next four years – matched by 600 middle-aged chaps on the career scrapheap. But male chauvinists who think Davies must have been brainwashed by Harriet Harman and secret agents from Brussels should consider the numerous surveys conducted in recent years that show women to be consistently more successful portfolio investors than men.
Women are more risk-averse, less driven by raw competitive urges, and more likely to stay focused on generating steady returns; and those are precisely the qualities needed in non-executive directors to counterbalance the machismo of thrusting executives. Imagine a Royal Bank of Scotland board made up of the philosopher Baroness Warnock, Dame Maggie Smith in Downton mode, the contrarian investment writer Merryn Somerset Webb, and your own mother-in-law (or indeed, imagine your own female dream team for this purpose and email it to martin@spectator.co.uk). Then imagine Sir Fred Goodwin telling them: ‘I’m going to pay top dollar for a can of worms called ABN Amro, even though we’re right at the peak of the market, because I can’t bear to be outbid by Barclays.’
The blokes on the real RBS board whooped their approval; women would have told him to stop being silly and go back to his desk. Our major companies, and the pension funds that invest in them, would be a lot safer in the hands of gender-balanced boards. One day, just for equality’s sake, we might even have to impose quotas for men.
Time for a rate rise
The interest-rate argument is hotting up. Andrew Sentance, a member of the Bank of England’s Monetary Policy Committee, has been sounding off in favour of a rise sooner rather than later, and the tide of opinion seems to be moving his way — contrary to steady-as-we-go indications from Governor King. Rarely has the choice looked so finely balanced. In simple terms, holding base rate low helps keep the pound cheap, which helps the recovery in export manufacturing, which is the only good thing happening in our economy at the moment; it also helps keep the housing market from falling over. But the cheap pound makes imports expensive, driving inflation to double the Bank’s target level — and thus squeezing disposable incomes, eroding savings and hobbling an uncertain domestic recovery.
On the other hand, inflation erodes the real value of the nation’s debt burden, and is unlikely to turn into a wage-led spiral while the job market is depressed by public-sector cuts. But still the MPC’s allotted task is to deter inflation rather than fuel growth — which is much more driven by global trends, which happen at the moment to be largely positive. So I’m with Dr Sentance: let’s have a small rate rise soon, to signal the direction of travel, lest we should need bigger ones later to quell the inflationary beast.
Whiff of sophistication
Possibly the worst piece of advice I offered last year was not to buy Ocado’s shares, however much you liked its online grocery service. Having been priced down to 180 pence from an indicative range of 200-275 pence in the flotation last July, the shares justified my warning by slumping to 121 pence in October. But then Ocado announced a quarterly profit for the first time (11 years after starting out) and the shares doubled from their low; if you bought close to the float price and sold earlier this month, you would have made 50 per cent.
So condolences to New York hedge fund manager Elinor Carter Simonds of Blue Ridge Capital, who seems to have taken me so seriously that she did the opposite of popping Ocado into her shopping bag. She took a colossal short position and is now reported to be sitting on a loss of more than £30 million. On balance, it’s a good thing that short-sellers occasionally lose their blouses, as a warning to others, and that bold entrepreneurial ventures eventually achieve the market recognition they deserve. But there’s still, to my mind, a dangerous whiff of financial sophistication around Ocado.
Blue Ridge was by no means the only short-seller, after others in Hedge Fund Alley had been persuaded to buy the shares in order to help get the flotation away — so there has been some serious arm-wrestling going on between traders with opposing positions, coupled with a shortage of liquidity which has boosted the price rise. It all reminds me of my days in Japan, when a stock would sometimes be described as ‘going-up-related’ (as opposed to, say, ‘export-related’), meaning that big hands in the Tokyo market had simply decided to make it move that way.
Latterly, one of Ocado’s ex Goldman Sachs founders, Tim Steiner, has sold a chunk of his family’s holding, following a bigger share sale by the John Lewis Partnership pension fund — and Waitrose, which is owned by John Lewis and is the supplier of most of Ocado’s groceries, has said it is expanding its own inside-the-M25 online offering in direct competition. In these pinched times, future profits are far from certain. After my previous intervention, I had better leave you to form your own conclusion as to where the shares might go next, but either way I still think this one is best left to the professionals.
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