Often on Monday mornings, listeners to Radio 4’s flagship Today show wake to the withering comments of David Cumming, chief investment officer of insurer Aviva, which has £334million of funds under management.
In his latest intervention, the investment panjandrum turned his fire on Emma Walmsley, warning that the ‘jury is still out’ on the Glaxosmithkline chief executive.
In doing so he aligned himself with corporate invaders at Elliott Management whose presence on the share register has sent GSK to the barricades.
Aviva chief investment officer David Cumming warned that the ‘jury is still out’ on the Glaxosmithkline chief executive Emma Walmsley
It is assumed than when the broadcaster-friendly Cumming speaks up, it is with the approval of senior colleagues. That is by no means clear.
It was perfectly acceptable for Cumming to question the share price and strategy, but comments about one of the handful of FTSE 100 women chief executives were unhelpful.
Cumming doubtless is feeling confident in his views at present, having rolled the bandwagon which contributed to the stock market flop of Deliveroo by focusing on the worker conditions for riders.
One suspects if the same scrutiny was applied to the workforces of FTSE-quoted mining firms in far off places, or other workers in the gig economy, Aviva’s investment choices would be considerably narrowed.
Reality is that although Aviva likes to dish it out on the airwaves, not all of its investment choices stand up to scrutiny.
Investors in Aviva’s three UK property funds, suspended since March last year, are unlikely to be thrilled that they are to be closed down and liquidated from July.
They are in a not dissimilar position to investors in Neil Woodford’s doomed equity income fund because of its investment in hard-to-shift unquoted stocks.
There long have been questions about the open structure of property funds given the lengthy time it takes for the managers to dispose of assets.
The regulator, the Financial Conduct Authority, has proposed extending the notice period for redemptions to six months.
Investors in the Aviva property funds have good ground for questioning the rush to close and the morality of locking them in for so long. Covid has dealt real estate a nasty blow.
But there is a strong case to be made that rents and valuations will bounce as the economy recovers.
That is why Blackstone is forking out £1.2billion for St Modwen, shares in Hammerson have almost doubled from January lows and Land Securities is pressing ahead with its Victoria redevelopment.
When asset managers run funds on the Aviva scale there is always a search for the edge.
That may well explain its ill-judged financing of New York activist Ed Bramson when he laid siege to Barclays’ investment banking arm and chief executive Jes Staley.
Nevertheless, like the targeting of the GSK boss, it was an uncomfortable moment.
An area where UK long-fund governance mavens could make a real difference is by exerting real resistance to private equity. Too often target companies roll over before the water cannons have been loaded.
St Modwen, which has adjusted well to the warehouse and logistics era, has approved a £1.2billion bid from Blackstone with barely a murmur.
Never mind Blackstone’s record of squeezing the pips of the US’s least well-off citizens in trailer parks, as exposed by New Yorker magazine.
The cavalier way in which opaque private equity has swept over UK firms John Laing, St Modwen, pharma supply chain group UDG and asset administrator Sanne is alarming.
It is almost always a win-win for executives. In the case of the recent spate of deals, bosses stand to collect up to £30million among them.
If the new owners absorb the management, as is being pledged at John Laing, then they also have the ability to pick up further big bucks with the help of tax advantaged carried interest.
Nice work if you can get it.
If Great British Railways had a spare billion pounds or so sitting around, it could acquire its new flexible fare strategy and joined-up approach to future journeys at a keystroke by buying the brilliant online ticketing service Trainline.
That would save the IT costs, heartache and complaints which happens when you try and patch new software on to clunky old systems.
It could also make yield management more efficient. After a near 25 per cent fall in Trainline shares in latest trading, a deal becomes ever more possible.
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