There’s an old saying that there are no atheists in a foxhole. Faced with impending demise we are happy to desperately grasp for anything that might prolong our existence. The Covid-19 outbreak should perhaps create a new truism: there is no shareholder primacy in a crisis. In common with the financial crisis, current economic disruption reminds us that the normal operating model for capitalism might work tolerably in normal times, but is quickly superseded when real pressure is exerted. Back in the distant past of last month shareholders would have been looking forward to dividends from many companies, and buybacks from others. That future isRead More →

It’s increasingly clear that the Covid-19 crisis is going to have significant and sustained impact on economies around the world. Tens of thousands of people will die. Millions of people may lose their jobs. There is no ‘upside’ to any of this, but there is plenty of downside risk for those least able to shoulder it. As we have written previously, this global catastrophe is revealing just how much of that risk some of the lowest paid workers in our societies are exposed to. Delivery drivers on temporary contracts can’t work from home, and won’t self-isolate if they have no sick pay. Workers in theRead More →

If bankers’ bonuses became the symbol of an economic system gone astray during the financial crisis, share buybacks might become the equivalent during the Covid-19 outbreak. A range of commentators have criticised companies that have spent money on buybacks, leaving themselves financially vulnerable, and in some cases dependent on state support. You would think buybacks would have dried up weeks ago, but it doesn’t seem everyone has got the message. Take Frasers Plc, formerly Sports Direct. On 20th March it released an RNS stating that it was monitoring the affect of the Covid-19 outbreak closely. It warned: ’the Board expects that COVID-19 will cause significantRead More →

If it were not for the general chaos in financial markets currently, events at NMC Health and Finablr would surely be one of the biggest business stories in the UK. Since last week events at both companies have taken a significant turn for the worse. First let’s look at NMC. In the past week it has released two incredible RNS announcements. The first, on 10 March, revealed an extra $2.7bn in debt facilities that had previously not been disclosed to or approved by the Board. The second, released on 12 March stated that the ongoing review being led by Louis Freeh had “discovered evidence leadingRead More →

US authorities took the highly unusual move of suspending trading on the Dow Jones industrial exchange this week; the same day that 5% was wiped of the country’s top 500 companies and 7.25% was lost from the UK’s largest 100. Meanwhile, in South Korea temporary restrictions are being put on shorting, once again echoing some of the panic of the financial crisis. Coronavirus then is not only the cause of much hand wringing – and washing – across the world’s health services, but also across its business leaders. As the death toll climbs, so too do the prospects of a bleak year for investors. EconomistsRead More →

It’s hardly news that plant-based alternatives to meat are becoming a big thing. With major chains like Burger King and KFC trying out meat alternatives, it’s safe to say that this is becoming thoroughly mainstream. Whilst some consumers are seeking out alternatives to meat because of ethical and/or environmental concerns, a growing number are also shifting to so-called ’flexi-tarian’ diets that reduce the amount of meat consumption. The peak cultural reference point for the UK indicating the size of the shift was the decision of Greggs to introduce a vegan sausage roll. We appear to have reached the inflection point at which people moaning aboutRead More →

Is the future of Responsible Investment going to be a much more private affair? An interesting recent snippet in The Sunday Times pointed to a wider issue affecting the way investors engage with companies – the decline of publicly traded businesses. The piece in The Sunday Times cited research by the Quoted Companies Alliance and broker Peel Hunt which found a majority of asset managers were concerned by the decline in the number of PLCs, which reduced the range of shares they could buy and hit market liquidity. The article noted that the number of IPOs had fallen in recent years, with just 36 companiesRead More →

It’s that time again when the battle lines are drawn, opposing camps martial their arguments against each other and people are forced to choose who gets their vote. We’re talking, of course, about voting in pooled funds. Last week saw the Association of Member Nominated Trustees (AMNT) reiterate its call for this issue to be tackled by regulators. We wholeheartedly agree. The status quo is a corporate governance rotten borough. An unrepresentative electorate commands the vast bulk of the voting power. It’s time for reform. We know from our own analysis of both manager voting and clients’ ESG policies that there can be huge differencesRead More →

It’s over eight years since the revelation that the News of the World had been involved in hacking the phone of murdered schoolgirl Milly Dowler. That news set off a chain reaction that saw the newspaper close, numerous journalists arrested, Rupert and James Murdoch summoned to face a grilling in parliament, News Corp’s bid for BSkyB pulled (and the opportunity ultimately lost forever), senior police offers resign and the Leveson Inquiry launched (if not completed). As the fallout spread, not only News Corp started racking up multi-million costs, but other media groups including Trinity Mirror (now Reach PLC) caught up. The scandal revealed that someRead More →

The second part of this week’s Panorama investigation into the Woodford scandal focused on Capital Group fund manager Mark Denning and a fund that appears to have taken positions in some companies in which Capital was also an investor. Denning has left Capital, but has strenuously denied any wrong-doing. The fund named by Panorama as being at the centre of the trades it questioned is Morebath. A quick trawl of filings shows that Morebath was indeed an investor alongside Capital in Aus-listed medical firm Mesoblast and Bollywood film producer Eros. PIRC has also found that Morebath took some positions that were big enough to triggerRead More →