Liontrust Asset Management has come under fire from the portfolio managers of GAM Global Opportunities Fund and GAM Global Special Situations Fund, who have called on the company to commence an immediate strategic review, with the objective of selling the company to the highest bidder.
In an open letter sent to Liontrust chief executive officer John Ions, Albert Saporta and Randel Freeman said Liontrust is suffering from a “massive destruction of value” and a prolonged period of underperformance, arguing that shareholders would be better served through a strategic review.
Saporta and Freeman, whose two funds collectively own around 3.6% of Liontrust shares, pointed to the asset manager’s 85% share price decline since 2021, adding that assets under management (AUM) have practically halved from £42.3bn to £22bn over the same period.
The managers warned that more decisive action is needed to stem continued outflows and the further erosion of shareholder value.
“You must have lost credibility in the eyes of your shareholders in your ability to turnaround the firm,” they said.
“The strategic mistakes of having concentrated on the UK retail market and ESG strategies while having a very embryonic alternatives product offering are weighing in. Moreover, performance in some of your key funds is declining.”
The letter also took aim at Ions’ remuneration packet, noting that his compensation since 2010 amasses close to £40m – with £17m of this received in the past five years.
“This level of compensation is unheard of in the UK, especially for a poorly performing small-cap company,” the managers said.
Taken together with the pay awarded to chief financial officer Vinay Abrol since 2004, Ions and Abral’s combined compensation is equivalent to nearly 40% of Liontrust’s current market capitalisation, they said.
Saporta and Freeman added that the Liontrust chief executive currently only owns around 1 million Liontrust shares – “showing extremely poor alignment of interests with your long-suffering public shareholders”.
The intervention is particularly notable given Liontrust’s failed attempt to acquire GAM in 2023 – a deal that collapsed after insufficient shareholder support.
Since then, Liontrust has continued to pursue growth through acquisitions, including the recent announcement that it plans to buy River Global.
Saporta and Freeman estimated that Liontrust has spent around £280m on acquisitions – excluding River Global – since 2011, “buying £17.5bn of AUM which in the past few years all but disappeared”.
“Talk about value destruction on a grand scale… We wonder how it is possible for an executive team to be in place for such a long time on such a compensation scheme given such appalling circumstances,” the letter noted.
Trustnet has approached Liontrust for comment.