Elliott Advisors' long-term claim is 'nonsense', says Alliance Trust

The chief executive of Alliance Trust has called Elliott Advisors' claims that it wants to remain a long-term shareholder of the investment trust "nonsense", as the battle for control of the 127-year-old company intensifies.

Katherine Garrett-Cox told FTfm that the New York-based activist hedge fund, which wants to install three new directors on Alliance's board to improve the group's performance, has only ever wanted a quick exit from the company.

"From the first time I met them and at every meeting since, Elliot has made it clear that they are looking for an opportunity for an exit," said Ms Garrett-Cox. "They have also made it clear that dividends, which are an artery for a huge swath of our investor base, are a waste of time, which is incredibly short term."

Elliott, which has built a 12 per cent stake in Alliance Trust to become its biggest shareholder, is seeking to appoint three non-executive directors to the board at an annual general meeting on April 29 - a move Alliance Trust is trying to block.

A spokesperson for Elliott said Ms Garrett-Cox's claims that it wants a quick exit were fictitious: "Elliott is a long-term shareholder in the company, and has been the largest buyer of shares in the market since 2010. We have met directors of the company on over 20 occasions, including attending all the annual general meetings in person, since we first became shareholders."

The spokesperson said Elliott had had an opportunity to exit on November 26 2013, when Alliance Trust's brokers wrote to Elliott to bid for the hedge fund's entire shareholding. "We rejected the bid, and have increased our shareholding since," said the spokesperson.

The trust has delivered a below-average return of 52 per cent over a five-year period, according to data from Lipper. Other trusts investing in global equities have produced returns of more than 100 per cent over the same time period.

Ms Garrett-Cox, meanwhile, has doubled her pay over that period to £1.4m.

On the subject of dividends, the Elliot spokesperson said: "Alliance Trust has a long history of dividend increases, and Elliott is aware of the importance of dividends to shareholders as part of an attractive total return. We have never specifically proposed to the company that it should amend its dividend policy.

"Indeed, we would like to see a more attractive dividend yield at Alliance Trust, as long as such a policy is sustainable and not at the expense of long-term capital preservation and growth."

In an emotional plea to its shareholders on Friday, Alliance chairman Karin Forseke asked them to trust the current leadership and reject the campaign by Elliott.

Ms Forseke wrote: "We have previously described Elliott and their affiliates as a business that seeks to influence companies to change their strategic direction through public and disruptive campaigns. As a hedge fund manager they do this to create value for their own investors and we believe they have very different perspectives from other shareholders."

Alliance Trust is one of the UK's largest trusts with £3.6bn in assets.

Next week: Face to face interview with Katherine Garrett-Cox

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