David Prosser: When star fund managers decide to jump ship, it is time to turn out the lights

The decision of Roger Guy yesterday to leave Gartmore plunged the company into outright crisis and looks set to hand it on a plate to an opportunistic buyer
Click to follow

As Sir Alex Ferguson will tell you, the problem with building your team around a single superstar is that if said star gets itchy feet, it threatens to bring your whole endeavour crashing down.

It is a phenomenon with which the fund management industry has become all too familiar – and no one more so than Gartmore. The loss yesterday of Roger Guy, its best-known and most successful fund manager, plunged the company into outright crisis. In the summer, its share price fell by 20 per cent on the departure of Guillaume Rambourg, its other big-name manager, and now Mr Guy's decision to leave looks set to hand the company on a plate to an opportunistic buyer.

In a crowded marketplace, stars give fund management businesses an edge over the competition, with both private and professional investors following the best-known names as they move around the industry. The businesses that John Duffield built so successfully – Jupiter and New Star – used to use their stars on billboard adverts , so strongly did he believe in the cult of the fund manager.

At Fidelity, meanwhile, the track record of Anthony Bolton saw, over the course of 20 years or so, the niche Special Situations fund grow in value from a few tens of millions of pounds to £6bn in assets at its peak.

This is not a UK-only phenomenon – just ask Warren Buffett. The allure of the men with the Midas touch, those mercurial characters who will transform your finances, is strong the world over.

It's great while it lasts, but what happens when your star man wants to move on (or goes off the boil)? Berkshire Hathaway is now tying itself up in knots over who will succeed Mr Buffett, but it seems inconceivable the business will continue in its current guise. Fidelity had to break up Special Situations once Mr Bolton stepped down, and saw many investors move their money elsewhere. The collapse of New Star, meanwhile, began when the stars it had lauded lost their shine.

Now Gartmore faces the same problem. When you bet everything on a single star manager, or even a handful of top names, you leave yourself with no plan B. It is hard to see how the company can now recover from this setback.

Rolls-Royce must get on top of this crisis

In the event, a third day of sell-offs failed to materialise at Rolls-Royce. The company's stock fell sharply in early trading before stabilising later in the day (a big contract win helped, as did support from ratings agencies). Moreover, while Rolls-Royce investors are no doubt upset about the 10 per cent wiped off the value of the company since Qantas's superjumbo had to make its emergency landing in Singapore last week, prior to that, the stock was up 25 per cent on the year. Investors are still sitting pretty.

Still, the lesson of BP is that companies which fail to get a grip on this sort of crisis from day one risk a load of trouble farther down the line. And this incident really could be as serious as BP's oil spill because Rolls-Royce's reputation for engineering excellence has until now never been sullied.

When Sir John Rose, Rolls-Royce's chief executive, announced earlier this year that he would step down from the company next March, all sorts of people queued up to pay him tribute. Rightly so: he was a powerful advocate of British engineering skills long before most people realised the growth offered by the City would prove ephemeral.

However, this is the sort of crisis to which he is ill-suited. Sir John does not court publicity and never gives interviews. Rolls-Royce follows his lead: it has kept a dignified silence since the Qantas episode, other than a couple of perfunctory statements to the market.

Until it has worked out exactly what was wrong with the superjumbo engine that failed, the company will be limited in what it can say. But that won't stop everyone else, including those with something to gain from doing Rolls-Royce down, from talking. Sir John had better start fighting the company's corner soon, even if that means stepping into the limelight he hates.

Sky's magic number is a frightening one

Congratulations to BSkyB, which took delight yesterday in declaring that the target it set itself six years ago of reaching 10 million subscribers has now been achieved. As the company itself points out, this means 36 per cent of households now buy pay-TV from Sky.

Still, any noise generated by the achievement might sit a little uncomfortably with Sky's largest shareholder, News Corp, which will be acutely aware that Ofcom has begun beavering away on an investigation into whether it should be allowed to acquire the 61 per cent of the company that it doesn't already own.

We should be careful. Ofcom must decide whether a News Corp takeover of Sky is a threat to British media plurality. There are no set tests for that, but the burden of proof for those who want the deal blocked will be higher than it would be if Ofcom were considering only competition issues.

Still, one part of BSkyB's announcement catches the eye. Almost a quarter of its 10 million television subscribers have also signed up to buy broadband internet access and a home phone service from Sky. Its attempts to bundle services together to maximise revenue per customer have, in other words, been very successful.

This is the sort of thing that spooks newspaper groups that compete with News Corp in the UK. Sky comes with a captive audience of 10 million households, to whom its new owner could sell online access to papers such as The Times and the News of the World. No other newspaper business has such an option. There's your threat number one to media plurality.