After the war comes the phoney peace, but Alliance Trust shareholders might benefit

Outlook

Katherine Garrett-Cox has opposed appointments at Elliott Advisors mooted by a hedge fund (EPA)

Just two weeks ago Anthony Brooke and Rory Macnamara were the baddies. They were portrayed by Alliance Trust, whose board they are now joining, as people who “could not be considered independent” by the company’s shareholders.

Dark hints were dropped about how they might serve as the means for an evil New York-based hedge fund, Elliott Advisors, to achieve its dastardly aims. Their election, it was held, could lead to Elliott having an “undue influence” over the company, a listed investment vehicle whose long-term performance has been, well, less than stellar.

Elliott was said to be bent upon “a short-term agenda” involving “disruptive actions” which “threaten the very existence of the company, and ride roughshod over our long-term shareholders, our customers and our over 250 employees”.

Today, however, everyone’s smiling. The two men are being lauded as salt of the earth types whose “significant experience” will be a “considerable asset” to Alliance and to its legion of small shareholders.

As for Elliott, it’s been re-cast as a responsible shareholder that has been seeking to work constructively with the company in which it invests. It has even received a public thank you from the trust’s board for “engaging with us on this important issue”.

Ultron, it seems, has joined the Avengers.

Don’t believe the hype. All this backslapping and bonhomie is Elliott’s reward for signing a “mutual non-disparagement undertaking” which requires it to play nice in public. At least until the 2016 AGM is over. This, and Elliott’s agreement to sacrifice the third of its nominees, represent a sop to the board of Alliance, which now knows it can no longer sit on its hands and allow expenses to rise at a rate that the trust’s performance scarcely justifies.

Elliott has won the day and Alliance will need to work quickly to address that issue, together with others, such as the disparity between the value of the shares in which it invests and the value of the trust itself.

All of which should be good for Alliance’s shareholders. It’s directors – and particularly the new ones – just need to be mindful that the forthcoming process should be of benefit to each and every one of them, and not just to Elliott.

If it can do so, Elliott will say sayonara with a nice going-away present, while small savers will be left with a better, and hopefully cheaper, trust to look after their money.