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QuotedData’s James Carthew comments on Gabelli board

Biotech trusts top performance charts in February

Investec Wealth & Investment has accused the board of Gabelli Value Plus of not “acting proactively on behalf of shareholders” as it called for a continuation vote on the investment trust.

In an open letter to the trust’s chairman, Jonathan Davie, Investec Wealth & Investment’s CIO Chris Hills said shareholders should not have to wait until the trust’s annual general meeting in 2020 to voice their opinion on whether the poor-performing trust should continue to operate.

Investec is the second largest shareholder of the trust, owning 22% of shares, behind the trust manager’s parent company Associated Capital Group (27%), according to Bloomberg.

…Gabelli’s total return for shareholders has been just 28.59%, compared to the Russell 3000’s 85.75% since its March 2015 IPO, according to FE data.

Other issues concerned the level of management fees, which are 1% of market capitalisation and 1.36% in ongoing charges; justification for the merger arbitrage element of the portfolio; and the value add from small-tail positions.

Hills said the trust’s board had not responded to its specific concerns and had not been forthcoming, which he added was “wholly unacceptable”.

Brokers agree with Investec concerns

Hills claimed the board had not acted on behalf of shareholders…

“We therefore recommend that our nominee company on behalf of our discretionary clients vote against re-election of the board.”…

Broker Numis Securities said it was “easy to understand Investec’s concerns”, noting that “discontent from such a significant shareholder clearly puts the future of the fund in doubt”, despite the parent group’s stake.

Quoted Data’s James Carthew also largely agreed with Investec’s points, adding: “The board should never have let things get this bad.”

The board of Gabelli Value Plus said it had “reviewed the letter, does not agree with a number of the points made and will respond fully in due course”.

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