Albion Venture Capital Trust PLC and Ventus funds

The Albion Venture Capital AGM is on Wed 21 Aug. Cliff Weight, Mark Lauber, Tim Grattan and others will be attending and asking questions. I finally received the Albion Venture Capital register on 16 August 2019. However, Albion Venture Capital VCT Chair Richard Glover wrote to all 5,300 shareholders on 15 August. Many were sent emails but the copy of the register we were given did not have email addresses, so we were unable to email shareholders. In the time available were only able to post letters to the largest shareholders.

I think shareholder democracy has been curtailed by the directors of Albion Venture Capital.

We applied for the register on 3 August, but only received it on 16 August, too late to be of much practical use, other than to send a letter to the largest shareholders click here for what we wrote: Albion letter to shareholders_V2 Final 16 Aug 2019

This is another example of how the playing field is tilted against shareholders wishing to unseat directors or vote against resolutions. See https://www.sharesoc.org/blog/vcts/ventus-and-ventus-2-vcts-obstacles-to-a-level-playing-field-in-unseating-directors/for a detailed analysis.

Background

The directors want to change the performance fee from the current arrangement (1.9% management fee, plus 8% of returns over a hurdle rate of 5% per annum with a high-water mark) to 20% of returns above a hurdle of RPI +2%p.a., from a new starting point of NAV at 1 April 2019.

ShareSoc recommends shareholders vote against this proposal and other resolutions at the AGM on 21 August. 1.9% plus 20% is egregious, particularly when:

it represents an increase from historically agreed arrangements and
it is accompanied by the rebasing of the current high-water mark to current NAV (effectively a forgiveness of historical under-performance, in favour of the manager).

ShareSoc is very concerned by these proposed changes to the fees charged to Albion Venture Capital VCT (AAVC) by its investment manager Albion Capital. We have therefore launched a campaign, seeking shareholders to vote against resolutions 2, 3, 4, 7 and 8 at the Albion Venture Capital AGM and the GM resolution on 21 August 2019. In addition, we seek to persuade the Albion Venture Capital directors to agree a better deal with the investment manager.

The AGM is on the 21 August. This is the best place to hold the directors to account. Shareholders, please attend the AGM and vote.

VENTUS update

We don’t believe that the boards at Albion, Ventus or Ventus 2 trusts are demonstrating sufficient independence, and as a consequence we are not satisfied that they are properly fulfilling their fiduciary responsibilities to their shareholders.

Existing Ventus 2 Director Paul Thomas was removed at the AGM on 8 August, but all the other directors were reappointed, by narrow majorities. The new proposed directors were not elected: by narrow majorities.

In Paul Thomas’ case it was very, very close with 9,558,621 shares voted to remove him, 9,512,196 for and 445,103 abstaining. Nick Curtis led a spirited campaign, supported by ShareSoc. Nick deserves our congratulations for his hard work and personal sacrifices made in this campaign. It is still very unclear how things will develop.

What is clear is that the directors authorised £38,000 of shareholders’ funds to be spent on a proxy solicitation campaign conducted by Boudicca. I suspect but cannot prove, without consulting a significant sample of individual shareholders, that their campaign influenced the result. (In the alternate case that it did not influence shareholders’ behaviour the £38,000 spent is still an unnecessary waste of shareholders funds!) I can understand some money being spent, but I felt that the amount was too high. Others have told me that spending any money in this way is unnecessary in a small company. This is a vexed question as clearly not all activists are motivated in shareholders’ interests, like us, and it is important that directors, acting on behalf of shareholders, can defend companies against activists working for their own agenda, not in the interests of shareholders.

ShareSoc is keen not to let this rest. We could campaign next year to vote against the current directors or call an EGM.

Shareholders have not been told if the planned management changes have been implemented. Silence suggests they have not, as it would be a material change to a significant management contract, which is known to be contentious and may/would have implications for the share price. No RNS has been made since the AGM results RNS, which did say this:

The Board notes that while resolutions 6, 7, 8 and 9 were passed, a significant number of shareholders opposed these resolutions. The Board are disappointed with this outcome and will seek to reflect carefully on feedback from shareholders to understand more fully the reasons for the opposition to these resolutions.

An update on the consultation process will be made in accordance with the UK Corporate Governance Code, within six months of the AGM.

I still will not believe the performance fee is in perpetuity, until I have seen the contract and read it very carefully. I suspect the wording is capable of more than one interpretation. Or it is a restrictive practice and may be struck out on that basis. Whatever, it can be renegotiated to something more sensible.

One thing I am sure is that the activism has paid off – one of the directors has been voted off, the directors have given out more information and so increased transparency, and they have agreed to merge the different classes of shares.

It is also good news that ShareSoc working with others can influence VCTs in this way. It is a good warning shot to Albion and others.

Pleas join our VCT Investor Group and our Albion Campaign. Donations are welcome and help support our aims.

albion-vct-campaign

VCT INVESTORS GROUP

DISCLOSURE: The Author owns shares in Albion Venture Capital, Ventus and Ventus 2

Cliff Weight, Director, ShareSoc

Post Date: August 17, 2019

Group description:	Our group is interested in sustainable investing and our goal is to identify and evaluate businesses that will thrive through innovation and their transition to a ‘One Planet Economy’. By leveraging the skills of group members, we aim to deeply understand these businesses, particularly focusing on how they develop long-term valuable benefits for their customers. Each year, we plan to evaluate around seven businesses to identify opportunities where our valuation exceeds the market price. A successful outcome is defined as achieving a compound annual growth rate (CAGR), including dividends, of 10% over a decade.
Meeting Type/Venue:	Meetings are in-person in a pub near to Waterloo station in London.
Meeting Frequency/Timing:	Meetings are bi-monthly on a Monday from 10:45am to 4:30pm. Members are expected to also pay for their own lunch which secures the group free use of a private room in the pub. The cost is expected to be £35-40 per person, per meeting, in addition to your SIGnet membership fee.

Group description:	SIGnet Taunton is a new group with around 10 keen members at present, with a range of investment styles and experience. We welcome new members.
Meeting Type/Venue:	In person meetings at a golf club near to the centre of Taunton.
Meeting Frequency/Timing:	We meet on the first Monday of every month at a golf club near to the centre of Taunton, 11am until 3pm with a lunch break.

Group description:	An online group for those who are new to investing, or have only been investing for a few years. Including topics such as: – What is a share or a bond, why and how to buy them. – Comparing funds, unit trusts, Investment trusts and exchange traded funds. – Portfolio management and diversification. – ISAs, pensions, SIPPS and how to save tax. – How terms such as PE ratio and dividend yield are used to value a share. – How to use technical analysis or charting.
Meeting Type/Venue:	Online using Zoom.
Meeting Frequency/Timing:	Meetings are usually held on the last Monday of the month at 7:00pm.

Group description:	An online group for those who already have some experience in investing. Covering topics such as finding companies to invest in, financial statements and ratios, valuation / margin of safety, analysis of companies and investment trusts and exchange traded funds.
Meeting Type/Venue:	Online using Zoom.
Meeting Frequency/Timing:	Meetings are usually held on the last Wednesday of the month at 7:00pm.

Group description:	The Equity Income Group welcomes investors of all levels of experience, from beginners to advanced. The focus of meetings is on dividend paying Investment Trusts, though there is also discussion around individual shares.
Meeting Type/Venue:	Meetings are held online.
Meeting Frequency/Timing:	Meetings are held every 6 weeks on a weekday between 7 and 8:30pm.

Albion Venture Capital Trust PLC and Ventus funds

Background

VENTUS update

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Group description:	A welcoming group open to all types of investors. Typical meeting content is to have a deep dive presentation on a topic selected by the participants and a session on buy/ sell/ key lessons learnt last month.
Meeting Type/Venue:	In person at a friendly pub close to Piccadilly Circus
Meeting Frequency/Timing:	Monthly during the evening on the first Wednesday of the month.

Group description:	All levels of experience welcome. A typical meeting agenda includes: – Macro Environment – Trades: Members review existing positions and identify securities with promising TA entry patterns or setups and with suitable risk/reward. Any security, long, short, futures, options may be considered. The convener takes actual positions in trades and maintains his own detailed ledger, accurately measuring performance of individual securities and cumulative activity. Members are notified by e-mail prior to the entries or exits that are decided upon. Following each meeting an updated copy of the ledger is circulated together with the next meeting agenda. Members may wish to maintain similar ledgers of their own but there is no obligation to do so. – Technical Analysis: Techniques and systems used in trades. Members can request discussion of particular aspects of TA.
Meeting Type/Venue:	Online via Zoom
Meeting Frequency/Timing:	The first Tuesday of every month from 7 to 9pm

Group description:	Open to all investors / people with an interest in investing. Typical meeting will involve members talking about recent purchases, successes, failures and possible future purchases. Also with occasional visiting speakers or members making presentations on a topic of interest.
Meeting Type/Venue:	We aim to meet on the last Tuesday of each month in a private room at a pub in Playhatch. Start time 7pm with members encouraged to meet up around 6pm for a bite to eat / drink before hand, if their diaries allow.
Meeting Frequency/Timing:	7pm on the last Tuesday of the month. Meetings likely to last about two hours but with informal ‘overspill’ before / after.

Group description:	Group focused on active investing, primarily in small / medium cap UK equities.
Meeting Type/Venue:	Regular Zoom meetings interspersed with occasional face to face meetings and social activities in the North West.
Meeting Frequency/Timing:	Monthly on Saturdays at 10am.