Yesterday,
I attended a seminar/roadshow hosted by one of the leading fund management
groups in the UK. One of the speakers
was a fund manager who has been running his particular fund for many years (20
odd) and it was interesting to hear his views on the markets and where he is
placing the fund. However, one of the
recurring themes during his presentation was how he and his team sit down with
directors and CEOs of the various companies he is invested in to discuss what
the company is doing to move forward.
This
is something we’ve seen with other high profile fund managers – using their
shareholder status and buying power to influence how a company is being
run. There’s no doubt about their legal
rights as shareholders to attend these meetings or have these discussions, but
is it right that they do so?
A
fund manager’s job is to manage the money he is looking after, client’s money,
by investing it in a range of shares. He
does his research and makes the decision to buy those shares. He monitors the holding and presumably at
some point, when he thinks the time is right, he then sells those shares. To do all that, he has to assess and make a
judgement about how these companies are being run. But does that remit extend to actually
influencing how those companies are run?
Is it his job to tell a CEO how to run the company or what direction the
company should go in? Or is it simply
his job to make a judgement, based on what the CEO is doing, as to whether or
not he wants to hold that shareholding?
As
ever, one could argue this either way, but I’m uncomfortable with fund managers
thinking they’re managing directors. I’m
not sure that’s where their talent lies.
Let the CEO run the company, let the fund manager analyse that company
and decide what to buy, sell or hold and both should be judged on their long
term performance.
