It's round two for Laxey-Alliance but investors don't care

Last week saw the renewal of hostilities between Laxey and Alliance Trust after the activist hedge fund insisted Katherine Garrett-Cox and her board consider outsourcing the fund's management.

The renewed call for change at Alliance came just days after the trust reported sector-beating returns, and roughly a year after Alliance shareholders turned down the offer of a strict share buyback, or discount control scheme, being introduced.

The latest requisition by Laxey, which is headed by Colin Kingsnorth, once again seems to have enough strength behind it to be put to a vote.

Or does it?

Like last year's assault on the global growth trust, Laxey's Kingsnorth is understood to have made clever use of the 100 rule, a clause in the Companies Act designed to allow a hundred like-minded minority investors to band together to create critical mass. Splitting his stake between 100 different cell companies allowed Laxey to requisition his demands singlehanded.

Even without the rule, support for Laxey's 2011 resolution was probably strong enough for its calls for change to be taken seriously by the vehicle's board.  Performance of the £2.5 billion closed-end global growth fund languished at around 60% over three years (versus 66.2% by FTSE World), its discount ran into the high teens and while its large shareholder base might have been enviable, it is fair to say it was behind the board due to inertia rather than any sense of enthusiasm.

Fast forward some 12 months or so and Alliance is in a different place altogether. Its final year total return was some 5% ahead of the global growth sector - the best set of numbers since Garrett-Cox came on board in 2007 - and while still wide at -15.4% the vehicle's discount volatility has been reduced (see Canaccord Genuity's chart below).

All this begs the question, why should shareholders care that Laxey has reignited its feud with Alliance?

Realistically, Alliance is being requisitioned by 0.07% of its voting share and this time around few other investors have so far stuck their head above the parapet to side with Laxey.