Charles Stanley Takeover

   

I attended, via the LumiAGM platform, the Court Meeting and General Meeting of Charles Stanley Group (CAY) to approve the takeover by Raymond James this morning. In other words, these were hybrid meetings with both physical attendees and web attendees.

The meetings were reasonably well run but there were no questions from attendees and I guess it will go through as the offer price is more than 40% higher than the previous closing price for CAY shares. But we will have to await the final vote results (a 75% majority is required plus court approval in due course).

The LumiAGM platform is easy to use and I would recommend it to other companies.

It is perhaps unfortunate that yet another stockbroker is disappearing, therefore reducing competition. Consolidation in brokers and platforms is the name of the game of late as size matters now that profits are being eroded by new entrants while operating and regulatory costs rise. Keeping up technically is now expensive for example.  Raymond James is a good fit because they are primarily a full-service broker like Charles Stanley. But it may leave the execution-only Charles Stanley Direct platform out on a limb. I would expect they might sell that business to another execution-only platform operator in due course but the stated intention is not to change anything in the short-term.

At least this takeover will remove another holding from my portfolio, reducing it to 84 companies and funds, although a number of them are investment trusts and VCTs which require little monitoring. But with the market riding high, it’s a good time to weed out a few holdings.

Postscript: Based on the voting results, it looks like a done deal. Some 99.9% of shares were voted in favour, although the number of shareholders actually voting is astonishing low at only 72 (only 12.5% of those eligible). This should lead the Court to question the outcome, but will they?  See here for the full results: https://www.londonstockexchange.com/news-article/CAY/results-of-court-meeting-and-general-meeting/15138290  

Roger Lawson (Twitter: https://twitter.com/RogerWLawson  )

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Polar Capital Technology Trust AGM and Board Apprentices

I attended the Polar Capital Technology Trust (PCT) Annual General Meeting via the Lumi AGM platform today. This was an exemplary example of how to run a “hybrid” AGM with 8 attendees on-line and 4 shareholders physically present. Questions came from both sources, voting was on-line and there were no technical hitches.

The low attendance was probably because we are in the holiday season I would guess. But it proved a useful meeting anyway with a good presentation from fund manager Ben Rogoff. He is always worth listening to and his video presentation should be available on-line, or you can read the Annual Report of the company where he covers technology trends and there is also a supplement on “Hybrid Work” that covers the WFH impact. If you want to keep up with technology trends, Ben’s annual reports are essential reading.

PCT increased the NAV per share by 45% last year but the share price discount has recently widened so the company has been buying back shares – it’s now on a discount of 7.3%. Technology shares have gone out of favour, or some profit taking has happened.

In response to a question about his own holding in the company, Ben said he had been buying shares recently. So have I as I still think technology shares are good value for the long-term.

An interesting aspect of PCT is that they do have a “board apprentice”. The person appointed is not a formal director but attends all board meetings as an observer. This enables them to learn how boards operate and otherwise gain an education. There is an organisation who can provide candidates for such roles – see https://www.boardapprentice.com/

As I said in a previous blog post, there are better ways to increase diversity than imposing quotas for females or other categories on the board. Education is the key. Appointing board apprentices is certainly a better way of improving diversity which I wholeheartedly support.

Roger Lawson (Twitter: https://twitter.com/RogerWLawson  )

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Scottish Mortgage Trust Report and Shell Climate Change Votes

The Scottish Mortgage Investment Trust (SMT) recently published their Annual Report and it’s well worth reading bearing in mind the exceptional performance they achieved last year. NAV total return was up 111% and that was way ahead of the global sector average. It was the best ever performance of the trust since it was founded in 1909 and it’s now one of the largest investment trusts.

How did they achieve such a remarkable result? You might think it was because of a strong focus on technology stocks – but that is only 23% of their portfolio. Perhaps you think it was because they made big bets on a few well-known names such as Tencent, Illumina, Amazon and Tesla? But that is not the case.

It is true that Amazon represented 9.3% of the portfolio at the start of the year and Tesla 8.6% but the 30 largest holdings only represented 80% of the portfolio. In other words, it was in essence a large and diversified portfolio. But a few stocks made a large contribution to overall performance with Tesla contributing 36% despite the trust selling 80% of their holding during the year so as to maintain diversification.

In his closing words, fund manager James Anderson suggests that he should have been more adventurous. He says “we have to be willing to embrace unreasonable propositions and unreasonable people in order to make extraordinary findings….”. He discounts the value of near-term price/earnings ratios – understanding how the world is changing seems to be his main focus.

Another share that many private investors hold is oil company Shell (RDSB) who recently held their Annual General Meeting. If you don’t hold it directly you might hold it indirectly as it’s usually a big holding in global generalist funds and trusts.

There were two resolutions on the agenda related to climate change one by the company asking for support for their “Energy transition strategy” and one requisition from campaign group Follow This. The latter demanded more specific targets to achieve reduction in long-term greenhouse gas emissions. The company’s resolution received 89% votes FOR, but the latter achieved 30% FOR. Even so that was higher than previous votes, or similar resolutions at other oil companies with support from proxy advisory services and big institutions.

Even the company’s resolution, supported by a 36-page document and which was only “advisory” includes reference to Scope 3 emissions (i.e. those emitted by their customers using their products). They say “That means offering them the low-carbon products and services they need such as renewable electricity, biofuels, hydrogen, carbon capture and storage and nature-based offsets”.

Are these proposals likely to be effective or substantially contribute to climate change? I think not when China and other countries continue to build coal-fired power stations and many people question whether it’s possible to change the climate by restricting CO2 emissions. These resolutions look like virtue signalling by major investors and may be financially damaging to Shell. It is particularly unreasonable to expect Shell’s customers to swap to other energy sources – they may simply switch to other suppliers if they can’t buy them from Shell. As the Shell report says: “If we moved too far ahead of society, it is likely that we would be making products that our customers are unable or unwilling to buy”.

Shell says that “Eventually, low-carbon products will replace the higher carbon products that we sell today”, but their report is remarkably short on the financial impact. In fact their report reads more like a PR document than a business plan and it also makes clear that projecting 30 years ahead is downright impossible with any accuracy.

Note: I hold Scottish Mortgage but not Shell. I do not hold any oil companies partly because they are exploiting a limited resource making exploration and production costs more expensive as time passes and partly because I see a witch-hunt by the environmental lobbyists against such businesses. I also dislike companies dependent on the price of commodities and vulnerable to Government regulation which Shell certainly is on both counts.

One interesting question is who owns and runs the Follow This campaign and how is it financed? Their web site is remarkably opaque on those questions. Even if they have been remarkably effective in getting media coverage for their activities, I would want a lot more information on them before supporting the resolutions they advocate.

Roger Lawson (Twitter: https://twitter.com/RogerWLawson  )

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EKF Diagnostics AGM, Verici DX, Eleco Issues and Boku AGM

I attended the Annual General Meeting of EKF Diagnostics (EKF) today via Zoom. This was one of the better organised electronic format AGMs I have attended. To quote from the company’s web site: “EKF Diagnostics is a global medical manufacturer of point-of-care and central lab devices and chemistry reagents including hemoglobin tests, HbA1c tests, glucose and lactate tests. EKF also manufactures and distributes products associated with COVID-19 pandemic”.  The latter has enabled the company to generate very high revenue growth recently and the AGM statement said this also: “Strong trading continues into the second quarter 2021 and the Board is now confident that trading for the full year will be comfortably ahead of already upgraded management expectations”.

There were a few questions posed by the approximately 50 attendees to the AGM and as they gave the proxy vote figures I asked why they got 11% of votes against the approval of the accounts. Such a level of opposition is unusually high. The answer given was that this was because of a recommendation from a major proxy advisor with the added comment “It’s just stupidity”. This is not a very helpful kind of answer. Why exactly was there a recommendation to vote against? And why was it stupid?

Note that EKF holds interests in companies RenalytixAI (RENX) and Verici DX (VRCI) who are focused on renal disease, the latter on diagnosis of kidney transplant rejection. Both companies listed on AIM last year and have zero or minimal revenue. I recently read the prospectus (admission document) for VRCI. As a transplant patient myself, I have a strong interest in this subject but the company seems to be some way from developing a saleable product or service, i.e. fund raising seems to be for financing research. I won’t be investing in either company until the prospects are clearer. It is very clear that it is possible to list new companies on AIM at present that are not just early-stage ones but pure speculations, but that has probably always been the case. These companies might meet a strong demand for new diagnostic and treatment options for renal patients if they are successful but success is far from assured and large amounts of capital have been raised and expenditure incurred with no certainty of profitable revenue resulting. At least that’s my opinion but anyone who thinks otherwise is welcome to try and convince me.  

Another unhelpful response to a question I received today was from Eleco (ELCO). I have been a shareholder for some time in this construction software company. The company announced on the 26th of April that it had received a requisition notice that covered resolutions to reappoint two directors, that all directors stand for re-election at future AGMs and that the remuneration committee report be approved.

It was certainly unusual that such resolutions were not on the AGM agenda on the 6th of May and the above requisition was ignored (probably too late anyway). It is of course standard practice now for all directors of listed companies to stand for re-election, and a remuneration resolution is also normal at most AIM companies even if not legally required. The AGM was held in a format that discouraged questions also so I did not attend.

On the 14th May the company announced that the requisition notice had been rejected as it did not comply with the Companies Act and the company’s Articles, but gave no further information.

So I sent a question addressed to the Chairman, asking what was the reason for the requisition and exactly why was it rejected. The answer I received from advisor SECNewgate (not from the Chairman) was: “Thank you for your email regarding Eleco. It has been discussed with the Company’s NOMAD and lawyers and we do not believe we need to add any further detail other than that the requisition notice does not comply with the requirements of the Companies Act 2006 and is also contrary to the provisions of the Company’s Articles of Association”.

Hardly a helpful response. Why should the company avoid answering such simple questions? Will they continue to evade answering, which legally could be difficult at the next AGM? If they have one or more disgruntled shareholders who chose to submit the requisition why should not other shareholders know about their concerns? This is just bad corporate governance.

I also attended the Boku (BOKU) Annual General Meeting today. This was another Zoom event with about 10 attendees. The CEO gave a short presentation and the Chairman covered the issue that proxy advisor ISS had recommended voting against the remuneration resolution (there were some votes against). The ISS complaint was apparently that the LTIP was not solely performance based. The Chairman said they needed to match the more normal US remuneration structure, i.e. options based on length of service.

Several questions were posed by attendees after the end of the formal meeting and the CEO gave his usual fluent responses. I questioned the new focus on e-wallets. Surely there were lots of companies offering such wallets? How were they to compete? The answer apparently is by focusing.

Both of the on-line AGMs I attended today were useful events if rather brief and not nearly as good as a physical meeting. It’s also difficult to put in follow-up questions after initial responses. Let us hope we can revert to physical or hybrid meetings soon (hybrid ones will at least make it easier for those with travel difficulties to attend so I hope the electronic attendance option is retained).

Roger Lawson (Twitter: https://twitter.com/RogerWLawson  )

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FRC Report on AGMs and Defensive Tech Stocks

 The Financial Report Council (FRC) have recently published a report on AGMs with a subtitle of “An opportunity for change”. The report covers how Annual General Meetings have functioned during the Covid-19 epidemic.  With restrictions on physical meetings, companies have adopted different approaches. Some have provided only the legal minimal which means ordinary shareholders have not been able to attend or ask questions. Other companies have provided virtual AGMs, with questions needed to be asked in advance, while others have provided a more comprehensive solution with questions capable of being asked and answered on the day, and votes capable of being submitted on the day.

I have commented on these different approaches and on the general issue of how to operate hybrid AGMs in future on this blog – just use the search function to search for “AGM” to see the articles.

The FRC report is a very good analysis in general of this subject (see below). It’s not too long or tedious for the casual reader but there are a few points worth noting:

They suggest that all shareholders be encouraged to use electronic communication and that they should provide an email address when purchasing shares.  It would certainly be good to have an email address on the share register which I have long argued for. It would assist communication from companies to their investors, and enable other shareholders to communicate with their fellow shareholders (a basic prerequisite for shareholder democracy). But the need to have the same information on the register for those in nominee accounts is also required.

Some share registrars already maintain a record of email addresses of shareholders and have electronic systems for recording voting but these can be complex and waste shareholders’ time. They also claim that these records are not part of the official “share register” which is dubious.

However, there are practical issues here that are not mentioned. I don’t mind receiving some information from companies via email but maintaining a record of which companies have my email address (and which one from multiple email accounts, particularly after I have changed them) would not be easy. We really do need a secure central register of all public company shareholders that the shareholders can maintain themselves as regards names, postal addresses, bank accounts (for dividend payments) and email addresses. Also there is the problem that I don’t like trying to read Annual Reports that can be several hundred pages long, on-line. Much better to receive a paper Annual Report.

For the above reasons, I gave up opting in for on-line communication and have all my reports on paper.

It is important for shareholders to be able not just to ask questions at AGMs but to “speak” on anything relevant to the business of the company. Some companies have adopted Articles providing for virtual AGMs that limit this. They also need to be able to ask “follow-up” questions.

The FRC suggests splitting the AGM into two meetings – an initial one for presentations and questions/answers with a formal meeting for voting later. That seems a good approach.

The FRC Report is present here:  https://www.frc.org.uk/getattachment/48c4ee08-b7be-4b7c-8f19-bcaf3d44e441/Corporate-Governance-AGM.pdf

The FRC is proposing to bring together a “stakeholder group” to consider the need for legislative changes or propose alternative means to achieve the required flexibility.

Defensive Tech Stocks

On another subject, why have technology stocks proved to be such good defensive holdings during the pandemic?  The editor of Techinvest spelled it out in these words in a recent edition:

“Driving the high demand for FAANG stocks since the start of the Covid-19 crisis has been the flight to safety after markets sold off heavily in early March. While it may seem counterintuitive, big tech has been attracting buyers-this-year because if its perceived defensive qualities. At a time when many other industries are being adversely affected by the Covid-19 disruption, tech appears to be emerging in a stronger position, with demand increasing in areas such as online shopping, remote working, and digital connectivity. According to research by McKinsey, the speed of digital adoption has been so quick in response to the pandemic that five years’ worth of progress has been made in just a few weeks. Big tech, in particular, is seen as a major beneficiary of the accelerated demand for digitalisation and investors have been backing this theme”.

Yes the world is changing rapidly and investors need to take note of that.

Roger Lawson (Twitter: https://twitter.com/RogerWLawson  )

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The Advantages of Investment Trusts

The AIC has issued a video which spells out some of the advantages of investment trusts over open-ended funds. They spell out that with most investment products you don’t have a say, but with investment trusts you do because you can vote on important decisions about how your company is run and what it invests in. You can also attend the Annual General Meeting (AGM) to meet, and question, the board directors and the investment manager. Investment companies also have independent boards of directors.

You may think that all of this is theoretical and in practice shareholders have little influence. But that is not the case. When push comes to shove, shareholders can change the fund manager and even the board of directors. I have been involved in several campaigns where this actually happened – not just in smaller companies such as in VCTs but at Alliance Trust. The outcome is usually positive even if a revolution does not actually take place.

But attending AGMs is now only available as an on-line seminar using various technologies. I have attended several in the last few weeks of that nature, and they are less than perfect in some regards. Technology is not always reliable and follow up questions often impossible. But they do save a lot of time in attending a physical meeting and they are certainly better than nothing. I look forward to when AGM events can return in a “hybrid” form where you can attend in person or via a webinar.

The AIC video is available from here: https://www.theaic.co.uk/aic/news/videos/your-investment-company-having-your-say

Brexit

I see my local M.P. Sir Bob Neill, is one of the troublemakers over the Internal Market Bill. He gave a longish speech opposing it as it stands in the Commons. But I was not convinced by his arguments. Lord Lilley gave a good exposition of why the Bill was necessary on BBC Newsnight – albeit despite constant interruptions and opposing arguments being put by the interviewer (Emily Maitlis). A typical example of BBC bias of late. Bob Neill is sound in some ways but he has consistently opposed departure from the EU and Brexit legislation. To my mind it’s not a question of “breaking international law” as the unwise Brandon Lewis said in Parliament but ensuring the principles agreed by both sides in the Withdrawal Agreement are adhered to. Of late the EU seems to be threatening not to do so simply so they can get a trade agreement and fisheries agreement that matches their objectives.

Roger Lawson (Twitter: https://twitter.com/RogerWLawson  )

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British Smaller Companies VCT AGM

I “attended” the British Smaller Companies VCT Annual General Meeting today via Zoom. This was yet another variant on the practice of virtual AGMs. But there were apparently about 30 people connected which is more than they normally get of shareholders at their AGMs.

It was well managed with no significant technical problems, unlike others recently I have attended. Shareholders could vote for or against the resolutions on the day by using a Zoom Vote facility to give an instant poll result (rather like a “show of hands” vote which is technically what I assume it was although that was not made totally clear). The poll votes were given after each resolution was voted upon. The proxy counts were also displayed at the end. All proxy counts were in favour with the highest opposition being 11% against share buy-backs (probably by ill-informed investors as these are quite essential in my view in VCTs).

The poll figures showed only one or two people voting against a few of the resolutions. I voted against the remuneration resolutions and against the re-election of Chairperson Helen Sinclair – partly because she was first appointed in 2008, and for historic reasons.

Shareholders could submit questions previously or at the meeting by typing them in (but no follow-up possibilities). Not as good as a verbal question/answer model.

David Hall gave a short presentation on the results before questions. They achieved a total IRR of 5.4% last year, depressed by the Covid epidemic as their year end is March. The epidemic had a varied impact on their portfolio holdings, but there has been a bounce back since the year end.

There was a question on dividend policy and the answer was that the current policy will remain in the short term.

The meeting was relatively short with most of it taken up by the voting procedure. But it was certainly better than not allowing any shareholder attendance as other companies have been doing.

Roger Lawson (Twitter: https://twitter.com/RogerWLawson  )

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Polar Capital Technology Trust AGM Report

Today I “attended” the Annual General Meeting of Polar Capital Technology Trust (PCT). This was a very good example of how to run a “virtual” AGM, unlike some I have attended recently. It included the ability to vote within the meeting and ask questions. It used the Lumi platform.

The meeting was chaired by Sarah Bates, and all the directors were in attendance and introduced themselves. Sarah “dropped out” at one point but another director immediately took over. Voting was done on a poll and only the two unusual resolutions were described (the continuation vote and remuneration policy).

The main part of the meeting was taken up with a presentation by fund manager Ben Rogoff which appeared to be pre-recorded and hence lacked spontaneity. But he is always worth listening to as he covers the trends in the technology world very well. I won’t cover it in detail as the recording is available on the company’s web site and much of it is in the Annual Report.

The NAV per share value was up 18.6% on the year and has continued to rise since the year end. Large cap stocks have been the drivers. Ben stated that the aim was to beat their benchmark by 2% and he covered some examples of major holdings.

There were only a few questions answered in the meeting. One was about the concentration of the portfolio in large cap stocks. The answer in essence was that reflects the market trend and hence has been a successful strategy. Another question was on portfolio turnover which was 87%. This apparently rose during the recent market turmoil. Only one question was on the formal business which related to whether repurchased shares were ever issued at a discount. The answer was no.

This is one of the few companies I hold where I can vote “for” to all the resolutions.

In all, a very well organised and run meeting that lasted only 50 minutes. I sometimes find at some of these events I can be doing something else such as checking emails at the same time as I have two screens on my desk, but not this one. Ben Rogoff speaks so fast and without any frippery you have to pay attention.

I would just like to highlight a couple of comments by the fund manager in the company’s annual report to give some insight into the world economy. To quote from it:

  1. “Our own outlook is broadly in-line with the current consensus which (we believe) assumes a limited lockdown period (2–3 months) that is followed by a recovery hampered by social distancing restrictions ahead of a vaccine in 2021 beyond which things ‘normalise’. During this time, policymakers are likely to do whatever is required to preserve the financial system. Their efforts thus far have been nothing short of spectacular. Interest rates have been slashed to zero in nearly all developed economies, while central banks have already expanded their collective balance sheet by an estimated $4trn, led by $2.4tr from the Federal Reserve (Fed). By the end of 2021, the G4 plus China are expected to have increased their balance sheets by $13tr with the Fed and the ECB balance sheets exceeding 50% of GDP. Unlimited QE from the Fed, the world’s lender of last resort, has effectively taken on private sector credit risk. Fiscal stimulus has also been ‘eye popping’ with US efforts estimated at $2.6trn, close to double anything seen in over a century with its flagship Coronavirus Aid, Relief and Economic Security (CARES) Act worth c.9% of GDP and double the size of the intervention following the financial crash in 2008. While different countries have adopted varied approaches, total worldwide stimulus has been estimated at $15tr to date, equivalent to c.17% of the global economy last year.

2. COVID-19 represents one of those generational moments when normality is suspended. Usually, these are deeply personal moments when the passage of time is interrupted by news of serious illness or an unexpected development that changes everything. Once life restarts, for some it simply snaps back to its earlier state. But for many, the timeout allows them to recalibrate and focus on what really matters to them. Our sense is that COVID-19 will result in societal recalibration – permanent changes that persist long after the pandemic – many of which will seem obvious in the fullness of time. The success of work from home (WFH) together with challenges to mass transit systems posed by social distancing means that many of us are unlikely to work as we did previously. This may have a profound and lasting impact on demand for commercial property, coffee shops (as a ‘third space’), business travel and even the role of cities. Rather than trying to move people at high speed in and out of business hubs (with HS2 expected to cost more than £106bn) perhaps infrastructure spending should be redirected to providing nationwide high-speed Internet. If we came to dominate the world because sapiens were the only animal able to assemble and cooperate flexibly in large numbers, then in a socially distanced world the case for universal internet access has never looked stronger”.

I totally agree with the last comment. Building railways which are certainly “old technology” at great expense seems somewhat perverse.

Roger Lawson (Twitter: https://twitter.com/RogerWLawson  )

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Northern 2 VCT AGM – A Totally Undemocratic Affair

I attended the Northern 2 VCT Annual General Meeting yesterday via Zoom. This was a most disappointing event.

There were three directors physically present and Tim Levett gave an overview of the company’s new investments and the top ten holdings. But when it came to the formal business they took a show of hands vote which is totally meaningless when only the directors were permitted to be present.

They did show the proxy counts, so they may have won a poll vote anyway but that is not the point. It should have been a poll vote.

The Chairman did suggest they would answer questions submitted prior to the event, but they did not specifically respond to the comments I submitted in advance. These were:

A – There are too many directors on the board who have served for more for more than 9 years. Too long! [in fact there are three out of five with more than 9 years which is contrary to the UK Corporate Governance Code unless reasons are given.  They did refer to the AIC Code but I do not accept that this should be used and it is simply not good enough for other directors to simply say they consider them independent. Is length of service a problem? I certainly think so. One only has to consider the recent case of Wirecard where the 75-year-old Mr Matthias had been Chairman for more than a decade until recently. Would such a massive fraud have taken place if the board had been regularly revived? In investment trusts it is particularly problematic as the directors can build very close and inappropriate relationships with the fund managers].

B – There is no clear statement of total return for the year in the Annual Report, and percentage change over the prior year). [There was no reference to this at all by the directors, but on my calculation it was -3.9% last year. That’s actually better than some other VCTs. Many VCTs had to mark down the valuations of some of their early stage businesses, but as the results were only to the end of March, there may be worse news to come].

Despite the use of Zoom, there was no interaction with the audience whatsoever with no opportunity to ask supplementary questions. I have no idea even how many shareholders attended.

A quite disappointing event and not how to run an AGM even bearing in mind the current restrictions.  

Roger Lawson (Twitter: https://twitter.com/RogerWLawson  )

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Virtual AGMs and How Innovation Works

The Financial Times ran an article today headlined “What’s an AGM without a chat with directors over a prawn sandwich?”. It covered the lack of attractiveness of AGMs now that there are only virtual electronic ones, if any at all, that shareholders can attend. I added this comment to the article on their web site:

“It is most disappointing that many companies are failing to hold virtual AGMs while the epidemic is around. AGMs are a valuable opportunity to ask questions of directors, both formally and informally. But as most have been held in London that means physical attendance for many was not practical. The best solution is a hybrid AGM where people can attend in person or electronically.

The smaller the company, the more valuable the AGM becomes. If they don’t want to hold formal AGMs electronically they could at least provide a seminar for shareholders to attend. But the FCA should draw up some firm rules that stop companies avoiding doing anything.

I am one of those people who regularly attends AGMs and I find them essential to learn more about companies and their management”.

There were a number of other good comments posted, but it is most unfortunate that the FT’s article writer talked about the free lunches and other goodies. Personally I could not care less about the lunches and frequently avoid them. The offered buffets I have found to be a good source of an upset tummy.

Anyway it was good to see today that Polar Capital Technology (PCT) are going to hold a virtual AGM on the 2ndof September. This will not just provide on-line access to the meeting but also support on-line voting using the Lumi Global web site or App (see  https://www.lumiglobal.com/ ). They also support hybrid AGMs which may be useful when the epidemic is over. I am a firm supporter of hybrid AGMs when normality returns as not many people can spare the time to attend meetings in person, particularly if they live remotely from the venue. But physical attendance is still the best if you want to chat informally to the directors, or fellow shareholders, so I would not want to see conventional AGMs abandoned in place of solely virtual meetings.

Polar Capital Technology are of course one of the big investors in innovative technology companies. I am just finishing reading a recently published book by Matt Ridley entitled “How Innovation Works”. I can certainly recommend it for summer holiday reading.

He dispels the myth of the lone inventor or genius creating leap forwards in products by covering many of the histories of past inventions such as the steam engine, the light bulb, the computer, the airplane and the adoption of farming – in other words a very wide period of history. The research that has gone into this book must have been very extensive indeed as so many examples are covered.

What conclusions are drawn? That innovation is typically a collaborative process of many minds and it is frequently difficult to pin down the first inventor. They often all learn from each other. He also looks at what environments encourage innovation and what discourage them. A wealthy and free society helps, while Government direction and monopolies are disadvantages. Few innovations come directly from scientific research financed by Governments or others.

The author emphasizes that innovation is often a gradual process with no great leaps forward in reality – it often just appears so in hindsight. For those investing in technology companies it’s well worth reading to understand why some companies are successful and others not. It certainly matches my experience of working in the software industry.

Now it’s the height of summer, and our windows are open, the flies are swarming into our houses. I recently purchased a great product which I consider a major step forward in fly killing. It’s a typical innovation in other words. It’s like a tennis racket but has wires connected to a battery in the handle that enable you to swat the flies and they instantly get fried when they touch the wires. No more swatting flies with newspapers and leaving squashed flies. Who invented this product? I have not been able to find out. But it is clearly a development of large mains powered fly killers that one saw on the walls of shops in the past. A photograph is below.

Roger Lawson (Twitter: https://twitter.com/RogerWLawson  )

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