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Keystone chair cops mystery shareholder revolt

22 January 2018

Beatrice Hollond, chair of Keystone, the UK investment trust managed by rising Invesco Perpetual star James Goldstone, faced a shareholder rebellion at its annual general meeting.

Beatrice Hollond, the chair of Keystone (KIT), the UK investment trust managed by rising Invesco Perpetual star James Goldstone, faced a shareholder rebellion at its annual general meeting last week.

A total of 801,053 votes – representing double that number in shares – voted against the re-election of Hollond, 57, who has chaired the £250 million listed fund for seven years.

Although the resolution number 5 was easily carried with nearly 1.8 million votes in Hollond’s favour, the ‘no’ vote was much bigger than the other 10 ordinary resolutions before shareholders.

In response Keystone said: ‘The large vote against resolution 5 came mainly from one shareholder with whom the board will engage.’

There was no further information from the company as to the identity of the shareholder or the reason for voting against Hollond.

Hollond, a former equity analyst at Morgan Grenfell and managing director at Credit Suisse Asset Management, holds several non-executive roles. She joined the board of Foreign & Colonial (FRCL) last year and also serves on the boards of Henderson Smaller Companies (HSL), Templeton Emerging Markets (TEM) and Telecom Plus (TEP).

According to Thomson Reuters data, Keystone’s largest investor is Investec Wealth & Investment with a stake of nearly 12% or 1.62 million shares. If true, this would rule it out as it would give the wealth manager 810,000 votes, more than were declared against Hollond.

That leaves 1607 Capital Partners, the US value investor that owns 1.32 million shares (9.8%) and 660,000 votes; Brewin Dolphin with 910,000 shares (6.8%) and 455,000 votes; and Speirs & Jeffrey, the Glasgow-based stock broker that owns 810,000 Keystone shares (5.99%) and 405,000 votes).

Investment Trust Insider approached Speirs for comment but it declined to do so.

Invesco Perpetual, Keystone’s investment manager, did not respond to a request for comment either. Responsibility for the portfolio was passed from Mark Barnett, the firm’s head of UK equities and manager of its biggest UK equity income funds, to Goldstone last March. This was part of moves to relieve the burden on Barnett, who still manages the Edinburgh (EDIN) and Perpetual Income & Growth (PLI) trusts, and to promote a talented young manager.

Goldstone, who also took on the small Invesco Perpetual Select – UK (IVPU) from Barnett, quickly stamped his mark on the portfolio by buying shares in Lloyds and Barclays banks shunned by his boss.

Keystone’s total shareholder return over one year of 13.3% lags the 19.6% average return of trusts in its UK All Companies sector, according to the Association of Investment Companies. Over 10 years it has generated a 143% total return, including dividends, below the 198% sector average. The shares trade on a discount of nearly 11%, wider than the sector average of 7.8%.

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