A modern trend with corporate apologies is to get them in early while being gloriously vague about what it is you are apologising for. Hargreaves Lansdown adopted this approach with the Neil Woodford affair, as mentioned here on Wednesday, in the hope that its chief executive, Chris Hill, would offer clarity when unveiling the group’s full-year profits.
No chance. Hill wouldn’t budge from his flat script. He says he has apologised to clients trapped in the Woodford Equity Income Fund “because we all share their disappointment and frustration”. OK, but that reads like an airy expression of sympathy rather than an apology for any action by Hargreaves.
Does Hill, for example, think Hargreaves overstepped the role of a nominally neutral platform provider in being so bullish about all things Woodford? Does he regret sticking with the fund manager until the end? Does he think that Hargreaves should have yanked the Equity Income fund from its Wealth 50 list as soon it started to worry about liquidity risks, which was as long ago as November 2017, as detailed in Hill’s own letter to the Treasury select committee?
He won’t be drawn. He says there will be “learnings and improvements we can make” but, even two months after the Woodford fund suspended dealings, he’s not yet in a position to share them. His only substantive conclusion is that “we are confident in the robustness of how we analyse, research and compile our favourite fund list”.
It would, of course, be absurd to expect Hargreaves to pick only winners in its “best buy” list. That task would be impossible. But then we’re back at the beginning. What is the apology supposed to cover?
Hargreaves shareholders won’t care. For them, the important news was that waiving fees on the Woodford fund costs only £360,000 a month, peanuts for a company making pre-tax profits of £306m last year at its usual astonishing profit margin of 64%. The shares rose 12%.
It would be hard, though, to say Hill’s personal stock has risen during this saga. He waited until the 11th hour to forgo his bonus and still can’t say what, if anything, Hargreaves would have done differently. Not impressive.
Aviva’s new boss shows sign of being radical
Maurice Tulloch became chief executive of the giant insurer Aviva only in March, so long-suffering shareholders will have to wait until November to see his new strategy, which is fair enough. In the meantime, he’s serving an amuse–bouche – a review of the Asian operation.
This may ultimately amount to little, it should be said, since doing nothing is an option. But the outcome could also be the sale of a unit worth $2bn-plus, according to analysts, or a joint venture partnership with a local operator.
Even a formal review suggests a willingness to be radical, or so investors will hope. Asia, after all, was a pet project of the former boss Mark Wilson, whose grand claim to have transformed Aviva is not reflected in the share price. At 389p, the shares sit at 2013 levels. At the birth of Aviva, via a three-way merger at the turn of the century, the stock was at £11.
That long-term perspective should serve as a prompt to Tulloch. His many predecessors have voiced his same ambition to make Aviva “simpler” but none has achieved it. If the only effective way is to start by making the insurer smaller, go for it.
Burford Capital opens its defence
The litigation funder Burford Capital is as angry as ever about the attack from short-selling US hedge Muddy Waters, but let’s give it some credit. Thursday’s nine-page counter-blast was a decent production. It was written in English, rather than legalese, which was a virtue. Some of the tangled legal cases Burford fights almost became intelligible.
The reward was a 26% bounce in a share price that almost halved on Wednesday. There’s no knowing where it’ll settle, of course, but one moral is clear. If your business is as complex as Burford’s, keep explaining.
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