Scottish Mortgage Trust has seen one of its non-executive directors step down after a disagreement over new board appointments and its policy of non-listed investments.
Amar Bhidé, a professor of business at Tufts University in Massachusetts and an SMT director since 2020, told the Financial Times he had clashed with chair Fiona McBain over the issues and felt he had no option but to leave.
“I’ve been very concerned about the share price performance and the discount, and trying to get people to understand that there is a structural reason for this,” he told the paper.
Scottish Mortgage, managed by Baillie Gifford, had been one the UK’s most successful trusts over the past decade as bets on technology companies such as Tesla, Amazon and Alibaba have paid off handsomely.
Over the past two years, however, the tide has turned as interest rates have risen and monetary conditions got tighter, with the share price down 55% from the 1,528p high of May 2021 and cutting its market value to £9.6bn.
Bhidé added that FTSE 100 member SMT had £3.4bn in unquoted businesses but its low fees and structure meant it lacked the “capabilities and governance clout to be able to monitor the illiquid investments on which there is little audited information in the public sphere".
Carrying on he added: “The fact that you’ve pulled it off for the last 10 years has been due to an utterly aberrant period in financial history. Don’t delude yourself that you can keep playing this game”.
Fiona McBain replied: “As chair of Scottish Mortgage, I have complete confidence that Scottish Mortgage’s board provides robust governance and oversight.
“Current topics such as short-term volatility, share price and private companies are discussed regularly with shareholders in various forums by the managers of Scottish Mortgage."
Even with the weakness recently, SMT’s share price has risen more than 300% over the past ten years but currently sits at a discount of almost 18% to the value of its underlying portfolio.