Asset manager Liontrust (LIO) has offloaded its entire stake in commercial office fit-out firm ISG (ISG:AIM) and delivered a withering verdict on its management’s track record.
Managers of Liontrust’s Macro Equity Income Fund (ISIN: GB0033726877) lost patience with the stock after a December trading update, they say in a note mailed to clients seen by Shares Magazine.
Ongoing losses in ISG’s construction division – a key reason for its 1 December 2015 profit warning – ‘undermines management credibility’ and cements ISG’s reputation ‘as a business prone to disappointment’, the note says.
Liontrust is not required to disclose the sale of its stake, which was as high as 4.4% in August 2015, via a stock market announcement because asset managers only have to declare when they move below or above 5% ownership in a company, a spokesperson said.
The news will be a blow to ISG management, headed by chief executive David Lawther, who are trying to fend off an unwanted 143p a share takeover offer from private equity firm Cathexis.
ISG’s board is trying to convince owners of the 70% of ISG shares not already owned by Cathexis to reject the bid, saying its offer does not reflect ‘an adequate premium for control of ISG’.
Number two shareholder Octopus Investments, which owns 8.8% of ISG, and number three River & Mercantile (RIV), which has 5.7%, have each indicated they oppose the bid and therefore support management through ‘letters of intent’.
Liontrust, previously ISG's fourth-largest shareholder, had already sold down its stake to around 1% of ISG by the time of Cathexis' offer.
Cathexis is expected to report to the market on 13 January the level of support it has received for the offer. If it has received acceptances representing more than 50% of ISG’s share capital, it can declare the offer ‘unconditional’.
Note: this article has been updated to show Liontrust only owned around 1% of ISG's share capital at the time of Cathexis' offer.