Do not Forseke me, oh my darling, as Frankie Lane might have sung, had he been an Alliance Trust shareholder.  That’ll be Karin Forseke, the new chairman, and Friday is High Noon (GMT) as the outlaws from Laxey Partners renew their efforts to shoot their way into the Dundee citadel of Britain’s largest investment trust. Colin Kingsnorth and his gang have already spurred Alliance into a frenzy of activity, overturning the habit of several lifetimes and buying in shares for cancellation, but now the gang is demanding a “comprehensive review of the company”.

There is something to be said for this. Alliance has struggled to make its diversifications (including the excellent Alliance Trust Savings) into profit centres, and even if ATS finally does turn the corner, it will be years before it has any impact on Alliance’s net asset value, the measure by which investment trusts are judged. The suspicion remains that its moves away from managing the main fund are to give the executives under Katherine Garrett-Cox  the prospect of growing the business.

At present, it’s shrinking fast; Alliance has spent over £250 million buying in its own stock, a move which has prettied up the performance but done next to nothing to close the discount to NAV, which has stayed stubbornly the wrong side of 15%. Considering that Alliance has said only that it is trying to stabilise this number, it’s hardly surprising that the experts at Wins concluded that “shareholders should take advantage of the buyback policy, while it lasts, to make a hasty exit.”

The meeting next week would present an excellent opportunity to explain the policy. The board might even think about a tender offer and a pledge to defend a discount closer to its peer group, but Laxey’s motion also demands that the board consider outsourcing the portfolio management. This would not only be a radical change of philosophy, it would also be very expensive.

Any gains would be highly uncertain, while the costs would rise significantly. Far better for Alliance to concentrate on investment performance (improving, but could do better) while explaining how it will shrink the discount. It’s a long way to Dundee for most of us Alliance shareholders, and it won’t be much of a showdown when they get there. On this occasion, the Laxey gang has got it wrong, and Ms Forseke should have no trouble gunning them down.

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