The week in investor relations: Small-cap team poached, sell-side cuts and a coup at Dignity
– CityWire reported that First Eagle Investment Management poached a team of small-cap managers from Royce Investment Partners. Bill Hench, Suzanne Franks, Rob Kosowsky and senior research analyst Adam Mielnik have left Royce for First Eagle. CityWire stated that the team was listed as managing the $2.1 bn Royce Opportunity Fund, which Hench had been lead manager on since 2013. Morningstar placed the fund under review, reportedly calling the team’s exit ‘stunning’ in an analyst note.
– Japanese mega-bank Mitsubishi UFJ Financial Group (MUFG) cut six members of its US team: four in sell-side research, sales and trading, and two investment-banking advisers, reported Reuters, citing a source familiar with the matter. The job reductions were made in the last week, the source said, as the bank expands its fixed-income trading and debt capital markets businesses, for which it has been hiring since mid-2020. The reshuffle at MUFG reflects a ‘long-running decline’ in sell-side analysis, said the news agency, noting that buy-side advisory firm Substantive Research published a survey in November last year showing that asset managers had nearly halved the prices they’re willing to pay for sell-side research since January 2020. This is due to meetings with analysts, which are typically in person, becoming virtual.
– The board of one of the UK’s largest funeral providers was ‘cleared out after a coup by its main shareholder’ to oust the executive chairman, according to The Times (paywall). Investors in Dignity voted in favor of removing Clive Whiley and replacing him with Gary Channon, chief investment officer of Phoenix Asset Management, which owns almost 30 percent of Dignity. The paper reported that Dignity’s three independent directors tendered their resignation after the coup, which they said left them ‘seriously compromised’. The company had already been searching for a new permanent chief executive, chairman and finance boss.
– US companies are beating profit estimates at a record rate, reported Reuters. Despite still being early in the earnings period, a ‘record percentage of first-quarter profit reports from major US companies are coming in above analysts’ expectations,’ noted the news agency. With results in from 110 of the S&P 500 companies as of Thursday, 85.5 percent have beaten analysts’ estimates for earnings per share, reported Reuters, quoting Refinitiv data, adding: ‘If that trend continues through the reporting season, it would be the highest beat rate on record going back to 1994.’ An average 78 percent of companies have beaten earnings estimates in the past four quarters.
– CNN reported that Boeing’s board raised the company’s executive retirement age. Normally the mandatory retirement age for Boeing executives is 65, but the board extended that to age 70 for CEO Dave Calhoun. Calhoun became CEO in January 2020, about halfway through the 20-month grounding of the 737 MAX, after the board removed predecessor Dennis Muilenburg. ‘I plan to work well past 65,’ Calhoun said at that time. ‘The board can have me as long as it wants me.’
– Record-breaking growth for index-tracking ETFs represents a ‘recipe for climate chaos’, according to a new study reported in the Financial Times (paywall), which blasts asset managers for failing to reduce coal exposure in passively managed investment portfolios. Reclaim Finance and Urgewald, two non-profit environmental campaigning groups, analyzed a sample of 29 leading asset managers – which collectively oversee $41 tn in both passive and active investments globally – between February and March this year. They found that just a quarter of these were covered by coal-exclusion policies, reported the paper. The findings were ‘even more stark’ for the largest passive managers, where data was readily available.
– CNN reported that Goldman Sachs has only 49 black executives and senior managers among its US workforce, accounting for about 3 percent of the total. In a sustainability report published Tuesday, the bank revealed data on the racial and gender composition of its US workforce for the first time. Of 1,548 US executives and senior managers, just 24 are black men and 25 are black women, or about 3.2 percent of the total, according to Goldman Sachs. ‘We’ve made good progress on our aspirational diversity and inclusion goals,’ wrote CEO David Solomon in the introduction to the report, adding that recent partner and managing director classes were the ‘most diverse’ in the company’s history. ‘There’s still a long road ahead, but I will continue to make this effort a personal priority.’