Bill1703
05 Mar 2017
Re: STAB "...I don't think you have ventured very far from the railway station on your trips oop north. Or were you really in Dundee?... There is more fine artwork in the AAM boardroom than Diageo.."Videodawn - yes, you are quite right... I exaggerate for effect, and ultimately do the Granite City a disservice. I am actually quite fond of Aberdeen, with its many fine features... though now mention it, I think I have actually spent a disproportionate time in various hostelries around the train station...And you are right about Dundee too! I was just thinking that, when LKH mentioned the "fragrant" KGC. Talking of whom... now I can't confirm your view of the AAM artwork - though it doesn't surprise me, old Gilbert is not the sort to deprive himself from everything I see and hear (easier to get away with that when your performance is good, of course). But I always remember being struck by the opulence of the Alliance Trust offices in Dundee, particularly in contrast to the apocalyptic bleakness outside their doors - back in the day when I used to turn up on occasion to advise them how to invest their funds. Yes, yes, I know what you're thinking... and it's a fair cop, most likely, though I don't think I'm to blame entirely. But the same goes as above on the (strained) relationship between opulent offices and less than opulent fund performance... for all I know (and if there's any justice) Alliance Trust have long since moved out of their erstwhile refined splendour and into a portakabin round the corner...
videodawn
05 Mar 2017
Re: STAB Bill, I don't think you have ventured very far from the railway station on your trips oop north. Or were you really in Dundee?There is more fine artwork in the AAM boardroom than Diageo IMO. LK will suggest they flog it for a special divi no doubt.
LK Hyman
05 Mar 2017
Re: STAB Bill," grey, miserable pubs crammed full of grey, miserable people.."If they call it Standard Aberdeen Life mebbe they could hire the fragrant KGC as sole CEO when Skeoch and Gilbert come to blows? She would introduce a bit of colour, no? And she's not doin' anything at the moment. AND it's but a short hop from Dundee to Aberdeen ....On second thoughts, mebbe not ... too expensive ... and useless. No, scratch that idea.LKH on the flybridge
LK Hyman
05 Mar 2017
Re: Standard Life in bed with Aberdeen A... Bill,"It's the purportedly 'active' managers at the more traditional end who actually end up hugging an index informally, while charging a big premium, that have most to lose (and will indeed lose it)."Indeed. index hugging is a goddamn disgrace innit though? I must get my head around the "active share" malarky, though it should not require the brains of an archbishop to catch the general drift.I have two funds which I particularly like, neither of which hugs its index ... Jake Rothschild's RIT Capital Partners and Neptune UK MidCap, both of which have done well over the long haul. Mrs LKH has a Fidelity UK index tracker which she refuses to cash in and allow me to do a bit of stock picking, despite my regular pleading, and Aberforth Smaller Companies (ditto). Not sure whether the latter is a closet hugger ... must check!LKH on the flybridge
Bill1703
05 Mar 2017
Re: STAB "Front runner is Standard Aberdeen to reflect a fund manager rather than a life company."SM - yes, SL have been trying to position themselves as an asset manager (or at least, asset 'gatherer') for some time, so dropping the Life bit would be logical. But they should be wary about losing such a long established and trusted brand?Of course, "Standard Aberdeen Life" may be too redolent of dodging the godforsaken elements by hopping between grey, miserable pubs crammed full of grey, miserable people...Or maybe that's just my experience of standard Aberdeen life...?
Bill1703
05 Mar 2017
Re: Standard Life in bed with Aberdeen A... "The good thing, from an active asset manager's perspective, is that the more money flows from active to passive, the more potential there is for volatility... After all, someone has to pick the stocks in order for there to BE an index."LKH - yup, as has oft been pointed out, there is a limit to how big passive can get. But it could still get a lot bigger over here, with passive share in the US now approaching 50% (from memory) and only around half of that in UK/Europe. And the fund guys know that... "The delta between the charges for active and passive management has always struck me as FAR too high. Jaysus, both systems are pretty capital-lite, ain't they?"... and the fund guys know this too! 'Tis the truth, and the higher charges will have to trend (significantly) down over time - as many of the sharper blades (eg. Tel Smith) have already reflected in their fees. Old Uncle Warren was having a go at 'active' again in his latest annual newsletter. Pointing out that as all the passive money will likely produce broadly average returns overall (by definition), then logically all the active money will also produce average returns - overall (and before fees!) Some well do great, others much less so, but they'll ALL charge premium fees.Yes, the really good ones should be able to charge good money and earn it... problem is, even the really good ones know that they won't be good all the time, which will make it difficult to charge the big bucks year in, year out. "It surprises me that there are so relatively few new active managers setting themselves up in new boutique firms. I would have thought that the opportunity is there ..."Yes, we will see more of it, I suspect. Either way, it's all about keeping costs low... either through greater scale from consolidation (as in the SL/AAM idea) - the only option really available to the funds that are already big - or your minimal overhead 'boutique' model.Whichever way you look at it, the shake-up needs to, and will, happen. Easy to point to the hedgies, who typically fail to justify their fees (and yes, most will fail and disappear) - but at least they're trying. It's the purportedly 'active' managers at the more traditional end who actually end up hugging an index informally, while charging a big premium, that have most to lose (and will indeed lose it).
sound money
05 Mar 2017
Re: STAB Front runner is Standard Aberdeen to reflect a fund manager rather than a life company.M
LK Hyman
05 Mar 2017
Re: STAB Pearl,"I hope they do not opt for STAB"How 'bout ABSALOM, m8? Anyone familiar with the eponymous biblical bloke would find that name rather appropriate.LKH on the flybridge
pearlsasinger
05 Mar 2017
STAB I hope they do not opt for STABas the new Group name.On a more serious note-- once again I commendthe absence of leaks.The talks have obviously been in existence for some time--given the apparent extent of agreed terms.. .
Bill1703
05 Mar 2017
Re: Standard Life in bed with Aberdeen A... "... I have never seen a company where joint CEOs have worked out... It can never last.... I'm a bit dubious about the whole deal - AAM have been in decline for some time, whereas Standard Life have been far more solid through recent rough times."Yes, Eadwig, it's only ever a compromise, and at best transitional. The probably don't even expect it to last themselves. It might (just) make more sense if they brought complementary skills or experience, yet Skeoch came from the investment side... so you have two Investment CEOs and none for Insurance?Interestingly, the way I read this is that SL must have approached AAM... if the other way around, it would be easy for SL to agree to take the business without needing to extend a welcoming hand (and package) to the boss. But I could be wrong... these guys must know each other well, could easily have been carved up over a few post-golf beers?For all that SL have been more "solid", as you say, they've still been under pressure for a while on investment returns (eg. GARS), and it confirms the take that all asset managers are increasingly worried about costs as pressure mounts from much cheaper passive competition. For all their solidity, SL could be more concerned than they've admitted publicly. "From this you can see I am assuming that SL are the senior partner, and as such will ultimately subsume AAM as the dust settles over a period of time...."Yes, though possibly the keener to do a deal, as above, which affects the dynamic of the relationship. That said... they say they have yet to settle on a name for the new group - I would suggest Standard Life works pretty well. Much older brand, and without recent tarnish.
sound money
05 Mar 2017
Re: Standard Life in bed with Aberdeen A... A snippet from the FT: "A senior fund manager at a rival European investment house, who declined to be identified, said he would expect to see “lots of job losses” in the event of a merger between the Scottish companies. The two companies employ about 9,000 people in total.He added: “This would be immensely logical and imaginative, unlike the Janus/Henderson deal, given the strength of Standard Life’s distribution and the manufacturing strength of Aberdeen. I can see how it [would be] well-received by both sets of shareholders.”If a deal were to go ahead between FTSE 250-listed Aberdeen and the investment business of Standard Life, the combined group would overtake Schroders, which oversees £397bn of assets, as the UK’s largest standalone fund company."Well that sounds a bit more promising and informative, the market will tell us what it thinks tomorrow . I hope the synergies are more than just one off cost savings.Incidentally SL are the acquiring companyM
Eadwig
05 Mar 2017
Re: Standard Life in bed with Aberdeen A... Reuters, "Keith Skeoch, chief executive of Standard Life, and Martin Gilbert, his counterpart at Aberdeen, would share the CEO's role at the new company,"You beat me to it Bill, I have never seen a company where joint CEOs have worked out (not that I've seen that many, and never on this scale). It can never last.I'm a bit dubious about the whole deal - AAM have been in decline for some time, whereas Standard Life have been far more solid through recent rough times.There is also every chance that if a deal is agreed based on the value of assets under management, by the time the deal goes through the value could be a lot less if people who have been happy with where their assets are now, decide to change due to the uncertainty always surrounding a merger. This happened on a very large scale when Barclays sold out of their Singapore & Hong Kong asset management business last year - although the price was set on the assets under management at the time of the deal, which ended up being about 50% less than expected when it was announced. So watch out for any terms like that emerging.With SL being the bigger company, I would expect AAM customers to be the more likely to take their assets elsewhere. They may not have anything particular against SL, but they may not be their first choice to manage their assets if AAM aren't doing it. It could also be the catalyst for a lot of people to move from AAM who haven't been happy with their performance of late but have done nothing about it. There will also be a portion of investors who are with both companies and don't want so many eggs moving into one basket.From this you can see I am assuming that SL are the senior partner, and as such will ultimately subsume AAM as the dust settles over a period of time. I think most people will have a similar view.The plus side for investors is that a lot of savings 'in the back office' must be on the cards as many jobs will be duplicated. Another blow to the Scottish economy on the way, I'm afraid. No doubt a lot of early retirements and redundancy pay partially offsetting savings initially. Some big pay-offs at the top of the companies, no doubt too, but hopefully a pragmatic approach will see the better talent pooled, ultimately.
Bill1703
05 Mar 2017
Re: Standard Life in bed with Aberdeen A... "From the Reuters piece it seems that the jobs for the boys have been sorted out - why the heck do the need a shared CEO role! Cost synergies clearly don't apply at that level."Joint CEOs tend to last about as long as joint managers in football... it's always a cop out, albeit an understandable one.Most likely, Gilbert will want to ensure his people are at least represented in the transition, and then will choose to spend more time with his non-executive directorships... and golf interests.
sound money
05 Mar 2017
Re: Standard Life in bed with Aberdeen A... HE"I hold SL, I'm open to being persuaded of the value of the merger but at first look it seems there is more in this for AAM than SL shareholders, be interested to see how market reacts on Monday."I hold both, actually it is the other way around. SL get a large exposure to Emerging markets as capital inflows are pouring in after years of decline. All of this for zero premium.For AAM holders the recovery value will be somewhat muted in this merger. Hope this flushes out a bid .M
Hydrogen Economy
05 Mar 2017
Re: Standard Life in bed with Aberdeen A... From the Reuters piece it seems that the jobs for the boys have been sorted out - why the heck do the need a shared CEO role! Cost synergies clearly don't apply at that level."Standard Life Chairman Gerry Grimstone would become chairman of the board of the combined group, with Aberdeen Chairman Simon Troughton becoming deputy chairman of a board that would have equal numbers of directors from both companies.Keith Skeoch, chief executive of Standard Life, and Martin Gilbert, his counterpart at Aberdeen, would share the CEO's role at the new company, while Bill Rattray would become chief financial officer." "create an investment group with strong brands, leading institutional and wholesale distribution franchises, market leading platforms and access to long-standing, strategic partnerships globally"Some grandiose words but no clarity as yet on how the merger creates value rather than just making it a bigger business with higher executive salaries etc. AAM is a different business model, but not current doing well. One thing they share is world class outflows from under-performing funds, not clear how the merger helps that issue. I hold SL, I'm open to being persuaded of the value of the merger but at first look it seems there is more in this for AAM than SL shareholders, be interested to see how market reacts on Monday. H2
