Beleaguered listed investment company Marlin Global has reported a first quarter drop in its portfolio value.
Marlin, managed by Carmel Fisher's Fisher Funds, faces a non-binding shareholder vote at its annual meeting in Auckland today to wind up the company.
The vote, led by rival fund manager Elevation Capital and backed by the New Zealand Shareholders' Association, comes on top of a controversial five-year renewal of Fisher Funds' management contract and a $12 million net loss in the year to June 30.
A 40-minute question and answer session at today's meeting included comments that Marlin's returns since 2009 had been "wretched" and its early performance wasgood because investing at the time was like "shooting fish in a barrel".
Marlin chairman Alistair Ryan says the company's adjusted net asset value (NAV) dropped almost 3% in the first quarter of the 2013 year.
Over the same period, the MSCI global small cap gross index increased 3%.
Closing the gap
Marlin's total shareholder returns – a mixture of share price and dividends – has increased 1.3% over the period, he says, mainly due to a closing gap between the share price and NAV.
This "discount" is a key plank for Elevation's vote.
Mr Ryan says the first-quarter result is disappointing but the company's team is committed to turning them around.
"It does demonstrate volatility," he says. "It's quite dangerous to report in short intervals because things can move around."
He says the portfolio's NAV has increased 6.5% since it began in 2007, compared to MSCI's drop of 10.5% over the same period.
The Chinese effect
After Mr Ryan's 40-minute opening address, Ms Fisher says she wanted to focus on introducing her new management team as there "isn't much point about events that happened 12 months ago".
She says the "Chinese effect" – poor performance by Chinese stocks Fook Woo and Ports Design – wiped 6.7% off the portfolio's value last year.
Ms Fisher is Marlin's executive director. Mr Ryan and fellow director Carol Campbell also sit on the boards of Marlin's sister companies, Kingfish and Barramundi.
Portfolio manager Roger Garrett says the company will move away from higher-risk, outlier stocks and has invested in its first larger cap stock, Volkswagen.
International analyst Manuel Greenland, who joined Fisher Funds in May, told today's meeting a few "bad apples" shares representing 17% of stocks held had hurt the company's performance by 30%.
Shareholders asked the board why Fisher Funds' contract was renewed, given the company's performance, and questioned the wisdom of paying dividends out of capital when the fund was not making money.
Shareholder Matt Schofield says
About 35 million proxy votes have already been cast in relation to the Elevation proposal, with almost 27 million votes against.
The results will not be known until later in the day, when they are announced to the NZX.