Magellan’s star investment guru confirms split from wife

Magellan has confirmed chief investment officer Hamish Douglass separated from his wife months ago, after media speculation that personal problems had created instability within the Sydney fund manager and contributed to the abrupt leadership change.

Magellan announced on Monday evening that chief executive Brett Cairns would resign from the company immediately “for personal reasons” but did not provide further details, leading The Australian Financial Review to publish an opinion questioning Mr Douglass’ relationship status.

Magellan’s Hamish Douglass is under the spotlight. Credit: Janie Barrett

The report tied Magellan’s global equities fund’s recent underperformance to research finding returns can suffer if investment executives are going through a divorce. Magellan’s flagship global strategy has underperformed the relevant MSCI index by about 14.5 per cent over the past 12 months and about 5 per cent over the past three years.

Magellan’s head of communications Lucy Briggs on Wednesday said Mr Cairns’ resignation had nothing to do with a personal falling out with Mr Douglass. “Brett’s departure has no connection to Hamish’s personal life.”

Magellan on Wednesday released an ASX announcement confirming Mr Douglass and his wife Alexandra had “separated some months ago” but claimed the relationship remained cordial and there were no plans to sell the Magellan stock they own together

“As our family and close friends appreciate, we both remain extremely close and united. We continue to spend considerable time together, and as a family,” the couple said in the statement.

“There has been unfounded speculation in the media regarding our shareholding in Magellan Financial Group. We can confirm that we have no intention to sell any of our shares in Magellan Financial Group.”

Mr Douglass said he remained “totally committed to the business and its future”.

“I would like to thank our clients and my outstanding colleagues for their ongoing support. Alex and I would like to thank our family and friends for their incredible support, and we would ask people to respect our family’s privacy moving forward,” Mr Douglass said.

While the statement was vague around the timing of the couples’ separation, corporate filings show Ms Douglass stepped down as a director of their private investment vehicle, Midas Touch Investments, in October last year. Midas Touch Investments is the second largest shareholder in Magellan Financial Group, with an 11.43 per cent stake.

Any legal action over joint assets, including the Midas shareholding, could create a liquidity event for Magellan. The couples’ Neutral Bay home, worth about $9 million, is registered in Ms Douglass’ name but council documents show Mr Douglass applied to renovate the two-storey heritage-listed home in August 2019, including works to add a driveway and attic and demolish the garage and swimming pool.

ECP Asset Management chief investment officer Manny Pohl said the market had “seen it all before” with billionaire divorces, following Platinum Asset Management founder Kerr Neilson and wife Judith in 2015. “Seeing as we have an investment, let’s hope it doesn’t follow a similar path.”

However, Dr Pohl said it was up to the individual whether the relationship breakdown would impact their approach to the job. “I’ve got a couple of people on my boards who have gone through horrific personal circumstances, wives with cancer, that sort of things. Some can ringfence it and put it into compartments where they don’t let it interfere with their life. Others can’t do that.

“I don’t know Hamish that well to say whether he can compartmentalise it all.”

Dr Pohl said the market would need to be updated once decisions had been finalised about the jointly owned shareholding. “At some point if there is a decision the investment will be lightened; the market needs to know what the plan of action is,” he said. “But not while it’s behind closed doors, going through lawyers; that part of the separation can take a while.”

Magellan’s share price has almost halved over the past 12 months as shareholders question the group’s counter-cyclical investment strategy. Mr Douglass acknowledged mistakes were made in August while reporting soft full-year results, but called on shareholders to see the bigger picture.

Dr Pohl, whose firm has owned shares in Magellan for more than five years, said recent performance was in line with Mr Douglass’ investment philosophy, but prolonged outperformance was a concern. “It counts against you after a while, you need to pull it back,” Dr Pohl said. “But this would be expected when everyone else is bullish.“

Magellan shares climbed 4.30 per cent on Wednesday to close at $30.35.

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