Uncertainty hangs over Magellan as Hamish Douglass leaves board

Magellan co-founder Hamish Douglass’s resignation from the troubled fund manager’s board has been met with mixed reactions in the market, as uncertainty continues to hang over the company’s long-term leadership following a tumultuous period.

Magellan on Monday released a three sentence statement saying Mr Douglass had resigned from the board due to his indefinite period of medical leave, which was disclosed last month when Mr Douglass said he was stepping down from his duties to prioritise his health.

Magellan has maintained that it wants Hamish Douglass to return to the company when his health allows it.Credit: Janie Barrett

Sources close to the company on Monday said Mr Douglass’s resignation as a director was “procedural,” and should not be seen as an indication of his health or the prospects of him returning to work at Magellan. Shares fell 3.8 per cent to $15.14.

The company has maintained that it wants Mr Douglass to return to the company when his health allows it, and co-founder Chris Mackay, who has stepped in to steady the ship in Mr Douglass’s absence, last month referenced “very encouraging” signs when talking about Mr Douglass.

Even so, there is uncertainty in the market surrounding how and if Mr Douglass may return to the company he co-founded in 2006, at a time when the business has suffered billions in outflows in recent months.

White Funds Management managing director Angus Gluskie said the market’s main focus was on Magellan’s declining funds under management, and investors did not have clarity on the long-term management of the company. “The market cannot form an accurate view on exactly who or what will comprise the management going into the future,” Mr Gluskie said.

Morningstar analyst Shaun Ler said Mr Douglass’s resignation from the board was a “net positive” for the company as it would help to address a potential conflict of interest in the former structure, under which Mr Douglass was both chairman and chief investment officer. Mr Ler said he was unsure if the resignation meant Mr Douglass would return permanently, or on a part-time basis.

Mr Ler said he thought the recent mandate redemptions probably reflected a lack of confidence in the new investment team, which needed to do more to improve fund performance. “We are confident that Magellan can stabilise performance and flows over the longer term,” Mr Ler said.

Tribeca Investment Partners portfolio manager Jun Bei Liu said she did not think Mr Douglass’s resignation from the board was a surprise, and she believed he was unlikely to return to the company. “Investors have been expecting him to step back,” Ms Liu said.

Mr Douglass announced last month he would take a leave of absence from Magellan after a period “intense pressure and focus” on both his personal and professional life.

The decision followed a period of turmoil at the company that included a collapse in Magellan’s share price, billions of dollars in fund outflows, the abrupt departure of its former CEO in December. Mr Douglass also confirmed last year that he had separated from his wife after concerns were raised that a divorce could affect the share price if the couple’s jointly-owned stake in the business was sold.

The company continues to look for a long-term chief executive, and in Monday’s brief announcement Magellan said it was continuing to look for an additional independent director.

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