By Simone Fox Koob
Magellan’s founder Hamish Douglass won’t be picking stocks when he returns to the business in October, with the ailing fund manager’s chairman saying that Douglass will come back as a consultant and not a permanent member of staff.
“He is no longer running Magellan,” chairman Hamish McLennan said on Thursday. “This is an arrangement we’re both very happy about.”
Magellan co-founder Hamish Douglass.Credit: Janie Barrett
After months of uncertainty around what kind of role Douglass would play in the future of Magellan, the company said in an update to the ASX on Thursday that he will cease to be a permanent member of staff from next Wednesday and will work in a consultancy role from October.
The new consulting role will see Douglass placed on a one-year contract. He will not be actively picking stocks, or have any governance or executive responsibilities, but will advise a number of clients and Magellan’s investment team on macroeconomic and geopolitical issues.
It has been a tumultuous year for Magellan, which began with the resignation of chief executive Brett Cairns at the end of last year. The company then lost its largest investment mandate worth $23 billion after Douglass was forced to disclose his marriage separation.
Douglass stepped down from his duties in February and took medical leave after a period of “intense pressure and focus” on both his personal and professional life, causing the Sydney-based fund manager’s share price to plummet to new lows after months of turmoil.
Magellan also announced on Thursday that it will bring forward the start date for its new chief executive as it seeks to steady its business. David George, Future Fund’s deputy chief investment officer, will now start on July 19, rather than August 8.
Mr McLennan said that Douglass wanted to come back, which was “good for the business”.
“But we must be clear, he is no longer running Magellan,” he said. “Hamish is no longer leading the business. David George is.”
“Hamish’s new role and David George coming into the company enables us to present a difference face of Magellan, and Magellan has certainly changed.”
Douglass’ exit package will remain confidential until the company releases its annual report.
Asked whether the announcement would provide more certainty for investors, McLennan said: “Time will tell. But it’s a meaningful role, and it’s a job that Hamish wants to do. And I think that works for Magellan and Hamish.”
Magellan’s share price rose by just over 2 per cent on Thursday, but remains down 70 per cent over the past year.
On Monday, Magellan shares tumbled after it disclosed its funds under management had dropped by $3.6 billion in the last month, with the stock slipping off the ASX 100 index.
Morningstar analyst Shaun Ler said Douglass’ new role provided some certainty, but investors would still be waiting to see whether performance improved before the share price started to go upwards.
“I think it’s fair to say that Magellan won’t be returning in its former shape, where Hamish is sort of the face of the business. I think today’s development is this a step towards the right direction to properly manage key-person risks,” he said.
“I think historically, from my understanding, Magellan is not just a one-man show. But Hamish has taken it on himself to do lots of PR activity. And that has given the market the perception that Magellan is a one-man show, so much PR and good performance that the firm’s reputation has been tied to one man.
“I think that today it is putting things back to where they should be, and helping to mitigate those perceptions.”
The upheaval at Magellan in recent months has seen persistent money outflows as investors ripped mandates from the funds, citing leadership instability and under-performance of the group’s core global equities fund. It also led to traders betting against the company by short-selling its shares, and longstanding investors dumping the stock.
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