Arden Partners – An interesting AGM

PUBLISHED: 09 Mar 2016 @ 00:52 | Comments (0) |

Yesterday’s Arden (LSE:ARDN) AGM was most interesting for what was not spoken, than what was laid out in the open.

Setting:

All the directors were there. They were welcoming and friendly. There were about a dozen other people. But it turns out that I was the only independent shareholder (there may have been one other, I’m not sure as he did not ask any questions).

Everyone else in the room seemed to be an employee-shareholder, a registrar or an Evershed corporate lawyer (let’s pay for the best, eh!). I was the only one asking questions – I think they normally conclude AGMs after 10 minutes, but I kept them going for half an hour.

The secondary trading business

Last week I wrote that I thought the institutional research and brokerage business was being killed off. My evidence was the amount outstanding trades at the year ends. In 2011 this was over £21m, now we are down to £0.66m.

But no. Apparently, the yearend decline is pure chance depending on the irregularity of the flows of orders. Trading has continued through the year at much the same level as previous years, although recent regulatory change is starting to have an impact. It is just coincidental that yearend numbers have declined.

As for market-making: I brought to the board’s attention that the amount held in stock for trading was £5m – £6m in 2011-13, but that had fallen to £1.7m now. Was this business being deliberately diminished?
No, it was not. They had ramped up efficiency by not needing so much stock of shares to trade but continue to offer much the same service as before.

Note that the room was full of people whose livelihood (and morale and motivation to stick with Arden) depends on the continuation of these business.

Relative emphasis

Are more staff employed in secondary trading or in primary/corporate deals?
Answer: about 20 in each

Staff costs

Average remuneration, including secretaries and reception staff was over £100,000. Can you justify this?

Answers:……….

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