The share price of embattled fund manager Magellan Financial Group Ltd (ASX: MFG) has fallen 13% after announcing Chairman and Chief Investment Officer Hamish Douglass would be taking a medical leave of absence.
Subsequently, the Magellan share price has fallen 13% in morning trading.
A period of intense pressure
The Magellan Board cited that “after a period of intense pressure and focus on both his professional and personal life” Mr Douglass had requested a period of medical leave to prioritise his health.
“The Board wholeheartedly supports Hamish’s decision to prioritise his health and Magellan is committed to providing him the time and support he requires”
Magellan, and in particular Mr Douglass, has been subject to intense media attention in recent months due to the underperformance of Magellan’s flagship equities strategy.
It culminated in the largest client terminating its mandate, with the Magellan share price falling 28% in one day.
Magellan is now without a permanent CEO or CIO.
Outflows accelerate
The Magellan share price will also be under pressure from the nearly $2 billion in funds under management (FUM) it lost during January.
Total FUM now stands at $93.5 billion.
Getting the band back together
In the absence of Mr Douglass, former CIO and founder Chris Mackay will step in to oversee the global equity strategies.
Mr Mackay held the position of Chairman and CIO at Magellan from 2006 to 2012, before stepping away to manage ASX-listed MFF Capital Investments Ltd (ASX: MFF).
MFF and Magellan have retained a close working relationship, with the two fund managers sharing offices as well as admin and research resources.
Former portfolio manager Nikki Thomas will rejoin Magellan as a co-portfolio manager of the global equities strategies.
Ms Thomas formerly held the role of Head of Research and portfolio manager from 2007 to 2017 before leaving to join Alphinity Investment Management.
Board reshuffle
The Magellan share price will also be on watch after announcing two changes to its Board after a review of structure and governance:
- Mr Douglass will take a leave of absence, with deputy Chairman Mr McLennan replacing him as an independent non-executive Chairman
- Robert Fraser will be appointed Deputy Chairman in place of Mr McLennan
The Board will continue its search process to appoint an additional independent director.
My take
It was just two months ago that Mr Douglass said he was “the fittest and healthiest he’s been in a long time”.
But the mounting pressure of underperformance, unexplained departure of its CEO and accelerating fund outflows will impact even the most seasoned investors.
Today’s announcement is a sombre reminder that health ranks above any performance benchmark.
