St James's Place shareholder urges overhaul of 'bloated' wealth manager

News Team, 26/10/2020

A minority investor in St James’s Place (SJP), Primestone Capital, has taken the wealth manager to task, alleging it is “bloated” and not delivering value to its shareholders.

In an open letter to SJP’s board of directors released today (26 October), Primestone said SJP’s share price had fallen 7 percent since the end of 2015, while its total shareholder return had been 2 percent annualised. 

Over the same period, SJP’s assets under management had grown 18 percent per annum, and income grew 13 percent per annum on average.

Primestone partners Benoît Colas and Damian Hahnloser said in the letter they believed the company’s share price did not reflect the strength of its business model, its leadership position or long-term growth potential.

“Moreover, we have identified that this underperformance is mostly due to the suboptimal management of SJP’s cost base,” they said.

Over 10 pages, the pair laid out areas where they believed SJP could better control its costs, saying it had hired excessively, was paying its staff too much, and had a “bloated organisational structure”.

The letter said the number of in-house staff supporting the affiliated advisers had increased by 70 percent over the last eight years, while average annual salary increases were consistently 2 to 3 percent above the national average.

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