Shares in international equities manager Hunter Hall International Ltd (ASX: HHL) have lost around a third of their value to hit $2.05 this morning after its chairman and chief investment officer, Peter Hall, abruptly quit on December 27 before flogging 19.9% of the company he co-owned for less than a third of the stock's face value.
Even more shocking are the departing founder's reported claims that there's more to life than share market investing, with Mr. Hall reportedly wanting to pursue interests outside finance as he looks to spend more time in the UK.
The Fairfax press also reported comments from Mr. Hall about his disappointment over the group's funds underperforming after the US presidential election, and due to significant holdings in the likes of Sirtex Medical Limited (ASX: SRX) and Vocus Communications Limited (ASX: VOC).
As a consequence of these issues, among others, Mr. Hall will also sell his remaining shareholding of 24.05% in Hunter Hall to investment conglomerate Washington H. Soul Pattinson & Company (ASX: SOL).
In effect Soul Patts will acquire a 44% (19.9% + 24.05%) controlling interest in the business at just $1 per share, compared to the $3.25 per share price the company was valued at on December 23.
This looks a good bit of business for Soul Pattinson providing it can right-size the Hunter Hall investment group and placate existing shareholders who may feel as though they have been thrown under the bus by Mr. Hall.
All in the timing…
Another potential issue to watch is what Hunter Hall does with its 6.69% holding in liver cancer treatment company Sirtex Medical Limited (ASX: SRX) now that a big supporter in Mr. Hall is suddenly out the door.
Sirtex itself announced a shock downgrade on December 9 that has resulted in the suspension of its CEO, while his share selling just over five weeks prior to the downgrade is investigated by lawyers.
Perhaps more worryingly, the regulator also confidentially queried whether Sirtex was in compliance with its continuous disclosure obligations on December 2, a week before it disclosed a downgrade to the market on December 9.
This suggests either Australia has a psychic regulator or it was well tipped off, which suggests there could be trouble ahead with fund managers like Perpetual Limited (ASX: PPT) selling down their holdings in Sirtex, while Hunter Hall surprisingly choose to increase its holding when Mr. Hall was still in charge just a few weeks ago.
I expect this story has a few more twists and turns yet and suggest investors steer well clear of Hunter Hall and Sirtex given more potential drama ahead…
