Lang and Pattisson resignation

Liontrust joint investment directors Jeremy Lang and William Pattisson have resigned from the boutiq...

Liontrust joint investment directors Jeremy Lang and William Pattisson have resigned from the boutique fund house.

The managers will stay with the firm until 11 January next year to ensure an orderly handover of functions and responsibilities, Liontrust says.

Analyst Cazenove says the move is "a remarkable development by any standards".

A Cazenove broker note says: "Quite why these key managers should have announced their resignation while the company is still in talks with potential acquirers is not clear but can hardly be conducive to a successful outcome, in our view.

"It is not clear that it can be argued that the managers are going out at the top. As we discussed in our Asset Manager Update of 9 January, the Liontrust First Income was a notable laggard in the Income sector for the fourth year running in 2008.

The boutique's share price dropped almost 40% this morning upon news of their departure, from its open at 110p, falling to 76p by lunchtime.

Cazenove adds: "While the management company retains the rights to the processes, whether they would carry the same weight run by other managers is unclear. Equally the company's standing with consultants in either the retail or institutional environment can hardly be enhanced by this announcement. Whether a new manager could be found with sufficient standing and credibility to appeal to consultants, but insufficient self belief in their own ability to be willing to run money according to someone else's strategy is unclear.

The broker is keeping the firm at a neutral position.

"We are not changing estimates at this stage, but in due course it seems likely that we will have to assume material outflows."

Lang and Pattisson, founding managers and authors of The Lang Approach (if a company surprises on the upside, it is likely to do so again), The Value Dynamic (mean reversion of high yield stocks) and Large Cap Process (not selling companies with rising expectations too soon), were rewarded to the tune of £3.8m each in the year to March 2008 as shares of the management fee income from their funds, they also received large initial equity holdings and substantial minority shares in the European team business.