Broker criticisms cause more pain for Alliance Trust

Alliance Trust's own corporate broker has admitted recent criticisms of the company have landed some "heavy blows" and has suggested a formal review of its business model.

In a note issued yesterday, J. P. Morgan Cazenove responded to the latest set of claims by hedge fund Elliott Advisors, as well as an open letter by former trust director Tim Ingram. While suggesting some arguments - such as Elliott's view of the cost of Alliance Trust's subsidiary businesses - represent a "red herring", the broker said performance concerns are more valid. Analysts said the early evidence on performance of the trust's new socially responsible investment focus is encouraging, but added: "It is difficult to see shareholders tolerating underperformance from this strategy...