Concerns Raised Over Investment Advisory Agreement for FINS
Trevor Montano, a shareholder of Angel Oak Financial Strategies Income Term Trust (NYSE: FINS), has voiced his strong opposition to a new investment advisory agreement with Angel Oak Capital Advisors, LLC. Montano has formally announced his intent to vote AGAINST this new agreement, citing significant concerns regarding the trust's performance since its inception and the accountability of the current adviser.
Performance Issues Highlighted
Since its inception in 2019, FINS has experienced a dramatic decline of more than 35% in its share price. This troubling trend has prompted Montano to question the performance and decision-making of Angel Oak Capital Advisors, LLC. He argues that the trust has not only underperformed in absolute terms but also relative to its peer group of closed-end funds. The inability to realize the Net Asset Value (NAV) of shares over an extended period casts further doubt on the management's effectiveness.
Previous Shareholder Meeting Outcomes
Montano recalls a recent annual meeting where shareholders directly opposed a similar advisory agreement, reflecting a clear desire for change. Despite this, two incumbent trustees were not duly elected but continue to serve, representing a significant governance issue. Their presence on the board raises questions about the legitimacy of the decisions being made, especially in light of the failure to hold a Trustee election that would allow shareholders a proper say in governance.
Reasoning Behind Opposition
Montano has articulated several reasons which justify his call for resistance against the proposed advisory agreement:
Fiduciary Accountability in Advisory Choices
Firstly, he emphasizes that the Board has a fiduciary duty to select the best possible investment adviser, especially at competitive fees. He notes that the same four independent trustees have governed since the fund's inception without a genuine competitive selection process for the adviser, raising doubts about the Board's commitment to shareholder interests.
Poor Financial Performance
Secondly, Montano points out the troubling financial results since Angel Oak's appointment. With the fund's price plunging over 35% since its launch and substantial discounts to NAV, the question of whether Angel Oak is successfully managing the fund arises. Shareholders deserve better representation and results.
Shareholder Rights and Governance
Thirdly, the way Angel Oak has enriched itself through fees, which have outstripped net income generated for shareholders, presents a fundamental imbalance in the relationship. Montano finds this problematic, especially since Angel Oak benefits from higher levels of leverage, making their interests misaligned with those of FINS shareholders.
Board Actions Against Shareholder Interests
Lastly, Montano criticizes ongoing efforts by the Board to maintain control at the expense of shareholder rights. He explains that by refusing to call for elections and allowing unelected trustees to decide on possibly self-serving agreements, the Board undermines the democratic principles of shareholder participation in governance.
He firmly concludes with a call to action: He is voting AGAINST the new investment advisory agreement, as well as any potential adjournment of the Special Meeting, and strongly encourages all shareholders to do the same.
About Trevor Montano
Trevor Montano is an experienced private investor with a focus on financial services, technology, and energy. He brings 25 years of expertise in investing and structuring financial instruments. His previous role as the Chief Investment Officer at the U.S. Department of the Treasury positions him as a knowledgeable advocate for shareholder interests, particularly in regards to the governance of investment funds.
Frequently Asked Questions
What is the main concern raised by Trevor Montano?
Trevor Montano is urging shareholders to vote against a new investment advisory agreement with Angel Oak Capital Advisors due to poor financial performance and governance issues.
Why has the share price of FINS declined significantly?
The decline can be attributed to ineffective management decisions made by Angel Oak since its inception in 2019, leading to substantial losses for shareholders.
What actions did shareholders take at the last annual meeting?
Shareholders voted against an identical advisory agreement, reflecting their desire for a shift in management and decision-making.
Why does Montano question the independence of the Board?
Only two of the six current trustees are independent and duly elected, raising concerns about the Board's alignment with shareholder interests.
What is Montano’s professional background?
He is a private investor with extensive experience in financial services and former Chief Investment Officer at the U.S. Department of the Treasury.
