The Magellan Financial Group Ltd (ASX: MFG) share price is on watch this morning amid reports emerging of the company's founder and chair, Hamish Douglass' response to intense rumours.
Douglass has hit back at media scrutiny facing both himself and the company this week, with his response hitting headlines at yesterday's close.
It followed reports by the press stating that his separation from his wife might cause the company financial harm.
He also addressed the major issue likely concerning investors.
Magellan was dropped by its largest client, St James's Place on Monday. The UK wealth management business' account previously made up 12% of Magellan's revenue. Its share price tumbled 32.9% as a result.
As of yesterday's close, the Magellan share price is $19.93. That's 3% lower than it was at the end of Tuesday's session.
Let's take a closer look at Douglass' response to media reports on Magellan's recent struggles.
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Magellan share price in focus amid Douglass' response
The Magellan share price is in focus on Thursday after Douglass appeared in an interview to address circulating rumours.
Douglass said suggestions he or his wife, Alexandra, would "dump" shares in the company as a result of their separation were "absurd".
Douglass said, "we've never sold a single share in Magellan" and "there's a time when people should really stay out of people's personal lives". He noted:
People have tried to create an image that my wife and I are in some nasty divorce. Nothing could be further from the truth.
Douglass also spoke on the loss of the major mandate the company previously had with St James's Place.
He said he's "disappointed" by the loss of the St James's Place account. However, he assured shareholders and investors it won't majorly impact the company. Douglass continued, saying:
Their mandate was a different mandate in global equity. it was a very bespoke mandate…
Their decision to withdraw doesn't have an impact on any other clients and importantly, it doesn't have that larger impact on our business… We will still have some of the highest operating margins of any fund management business in the world, with very substantial cash flow.
The loss of St James's Place's account will likely have a 6% impact on the company's financial year 2022 revenue.
The challenges currently facing Magellan come just weeks after the company's long-term CEO, Dr Brett Cairns resigned.
Yesterday, reports emerged that Cairns stepped down due to clashes with the company's board and Douglass. The company reportedly denied any such fallout occurred.
This week's fall has added to the woes the Magellan share price has faced on the ASX lately. Right now, the company's stock is trading for 62% less than it was at the start of 2021.
