First Opportunity Fund, Inc. (NYSE: FF) (the Fund) held its annual stockholders' meeting in Boulder, Colorado on Monday, May 3, 2010, at which time stockholders approved the Fund’s restructuring proposals and elected directors.
At Monday’s meeting, stockholders approved new investment co-advisory agreements with Rocky Mountain Advisers, LLC (RMA) and Stewart Investment Advisers (SIA), as well as a new sub-advisory agreement with Wellington Management Company, LLP. Under the new structure approved by the Fund’s stockholders, with respect to the portion of the portfolio managed by RMA and SIA, the new advisers intend to make a substantial investment in certain private investment funds currently managed by an affiliate of Wellington Management. Separately, Wellington Management will act as sub-adviser with respect to a discrete portion of the portfolio containing positions with respect to which Wellington Management has long-term familiarity in its role as the Fund’s previous advisor. The term of Wellington Management’s role as sub-adviser will not last more than 2 years and will be limited to liquidating a portion of the Fund’s legacy holdings. RMA and SIA will oversee the Fund’s investments in private investment funds, supervise and oversee all sub-advisory activities and manage the balance of the Fund’s assets in accordance with Monday’s stockholder approved changes and the Fund’s investment objective and policies.
As part of the restructuring proposals, stockholders also approved eliminating the Fund’s fundamental concentration policy, which previously required that the Fund invest at least 65% of its assets in financial services companies. Since stockholders eliminated this concentration policy altogether, the Fund will be required to reduce its exposure to the financial services industry to less than 25% of its overall assets, although it is expected that some of the private investment funds in which the Fund invests may have significant financial industry exposure. Because the Fund is presently substantially concentrated in financial services companies, it will likely continue to be concentrated in the securities of these companies in excess of the 25% threshold approved by stockholders for a period of time following Monday’s approval. The new advisers intend to reduce the Fund’s holdings in financial services companies to below the 25% threshold in a prudent manner.