Edinburgh-based investment manager Baillie Gifford is urging shareholders in three of its trusts to thwart plans put forward by activist US hedge fund Saba Capital Management to take control of trust boards.
New York-based Saba has acquired stakes of between 21% and 28% in three of Baillie Gifford’s investment trusts: the US Growth Trust, the Edinburgh Worldwide Investment Trust and Keystone Positive Change Investment Trust.
The hedge fund claims that all three trusts – as well as four other UK investment trusts – have underperformed over the past three years and wants to replace the current directors of the trusts with its own two candidates. If successful, Saba would assume management of the trusts and would be expected to change each trust’s investment mandate.
Shareholders will vote on the proposals at general meetings scheduled for early February. If 50% of the votes are cast in Saba’s favour, its proposals will pass, and the potential changes will affect all trust shareholders.
In a press statement, Baillie Gifford said that retail shareholders often do not vote at general meetings as they invest through platforms and are unaware of how they can exercise their right to vote.
The boards of the trusts yesterday strongly advising shareholders to vote against all Saba’s resolutions.
James Budden, Baillie Gifford’s Head of Global Marketing, said: “We urge all shareholders to act on this occasion, to clearly understand the choices facing them, and to ensure their voices are heard. Every vote matters.”
“Saba cherry-picked data when our style of investing was out of favour to portray a narrative of poor performance and wide discounts.
“We recognise the past few years have been tough for the companies we invest in; however, performance has notably improved throughout 2024.
“We are confident that our investment approach can outperform over the longer term.”
Baillie Gifford has managed investment trusts since 1909 and is the largest manager in the sector with a stable of 13 closed-end vehicles.
