Smithson (SSON), the £1.6bn investment trust overseen by star fund manager Terry Smith, is to liquidate and turn itself into an open-ended fund.
The sensational decision follows Saba Capital building a 16% stake ahead of a possible continuation vote next year that could have given the activist hedge fund scope to apply pressure on the board.
Smithson said it would offer shareholders the choice of withdrawing all their money at close to net asset value (NAV) or switching into Smithson Equity Fund, or “New Smithson”, a new open-ended investment company that will be run by Smithson’s manager Simon Barnard.
It said this was in response to the discount, currently 9%, that has dogged the investment trust for three years despite the company buying back 39% of its shares.
“The board has decided upon this proposal after a period of careful consideration of a range of options aimed at optimising value for shareholders. Whilst the board is confident in SSON’s investment strategy and manager, the directors are also highly cognisant of the discount to NAV which has been entrenched for some years and the need therefore to take action to restore value to shareholders,” Smithson said.
