Saba Capital has vowed to continue its war of attrition against Edinburgh Worldwide (EWI) by re-submitting resolutions to appoint the same three nominees for the investment trust’s board that shareholders rejected just three weeks ago.
In the latest open letter to EWI shareholders, Saba, holder of a dominant 30% stake in the global companies smaller companies fund, said it would renominate Gabriel Gliksberg, Michael Joseph and Jassen Trenkow at the forthcoming annual general meeting and vote against the re-election of the current directors.
Rehearsing its previous arguments about performance, the partial sale of the trust’s large investment in SpaceX and the failure to disclose the chair’s previous employment at Homeserve, the activist hedge fund said shareholders “would benefit from having a refreshed board” to replace the existing directors and remedy their alleged governance failings.
James Carthew, head of investment company research at QuotedData, said: “Insanity is doing the same thing over and over again and expecting different results. I keep saying that I cannot follow the logic to Saba’s actions but maybe there just isn’t any.”
Saba claimed that as “just 53.2%” of shares voted at the general meeting on 20 January to back the current board “a meaningful portion of shareholders remain unhappy”.
However, more than half of that tally is represented by Saba. Announcing the result last month, chair Jonathan Simpson-Dent said 92.7% of non-Saba held shares had rejected its attempt to take control after responding to the board’s call to preserve the fund’s remit with fund manager Baillie Gifford. A similar vote a year earlier was also overwhelmingly rejected by non-Saba investors.
A spokesperson for Edinburgh Worldwide said: “For the third time, Saba is seeking to replace the entire independent board with its own nominees in order to take control of the company. In doing so, it is repeating a number of misleading statements that have featured throughout its aggressive and personal campaign.”
Despite the decisive outcome of last month’s vote, Saba was choosing not to listen to the strong shareholder opposition it had provoked, the company said. It added that Saba had failed to engage with the board’s efforts to communicate with it and its advisers.
“The board will update shareholders on its plans in the near future,” the spokesperson said.
Our view
Matthew Read, senior analyst at QuotedData, said: “This is starting to feel like Groundhog Day. EWI shareholders have repeatedly said that they do not want to be invested in a vehicle controlled by Saba, or the investment mandate that it proposes. Yet Saba is back again, stuck in a loop, proposing to take control of EWI’s board with the same set of directors, who lack the necessary experience in UK listed closed end funds to manage a trust like EWI.
“Given the costs that EWI is incurring to protect other shareholders against Saba’s landgrab by stealth, there should be a limit to how many times it can come back with the same proposals, just mildly repackaged. We can only think that Saba believes that it can grind its fellow shareholders down and win this as a war of attrition, but perhaps it would not be so gung ho if it had to bear the full costs of its actions.
“We think EWI’s board may have to think more creatively about its Saba problem but, fundamentally, they shouldn’t have to. It is clear that additional rules are required to protect minority shareholders from this sort of attack.”
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