Gavin Lumsden, Citywire Investment Trust Insider, 8 Nov 2023:
In a move that keeps the £841m investment trust and its fund manager Alexander Darwall on the back foot ahead of the crunch poll on 15 November, Saba today issued another open letter criticising EOT’s proposal yesterday for a 25% tender offer as insufficient.
Saba portfolio manager Paul Kazarian told EOT chairman Matthew Dobbs that the offer of a ‘modest tender offer’ instead of more significant action raised significant concerns…
In response, the board dismissed this analysis as ‘conjecture’ and insisted that the 25% tender was best for the majority of shareholders. It repeated its promise to hold a further continuation vote in 2026 and every three years afterwards…
EOT shares firmed 2p to 799p. Over five years they have returned just 7% to shareholders, reflecting a derating and loss of investor confidence that occurred after the collapse of its former largest holding, German payment processor Wirecard. Over 10 years, the shares have nearly doubled, reflecting Darwall’s much stronger long-term record since helping launch the fund in 2000.
James Carthew, head of research at QuotedData, said Saba’s demand for a 50% tender needed to be taken ‘with a pinch of salt’ as the activist was unlikely to achieve a full exit and a quick profit if shareholders participated fully in a 25% buyback.
‘European Opportunities discount is wide because its relative performance has been poor and the board’s original argument – give us time to turn that around and if not we’ll take more drastic action – made sense to us.
‘The more immediate tender makes less sense. A share buyback programme of the same size with a commitment to buy back stock at say a 5% discount would likely have been more effective. However, we are where we are and now the board is right to resist calls for an even bigger tender,’ Carthew added.
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