Update with Baillie Gifford response: Saba Capital boss Boaz Weinstein has attacked Baillie Gifford for reducing the positions held in SpaceX by Edinburgh Worldwide (EWI) and Baillie Gifford US Growth (USA) investment trusts.
Tweeting on X, Weinstein said he had received calls from “furious” shareholders in both trusts, where Saba holds around 30%, amid reports that Elon Musk’s rocket company is preparing for a $1.5trn flotation.
Weinstein claimed that the trusts cut their SpaceX holdings by about a third in preparation for their proposed merger, which the activist hedge fund blocked last week.
SpaceX is a top holding in both trusts, as it is with Baillie Gifford flagship Scottish Mortgage Trust (SMT), accounting for 6% of US Growth and 8.5% of Edinburgh Worldwide. However, the positions are down from 11.2% and 14.2% in May and April, according to trust results and Baillie Gifford documents.
By contrast, Scottish Mortgage holds 8.2% in SpaceX, up from 7.6% in September when the stake was worth £508m.
Weinstein said the sales of the unquoted SpaceX would have been at a “massively lower” valuation, adding: “Baillie put their interests ahead of their clients yet again. They calculated they need to sell to keep the private holdings percentage from going up in their ill-fated EWI/USA merger.”
Baillie Gifford denied this, saying it always put the interests of its clients first. “All portfolio decisions are taken within shareholder-approved investment objectives and policies, and in the long-term interests of shareholders as a whole.”
“SpaceX remains a high conviction holding and one of the largest positions in both trusts,” a company spokesperson said of EWI and USA.
Baillie Gifford indicated it had not reflected the reported $1.5trn in its valuation. “Whilst we are aware of continued positive news flow around SpaceX, only confirmed transactional activity will feed into our fair value assessment. Press speculation is not one of the inputs in our valuation process,” the spokesperson said.
Earlier in the week Musk dismissed the reports about the SpaceX IPO plans as “inaccurate”.
Nevertheless, SMT shares rose 5.4%, taking their gain this year to nearly 18% and reducing the investment trust’s discount to under 6%. USA shares added 1% and EWI edged 0.6% higher.
The dispute over SpaceX is the latest clash between the activist hedge fund and Baillie Gifford and the two trusts. Saba has requisitioned a general meeting of shareholders to replace EWI’s six-strong board with three nominees of its own, lambasting its poor performance over three and five years but ignoring its recovery in the past year.
This promises a re-run of the general meeting in February when Saba first tried to gain control of the £721m trust’s board but was overwhelmingly rejected by shareholders.
It alarmed the board of Baillie Gifford US Growth in October when without warning it used its 29% stake to vote against the re-election of its board but was defeated by a narrow margin.
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James Carthew, head of investment company research at QuotedData, said: “Some commentators have suggested that, for Saba, the attraction of EWI and USA is their stakes in SpaceX. This tweet seems to reinforce that idea.”
