Gavin Lumsden, Investment Trust Insider, 18 December 2024:
After months of mystery over its intentions, activist Saba Capital today launched campaigns for change at seven investment trusts in which it is the leading shareholder with stakes of 19-29%.
The New York based hedge fund manager has requisitioned general meetings at three Baillie Gifford trusts: Baillie Gifford US Growth Trust (USA), Edinburgh Worldwide (EWI) and Keystone Positive Change (KPC) alongside two from Janus Henderson, Henderson Opportunities Trust (HOT) and European Smaller Companies Trust (ESCT) and separately CQS Natural Resources Growth & Income (CYN) and Herald (HRI), the global technology fund run by veteran manager Katie Potts..
Stifel analyst Iain Scouller believed the trusts’ boards would have to come up with strong counter-proposals to win the day as Saba’s large stakes and the likelihood that many retail investors would not vote, put the activist in a commanding position to push through changes..
Matthew Read, senior analyst at QuotedData, viewed Saba’s approach as ‘very short-term in nature’ and said it would be critical for all shareholders in the trusts to vote and protect their interests.
He said Saba’s call for investors to cash out ignored the fact that the US Growth and Edinburgh Worldwide trusts held big weightings in unquoted stocks that were not easy to sell, while Herald owned stakes in smaller companies that were also illiquid.
Read also thought it strange Saba was targeting Keystone Positive Change when it was poised to merge with an open-ended sister fund that would effectively allow investors to exit at asset value.
‘This and the other challenges we highlighted above have long made us feel that Saba doesn’t really understand some of the funds that it is invested in,’ said Read, pointing out that the UK investment company market was very different from the US.
Read more here