Questor on Edinburgh Worldwide – Ignore recent performance blips – this trust will keep building the future
If a certain US vulture investor is defeated, there is long-term gain to be had
A US vulture investor has requisitioned a meeting to replace the board of Edinburgh Worldwide and replace it with two directors, one of whom is an employee of said vulture – Saba Capital.
It then intends for this new board to serve notice on the existing manager and appoint Saba as manager, with a mandate to invest in other London-listed investment trusts. At its heart, this is a choice between taking a short-term gain or the potential for a much more lucrative long-term recovery in the trust’s fortunes.
Saba’s argument that the trust’s short-term returns have been disappointing is undoubtedly true. Questor understands shareholders’ frustration, but feels that a narrow focus on the past three years gives a misleading picture. The existing board has taken action to revitalise performance and there are signs this is working.
Edinburgh Worldwide was launched in July 1998, with Baillie Gifford appointed manager in November 2003. At that time, the net asset value (Nav) was 162.75p per share and its approach was to run a focused portfolio of mostly large cap listed growth stocks.
Ten years later, the Nav was 432.3p, and the trust had generated a total return of 191pc, well ahead of the 132pc return on its MSCI All Countries World index benchmark. The share price had done even better, with a return of 245pc.
However…. read more here