Edinburgh Worldwide Trust EWI is the last trust to vote down all proposals from activist investor Saba Capital in a clean sweep for the UK investment trust industry in the battle for control over the companies.
Shareholders in the targeted trusts turned out in large numbers to vote against the proposals from the US investor from the first general meeting (Herald Trust HRI) on Jan. 23. Five additional trusts voted against the proposals in early February: The European Smaller Companies Trust ESCT, Henderson Opportunities HOT and CQS Natural Resources Growth & Income CYN, Baillie Gifford US Growth USA and Keystone Positive Change KPC.
What Did Saba Capital Propose?
Saba Capital, an American hedge fund, built up stakes in seven UK investment trusts with the stated intention to improve performance and liquidity. At the end of 2024, it revealed proposals it intended to put to shareholders: primarily, investment trust board directors would have been replaced by Saba-appointed directors. And, crucially for investors, investment trust fund managers—which are appointed separately to the board directors—would also have been replaced.
In January the company said: “Saba is convening the general meetings because we believe the current boards of directors and investment managers have failed to perform versus their benchmarks, resulting in deep trading discounts to net asset value.”
• Read this: UK Investment Trusts vs Saba Capital: 6-0
• Read this: What’s Going on With UK Investment Trusts?
• Read this: Saba’s Investment Trusts Explained in Detail
How Edinburgh Worldwide Investment Trust Shareholders Voted
Shareholders in Edinburgh Worldwide Investment Trust voted down all resolutions proposed by Saba Capital. Of the total votes cast, 63.8% of shares were voted against Saba’s resolutions. A total of 36.2% of shares voted in favor of Saba’s resolutions, including the shares held by Saba.
Shareholders representing 64.7% of the total issued share capital voted on the resolutions. The level of shareholder participation in the vote was supported by a high level of engagement by retail shareholders who hold their shares through digital platforms.
Jonathan Simpson-Dent, chair of Edinburgh Worldwide Investment Trust, comments: “Edinburgh Worldwide’s shareholders have spoken: they have rejected Saba Capital’s proposal for a fundamentally different strategy based on fundamentally different principles with a fundamentally different investment approach.
“Today’s result confirms that this unique mandate still appeals, but shareholders also expect the trust to deliver. We took decisive action in 2024 with positive early results. Our job now is to deliver the performance our shareholders rightly expect.”
Will Saba Capital Come Back for More?
While Saba Capital has been defeated for now, the hedge fund remains a major shareholder in these seven trusts.
Richard Stone, chief executive of the Association of Investment Companies (AIC), comments: “This is the end of round one, but Saba’s most recent requisitions show that this may not be over yet. Shareholders are being asked to choose between an investment trust, with its long-term approach and structural advantages, and an unknown open-ended alternative. They will need to give this careful consideration and vote accordingly.”
The author or authors do not own shares in any securities mentioned in this article. Find out about Morningstar’s editorial policies.
