Baillie Gifford US Growth slams Saba’s ‘self-serving’ coup plot
Baillie Gifford US Growth has followed investment trust peers in urging shareholders to reject a boardroom overhaul proposed by activist Saba Capital.
Saba proposes to replace Baillie Gifford US Growth’s current board with Boaz Weinstein, its founder and chief investment officer, and Miriam Khasidy, a former director at alternative investment manager Pantechnicon Capital.
It also intends to offer shareholders ‘long-overdue liquidity options’ and the potential for ‘greater long-term returns’ under a new investment strategy and manager.
Saba sent shockwaves through Britain’s investment trust sector last month when it launched an attempted overhaul of seven funds in which it has built a substantial stake.
The hedge fund has criticised each trust’s board and investment manager for what it describes as a failure to tackle recent performance woes and a persistent discount to net asset value.
However, Baillie Gifford US Growth told investors on Monday that Saba’s proposed changes are ‘substantial, self-serving and destructive’.
It is urging investors to vote against all Saba’s resolutions at an upcoming general meeting on 3 February.
The Edinburgh-based trust said Saba’s plans ‘lack detail, with potential material conflicts of interest’ and could lead to a ‘potential substantial increase’ in its ongoing fund charges.
Baillie Gifford US Growth noted that Saba’s publicly-available funds had charges around twice as high as its own and had underperformed the company over ‘most recognised measurement periods’.
Target: Edinburgh-based Baillie Gifford US Growth Trust has become the latest firm targeted by Saba Capital to resist the activist investor’s attempts to sack its board
Up to the end of last year, Baillie Gifford US Growth said the trust had achieved a 180.1 per cent return for shareholders since its initial public offering in 2018.
Meanwhile, the Saba Closed-End Funds ETF had only returned 125.8 per cent since Saba started managing the fund in March 2017.
Some of the world’s most famous and profitable technology businesses, including Amazon, Nvidia, and Meta Platforms, form part of the Baillie Gifford trust’s holdings.
Tom Burnet, the group’s non-executive chair, said: ‘Baillie Gifford’s global reputation provides it with preferential access to the US growth companies of tomorrow, so the future of this company is bright.
‘Saba wants to subvert all of this. Their proposals lack detail and, if implemented, could destroy the board’s independence, radically alter the investment strategy of the company and prove highly disruptive to shareholder value.
‘We urge all shareholders to make their voices heard and to vote against Saba’s self-serving and destructive proposals.’
The investment trust is one of seven London-listed firms targeted by Saba, which wants to remove their boards and change their investment managers and mandates.
Alongside Baillie Gifford, those affected are CQS Natural Resources Growth & Income, Edinburgh Worldwide, European Smaller Companies, Henderson Opportunities, Herald Investment Trust, and Keystone Positive Change.
New York-based Saba is the biggest investor in all seven trusts, with holdings of between 19 per cent and 29 per cent, having built up significant positions throughout the last year.
Baillie Gifford US Growth is currently sitting on a discount to NAV of just 0.93 per cent, having narrowed significantly from around 10 per cent for much of 2024 and more than 20 per cent for the majority of 2023.
Its shares have added 61.7 per cent over the last year, compared to an average peer return of 22.7 per cent, according to the Association of Investment Companies. However, they have fallen 9 per cent over the last three years.
London-listed Keystone also expressed opposition to Saba’s plans on Monday, with its chair, Karen Brade, saying she was ‘appalled’ by the group’s ‘actions and conduct’.
She added: ‘We believe its proposed resolutions would be highly detrimental to the interests of all other shareholders.
‘Be under no illusion – we believe this US hedge fund manager is acting opportunistically, seeking to seize control of the board without a controlling shareholding, to pursue its own agenda.’
Her words come three days after Herald urged its shareholders to vote against Saba’s plans and about a fortnight after European Smaller Companies advised its investors to do the same.
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