Saba Capital urges new nominees to offer shareholders full cash exit if elected at Baillie Gifford US Growth Trust
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Saba Capital has stepped up its attack on Baillie Gifford's US Growth Trust
Saba Capital has stepped up its attack to take over Baillie Gifford US Growth Trust after calling for a full cash exit for shareholders at or near net asset value.
The activist investor demanded board changes this morning at the Edinburgh-based trust, which has received a requisition notice from its largest shareholder. Saba wants shareholders to back the appointment of three directors: Jason Chen, Thomas H McGlade, and James Waterlow.
Saba wants a vote at the forthcoming annual general meeting. The board of Baillie Gifford US Growth Trust has advised shareholders to take no action at this time and await further company announcements.
The US hedge fund claimed that the trust has underperformed the S&P 500 by 88.4% on a share-price basis and 79.1% on a net asset value basis, and it has promised to provide shareholders with a 100% cash exit.
It is the latest move by Boaz Weinstein’s Saba Capital to shake up the investment trust sector. It succeeded earlier this year in ousting the board of Edinburgh Worldwide Investment Trust, after EWIT failed in an attempt to merge with US Growth Trust, whose board had fended off Saba’s first attempt to force changes. Aberdeen secured a three-year standstill agreement to cover a group of investment trusts for an undisclosed fee, to stop Saba taking control.
Saba also targeted Herald Investment Trust, European Smaller Companies Trust, Henderson Opportunities Trust, Keystone Positive Change Investment Trust and CQS Natural Resources Growth & Income.
The Baillie Gifford US Growth Trust has a market capitalisation of $916 million. It does not offer a dividend yield, which aligns with the its growth-oriented strategy, where reinvesting potential returns into burgeoning opportunities takes priority over distributing dividends.
It was launched in 2018 to back US growth companies with the aim of producing long-term capital growth for investors.
It initially focused on a portfolio of 90 holdings, typically with 30 to 50 listed security holdings. The maximum investment in any one holding was limited to 10% of the company’s total assets.
Annabel Brodie-Smith, communications director of the Association of Investment Companies (AIC), said: “Shareholders should look out for Baillie Gifford US Growth’s response to Saba’s proposals. It’s clear that it will be critical for all shareholders to vote at this AGM. Investment trusts give shareholders a say on the future of their company and it’s vital they make their voices heard.”
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