18th Dec 2024 09:58
(Alliance News) - Saba Capital Management LP on Wednesday called on investors of seven investment trusts to oust current management after "underwhelming", and in some cases "disastrous" shareholder returns.
"We believe that the current boards have failed to hold the investment managers accountable, which is why we want to offer you the opportunity to elect new directors with a concrete plan to deliver shareholder value," Saba said in a letter to shareholders.
The seven trusts called out were Baillie Gifford US Growth Trust PLC, CQS Natural Resources Growth & Income PLC, Edinburgh Worldwide Investment Trust PLC, European Smaller Companies Trust PLC, Henderson Opportunities Trust PLC, Herald Investment Trust PLC, and Keystone Positive Change Investment Trust PLC.
Saba has been steadily accumulating shares in all seven, building stakes of between 19% and 29%, it said.
The hedge fund, founded by former Deutsche Bank banker Boaz Weinstein, said it is the largest investor in each trust.
Weinstein, who is chief investment officer at Saba, said: "Saba prefers private engagement with the boards of the trusts we invest in, but underperformance, persistent trading discounts and disengaged management teams leave us no choice but to act."
"The value creation opportunities are vast when trusts are overseen by skilled managers and boards operating with best-in-class governance. This is why we believe change is urgently needed at these trusts."
"We believe that the boards have not minded the trading gap, which is why we want to offer you the opportunity to elect new directors with a concrete plan to deliver shareholder value," he added in a letter to shareholders of all seven investment trusts.
Weinstein said Saba has a "track record of pursuing changes that return discounted trusts to their full NAV and create long-term value for shareholders".
"With our industry expertise, we have identified a clear path forward to transform these Trusts and deliver greater shareholder value than under the current boards and respective investment managers," he added.
Weinstein said the Trusts have delivered "underwhelming, and in some cases disastrous, total shareholder returns" compared to their respective benchmark indices during the last three years.
"The takeaway is clear: the trusts' managers and their directors have failed shareholders."
This failure left Saba with "no choice" but to take the "extraordinary" step of requisitioning a General Meeting for each of the seven Trusts. Saba has requested these are scheduled by early February 2025 at the latest.
At each of these meetings, shareholders will have the opportunity to vote on two critical resolutions to remove all current directors of the Trusts, and appoint new, "highly qualified" candidates to replace them.
By fully reconstituting the boards, Saba believes that it can "unlock greater value for shareholders and address the long-term structural issues that have hamstrung the trusts' return potential under current leadership".
The new directors Saba wants appointed include Weinstein himself, plus Paul Kazarian, Miriam Khasidy, Marc Loughlin, Jonathan Zucker, Doug Hirsch, Simon Reeves, Jassen Trenkow and John Karabelas.
Shares in Baillie Gifford US Growth Trust PLC was down 0.2% to 289.00 pence each in London on Wednesday. CQS Natural Resources Growth & Income PLC was up 0.4% to 193.93p. Edinburgh Worldwide Investment Trust PLC was up 0.6% to 193.10p. European Smaller Companies Trust PLC was up 2.2% to 168.80p. Henderson Opportunities Trust PLC was down 0.7% to 233.32p. Herald Investment Trust PLC was up 0.1% at 2,492.55p and Keystone Positive Change Investment Trust PLC was down 1.3% to 250.26p.
The trusts had not yet issued responses early Wednesday morning.
By Jeremy Cutler, Alliance News reporter
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