Edinburgh Worldwide Investment Trust (EWIT), the Baillie Gifford-managed, technology-focused investment trust, is urging shareholders to vote against a proposal by Boaz Weinstein’s activist hedge fund Saba Capital to replace the trust’s board of directors.
On Wednesday, the EWIT board said it would strongly urge shareholders to reject Saba’s plan to remove the current board and appoint three new directors. Saba, a U.S.-based hedge fund, owns roughly 30% of the trust.
EWIT chair Jonathan Simpson-Dent described Saba as an aggressive U.S. hedge fund seeking to seize control of the trust for its own commercial advantage, at the expense of other shareholders. He said the trust has made strong progress over the past 12 months.
Saba, however, argues that sweeping board-level changes are necessary to reverse what it describes as unprecedented value destruction over the past five years. In a recent letter to shareholders, the firm said its proposed directors, Gabi Gliksberg, Michael Joseph and Jassen Trenkow, could deliver the performance shareholders rightfully expect.
As the largest shareholder, Saba has requisitioned a General Meeting, expected to take place early next year, at which shareholders will vote on its resolutions to replace the board. Simpson-Dent said shareholders should be given clarity on Saba’s intentions beyond board replacement to avoid uncertainty should the activist succeed.
Simpson-Dent highlighted EWIT’s net asset value total return of 16.2%, compared with 6% for its benchmark, the S&P Global Small Cap Index. He also noted that a share buyback programme had helped narrow the average discount to net asset value to 5.3% over the past year, significantly tighter than the peer group average of 17.9%.
Saba’s latest move follows a failed attempt to replace the EWIT board in February. Since then, the firm has increased its stake to 30%, enabling it to block a proposed merger between EWIT and Baillie Gifford’s US Growth Trust earlier this month.
Escalating Tensions
Relations between EWIT and Saba have deteriorated amid a prolonged dispute over the trust’s valuation discount. Weinstein has said he has no confidence that the current board can improve performance or protect shareholder capital.
Saba said shareholders previously gave the board more time to deliver improvements, but that the board failed to generate adequate results.
Weinstein has increasingly targeted closed-end funds and investment trusts in the U.K. and U.S., citing opportunities created by persistent discounts to net asset value. Speaking at the Sohn London investment conference last month, he warned that there was a storm brewing in the U.K. investment trust sector.
EWIT’s portfolio, valued at approximately $847 million, consists of smaller and emerging public and private companies focused on disruptive technology innovation. Its largest holding is SpaceX, accounting for nearly 16% of total assets.
That holding has become a focal point of the dispute. In a post on X this week, Weinstein accused Baillie Gifford of selling roughly one-third of SpaceX shares held in EWIT and the US Growth Trust at a level he claimed was far below the valuation SpaceX could achieve in a future IPO. He said Saba had received calls from shareholders who were angry about the sale.
EWIT responded that it continues to offer investors a unique and distinctive portfolio of disruptive and transformative companies positioned for long-term growth, including exposure to SpaceX.