Baillie Gifford US Growth slams Saba’s ‘interesting’ coup plot

Baillie Gifford US Growth has followed its investment trust peers in urging shareholders to reject a boardroom overhaul proposed by activist Saba Capital.

Saba is proposing to replace Baillie Gifford US Growth’s current board of directors with Boaz Weinstein, its founder and chief investment officer, and Miriam Khasidy, a former director at alternative investment manager Pantechnicon Capital.

It also aims to offer shareholders “long-awaited liquidity options” and the potential for “increased 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 had taken a substantial stake.

The hedge fund has criticized each trust’s board of directors and investment manager for what it describes as a failure to address recent performance problems and a persistent discount to the value of net assets.

However, Baillie Gifford US Growth told investors on Monday that Saba’s proposed changes are “substantial, self-serving and disruptive.”

It urges investors to vote against all Saba resolutions at an upcoming general meeting on February 3.

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 current fund charges.

Baillie Gifford US Growth noted that Saba’s publicly available funds had charges about twice as high as its own and had underperformed the company during “most recognized measurement periods.”

As of late last year, Baillie Gifford US Growth said the trust had achieved a 180.1 percent return for shareholders since its initial public offering in 2018.

Meanwhile, the Saba Closed-End Funds ETF had only returned 125.8 percent since Saba began managing the fund in March 2017.

Some of the most famous and profitable technology companies in the world, including Amazon, Nvidia and Meta Platforms, are part of the holdings of the Baillie Gifford trust.

Tom Burnet, group non-executive chairman, said: ‘Baillie Gifford’s global reputation gives it preferential access to the growing US businesses of tomorrow, so the future is bright for this company.

‘Saba wants to subvert all this. Their proposals lack detail and, if implemented, could destroy the independence of the board, radically alter the company’s investment strategy and be highly detrimental to shareholder value.

“We urge all shareholders to make their voices heard and vote against Saba’s selfish and destructive proposals.”

The investment trust is one of seven London-listed companies targeted by Saba, which wants to remove its boards and change its investment managers and mandates.

In addition to 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 largest investor in the seven trusts, with stakes between 19 percent and 29 percent, and has built up significant positions over the past year.

Baillie Gifford US Growth currently has a discount to net asset value of just 0.93 percent, having narrowed significantly from around 10 percent for much of 2024 and more than 20 percent for most of 2023.

Its shares have added 61.7 percent over the past year, compared with an average peer return of 22.7 percent, according to the Association of Investment Companies. However, they have fallen 9 percent in the last three years.

London-listed Keystone also expressed its opposition to Saba’s plans on Monday, with its chairman Karen Brade saying she was “horrified” by the group’s “actions and conduct”.

He added: ‘We believe that the proposed resolutions would be very detrimental to the interests of all other shareholders.

“Don’t get your hopes up: we believe this American hedge fund manager is acting opportunistically, trying to take control of the board without a majority stake, to pursue his own agenda.”

His words come three days after Herald urged its shareholders to vote against Saba’s plans and about a fortnight after small European companies advised their investors to do the same.