Herald urges investors to oppose Saba’s ‘opportunistic’ coup plans

Herald Investment Trust is urging shareholders to reject Saba Capital’s “opportunistic” attempt to take control of the company.

Saba last month wrote an explosive open letter to investors in seven London-listed investment trusts, including Herald, urging them to dismiss their boards and renew their managers and investment mandates.

The New York-based hedge fund is now the largest shareholder of all the trusts, with stakes between 19 and 29 percent, and has built up large positions over the past year.

The other trusts affected are Baillie Gifford US Growth, CQS Natural Resources Growth & Income, Edinburgh Worldwide, European Smaller Companies, Henderson Opportunities and Keystone Positive Change.

Boaz Weinstein, founder and chief executive of Saba, lashed out at the trusts’ relative underperformance, “uncommitted” management and a “persistent” discount to their net asset value (NAV).

Saba has subsequently called for a general meeting for the seven trusts, where investors can decide whether to oust all current directors and appoint “new and highly qualified” candidates as their replacements.

He wants Paul Kazarian, chief executive of Saba listed investment trusts, and former financial and banking executive Jassen Trenkow to join Herald’s board.

“If you are ready for positive change, we strongly urge you to vote in favor of the resolutions, as we firmly believe they are the only credible, long-term way to realize huge returns on your investment,” Weinstein said.

However, Herald bosses responded by saying Saba’s proposal to take control of the business was “opportunistic” and was being done for his own financial gain rather than concern about the company’s performance or its stock rating.

They also said the firm had not provided “concrete details” of its investment strategy for Herald and warned that shareholders could lose “significant value” if the hedge fund sells parts of the portfolio after acquiring the property.

As a result, Herald wants all shareholders to reject Saba’s resolutions at the next general meeting on February 25.

The heads of small European companies have already advised their shareholders to vote against the Saba acquisition, while the other consortia have asked investors to “take no action” at their respective general meetings.

Andrew Joy, Chairman of Herald, said: “Since its launch in 1994, Herald Investment Trust’s investment strategy has delivered exceptional investment performance and substantial returns for its shareholders.”

According to the company, it has achieved a lifetime NAV return of 2,612 percent, but Saba has “materially underperformed” with a return of 865 percent since 2009.

Herald manages four technology-focused funds, including Herald Worldwide Technology, whose largest holdings include Apple, Microsoft and Google parent company Alphabet.

The firm said the technology industry is “experiencing a particularly dynamic phase”, with artificial intelligence creating new products and services, and geopolitical instability driving innovation in the defense and cybersecurity sectors.