Saba target trust warns US hedge fund represents ‘existential threat’

An investment trust targeting Saba Capital has warned it faces an “existential threat” if the US corporate raider triumphs in a vote next month.

The Edinburgh Worldwide Investment Trust (EWIT) urged shareholders to oppose Saba’s plans to remove its board and replace them with its own candidates at a meeting scheduled for February 14.

Saba, led by Wall Street financier Boaz Weinstein, owns about 21 percent of the trust and will win if at least 50 percent of voting shareholders support the proposals.

This means it can be successful if a large number of investors do not turn out to vote against the plans.

EWIT chairman Jonathan Simpson-Dent accused Saba of “blatant land grabbing” and attempting to “exploit” the fact that the trust’s large number of retail shareholders do not normally vote.

Retail investors own about 50 percent of the trust’s shares, meaning they have enough power to reject the American company’s proposals.

‘I am deeply concerned about Saba’s proposals. Mutual funds are extremely democratic in nature; Saba’s proposals are not,’ said Simpson-Dent.

‘(Shareholders) have chosen Edinburgh Worldwide for its unique and early access to hidden gems and innovative businesses that in many cases are not available on the public markets. Let’s not let Saba take that away from us.

In announcing the date of its vote on Saba’s plans, EWIT said the US company had “no apparent track record” of investing in small, specialized companies, the trust’s main objective.

He added that the hedge fund’s proposals risked “prioritizing Saba’s own commercial interest” over “creating value for the benefit of shareholders.”

Responding to the announcement, a Saba spokesperson said: “EWIT has underperformed its benchmark index for the past three years and its recent rise in total return appears to be largely due to Saba’s purchases, not the investing in “hidden gems” in private markets or making improvements at the board or management level.’

With assets worth £812m, EWIT, managed by Baillie Gifford, offers investors a portfolio of what it describes as companies operating at the “frontiers of technological innovation”.

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It is one of seven investment trusts targeted by Saba, and Herald, the largest trust targeted by the US firm, will be the first to face a vote tomorrow.

Simpson-Dent told the Mail that Saba was offering a “short-term” approach to the trust which he said was a “complete mismatch” with the purpose of the business.

“We have found it much easier to show our investors how different they are from our current approach,” he added.

The EWIT president has been among Saba’s harshest critics, accusing Weinstein and his allies of trying to “make a quick buck” by acquiring the trusts.

Others outside the trust have also criticized Saba’s plans. Baroness Altmann, the former pensions minister, accused her of trying to “hijack” the trusts and trying to “take advantage of the lack of protection for UK retail shareholders”.