US investor Saba Capital is proposing revolutions at several investment trusts – replacement boards and new fund managers. They suggest the performance of the trusts has been poor and vigorous steps have not been taken to improve shareholder value.
There are seven general meetings being requisitioned and the trusts affected are Baillie Gifford’s Edinburgh Worldwide (EWI), Baillie Gifford US Growth (USA), and Keystone Positive Change (KPC), Henderson Opportunities (HOT) and European Smaller Companies (ESCT) trusts plus Herald (HR1) and CQS Natural Resources Growth & Income (CYN).
ShareSoc, the UK’s premier organisation for individual investors, has serious concerns about the governance risks posed by Saba’s proposals, which seek to replace independent boards with its own non-independent representatives in all 7 trusts, award itself the investment management mandates, combine the trusts into a larger vehicle and use that vehicle to acquire further trusts at a discount. See comments here: https://www.sharesoc.org/sharesoc-news/sharesoc-warns-of-serious-governance-issues-in-saba-capitals-proposals/
The AIC which represents investment companies also has concerns and is encouraging shareholders in the trusts to vote – see https://www.theaic.co.uk/aic/news/press-releases/six-unanswered-questions-about-saba-proposals . Information on how to vote is usefully included.
What’s my view? I am generally in favour of such revolutions where past performance is clearly an issue. For example I supported changes at Alliance Trust promoted by another activist investor. But this example is not nearly as clear cut. I don’t personally hold any of these trusts but I think the proposed changes need to be spelled out and justified more clearly.
But shareholders certainly need to vote on the proposals and the boards need to spell out what their defence is or any alternative proposals.
Baronsmead VCT Voting
But voting at General Meetings of companies is not always easy. For example, yesterday I tried to vote at the AGMs of Baronsmead Venture Trust (BVT) and Second Venture Trust (BMD). After twenty minutes of trying to follow the instructions I received in a letter, I gave up. I have sent a complaint to the registrar (The City Partnership (UK) Limited) about the way too complex log-in procedure and even after logging in it was not obvious how to vote.
Roger Lawson (Twitter: https://x.com/RogerWLawson )
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