Unwanted drama for major Scottish company just goes on and on |
The unwanted drama just goes on and on for a major Scottish company facing another attempt to oust its board, writes Ian McConnell.
And the industry body has now called on the UK Government to 'get to grips with the threat'.
It has long been clear US hedge fund manager Boaz Weinstein would not be walking away from the UK investment trust sector just because his Saba Capital Management lost every one of its attempts to oust the boards of seven funds early last year.
That string of defeats has not put him off at all as Saba continues to make its presence felt on various fronts.
Edinburgh Worldwide Investment Trust had by last month seen off two attempts by Saba to oust its board.
Of course, the latest defeat for Saba on January 20 did not change the fact that its stake of “just over” 30% in the trust, as Edinburgh Worldwide chairman Jonathan Simpson-Dent quantified the holding in the run-up to last month’s vote, means it continues to cast a long shadow over the fund.
That said, even with an acute awareness of Mr Weinstein’s persistence when it has come to UK investment trusts, his decision to launch a third bid to oust the board of Edinburgh Worldwide only three weeks after his second attempt was defeated was a real attention-grabber when it was announced on Tuesday.
And Saba is proposing the appointment to Edinburgh Worldwide's board of the very same three individuals, Gabriel Gliksberg, Michael Joseph, and Jassen Trenkow, at the investment trust’s forthcoming annual meeting as it did last month. The US hedge fund said this week that it will propose these appointments as additional resolutions at the annual meeting and vote against the re-election of the existing directors.
Excluding shares held by Saba, investors representing 92.7% of the shares voted rejected the US hedge fund’s proposals at the general meeting of Edinburgh Worldwide requisitioned by Saba and held on January 20.
However, that has clearly not put Mr Weinstein off another attempt.
Taking into account Saba’s shareholding, investors holding 53.2% of the Edinburgh Worldwide shares voted opposed the resolutions put to the January 20 meeting.
And it was this 53.2% figure on which Saba focused in its open letter this week to shareholders of Edinburgh Worldwide, which is managed from the Scottish capital by Baillie Gifford.
This shows the strength of the US player’s position as a result of its stake, with a record turnout of shareholders in the January 20 vote and with 92.7% of non-Saba shareholders rejecting the hedge fund’s resolutions producing overall 53.2% opposition given Saba’s vote for its own proposals.
Presumably, Mr Weinstein and Saba will be well aware of this arithmetic.
Edinburgh Worldwide observed on January 20 that shareholders representing more than 70% of the total issued share capital voted on the Saba resolutions put to that general meeting, "a record shareholder turnout, exceeding the turnout at last year's requisitioned general meeting". It was at the February 14, 2025, general meeting that the US hedge fund’s first attempt to oust the trust’s board was defeated.
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Much was made ahead of last month’s vote, and rightly so, about the degree to which the turnout would affect that result.
And Baroness Ros Altmann, a former UK pensions minister, last month made some very thought-provoking comments in the context of the arithmetic.
She said ahead of the crunch vote on Saba’s second shot at ousting Edinburgh Worldwide’s board: “This renewed attack could herald similar actions against numerous other UK investment trusts in which Saba has taken stakes. There is a serious risk that EWIT’s retail investors do not realise what is happening and fail to exercise their vote. Allowing a determined hedge fund to keep returning to the register until fatigue or low turnout hands it victory is not healthy shareholder democracy.
“Under current rules, disruptive resolutions can pass unless enough other shareholders actively vote against them…I hope retail investors, wealth managers, pension trustees and regulators will consider the longer-term risks of allowing short-term trading interests to impact confidence in the closed-ended model’s traditional long-term investment approach that has served investors well over time.”
The “fatigue or low turnout” danger in a situation where an activist keeps forcing votes, in the case of Edinburgh Worldwide on the ousting of the board, remains absolutely worth highlighting.
And it is surely difficult to disagree with Baroness Altmann’s “not healthy shareholder democracy” observation.
The non-Saba shareholders of Edinburgh Worldwide have now voted resoundingly on two occasions against the US hedge fund’s resolutions.
The Association of Investment Companies said yesterday it had written to the Financial Conduct Authority (FCA) and the Department for Business and Trade “calling for action to protect retail shareholders’ interests”, declaring: “This follows Saba Capital’s repetitive attacks on Edinburgh Worldwide Investment Trust.”
The letters from the AIC suggest what the industry body describes as “measures to defend shareholders’ rights and ensure a fair and democratic process”.
AIC chief executive Richard Stone said: “It’s time for the regulator and Government to get to grips with the threat that Saba poses and act to support UK companies. Is it fair that an investment trust needs to achieve repeated record turnouts to avoid Saba taking control against the wishes of the vast majority of all other shareholders? How can shareholders make an informed decision when individuals nominated for election to the board are silent on their intentions for the company and do not subject themselves to shareholder scrutiny? Why can an activist force repeated votes on the same proposals in such a short space of time?
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“There should be a limit to the number of times a meeting can be requisitioned by the same shareholder making similar proposals. The current legislation does not give boards sufficient powers to stop the same proposals being brought forward repeatedly by a single shareholder when they have already been rejected. This creates a distraction and cost to the detriment of other shareholders.”
Declaring that “directors must represent all shareholders”, Mr Stone added: “Our priorities for voting reform therefore include changing the related parties rules so that directors nominated by a significant shareholder must win the support of other shareholders, excluding the significant shareholder, to be elected.”
The AIC raises very important points, and its suggestions are surely worthy of consideration.
Mr Stone had said on January 20 of the Edinburgh Worldwide vote that day: “Once again, the vote has highlighted the importance of broad shareholder participation so that low turnouts don’t hand victory to large minority shareholders by default."
His point about the possibility of minority shareholders gaining victory “by default” because of a low turnout is well made.
On the broader issue of the investment trust sector and its importance for long-term saving, Baroness Altmann said last month: “UK investment trusts are one of the strengths of our financial system, channelling patient capital into innovative, long-term assets which open-ended funds often struggle to hold. But this model depends on boards acting for all shareholders, not just an aggressive minority with a short time horizon. They are ideal investments for pension funds.”
Saba this week again expressed dissatisfaction with Edinburgh Worldwide’s performance.
Edinburgh Worldwide, which had total assets of around £861.59 million at December 31 and has Elon Musk's SpaceX as the single largest holding in its portfolio, highlighted an impressive investment performance against its benchmark over the past year in the run-up to last month’s vote.
Mr Simpson-Dent this week flagged the view of Edinburgh Worldwide’s board that Saba is “evidently choosing not to listen” to other shareholders in the investment trust.
He said: “For the third time, Saba is seeking to replace the entire independent board with its own nominees in order to take control of the company. Saba's basis for its latest attack has not changed since shareholders rejected its resolutions on 20 January 2026, just three weeks ago.
“Only three weeks ago, a record 70% of shareholders participated in the second vote in less than a year, with an overwhelming majority (93%) of non-Saba holders again rejecting its proposals. Despite this strong shareholder opposition to Saba taking control, Saba is evidently choosing not to listen and has, again, chosen not to engage with the board.”
Last year, Edinburgh Worldwide held its annual meeting on Valentine’s Day, when it became the last of the seven investment trusts targeted in Saba’s spectacular initial salvo to see off the US hedge fund’s attempt to oust the board.
The investment trust has until the end of April to hold this year’s annual meeting.
Mr Simpson-Dent said this week: “The board will update shareholders on its plans ahead of the company's AGM.”
In some ways, this week’s launch of another move on Edinburgh Worldwide by Saba might be viewed as the start of the next act in this drama.
However, in other ways, it could be viewed as the continuation of the same act, with the curtain having remained up throughout.
Whatever the case, the broader UK investment trust sector will be watching closely as this unwanted drama plays out.