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Thanks for joining us today to cover the unfolding saga as Saba is defeated in another two votes on its attempts to displace investment trust boards.
Join us tomorrow as another two trusts (CQS Natural Resources Growth & Income and Henderson Opportunities Trust) hold their general meetings on the proposals. We’ll bring you the results and analysis as it happens.
Edinburgh Worldwide chair encourages shareholders to vote
âIt is good to see both Keystone and Baillie Gifford US Growth shareholders resoundingly oppose Sabaâs proposals. Shareholders clearly want a strategy and governance framework they have chosen rather than the short-term financial arbitrage offered by Saba,â says Jonathan Simpson-Dent, chair of Edinburgh Worldwide Investment Trust.
Edinburgh Worldwide is the third investment trust being targeted by Saba that is currently managed by Baillie Gifford.
Sabaâs initial nominee for the Edinburgh board didnât hold sufficient shares in the trust, which invalidated the original requisition notice. While Saba has subsequently addressed the issue, Edinburghâs general meeting is now over a week behind the other trusts, taking place next Friday, 14 February.
As such, Edinburgh Worldwide shareholders still have time to vote on the proposals, and in Simpson-Dentâs view it is imperative that they do so.
âWe remind shareholders that voting is open for Edinburgh Worldwide ahead of our general meeting and AGM on February 14, and that they need to vote twice both against Saba in the GM and for the Board in the AGM. Edinburgh Worldwide has the highest proportion of retail investors and therefore a bigger battle to stop Saba,â he said.
Earlier today, Simpson-Dent acknowledged that independent voting advisers Glass Lewis, ISS and PIRC had recommended shareholders vote against Sabaâs proposals.
âIâm encouraged that the independent voting advisers, which many institutional investors widely rely upon, have all highlighted serious concerns about Sabaâs plans to replace an independent and expert Board with one which we firmly believe is conflicted from the outset and not fully aligned to your interests,â he said.
A victory for shareholder democracy
Sabaâs attempts to dislodge the current board of the seven UK investment trusts it is targeting were based in large part on an assumption that shareholders of the trusts, particularly retail shareholders, would be lethargic in their response.
With substantial stakes in all seven trusts targeted, the assumption was, apparently, that it could push its proposals through with relatively little resistance.
The response has proven that assumption unfounded.
âThe impressive turnout of retail investors demonstrates what can be achieved when shareholders are informed, enabled and motivated to have a say on their trust,â said Richard Stone, Chief Executive of the Association of Investment Companies (AIC).
âToday’s votes highlight the importance of shareholder democracy and represent a strong repudiation of Saba’s proposals by a clear majority of shareholders,â said James Budden, head of global marketing at Baillie Gifford (which manages Keystone as well as the US Growth Fund). âShareholder engagement is crucial to the health of the investment trust sector. Hopefully the quantum of the vote cast today is a sign that such participation can be more common in the future.â
“The UK investment trust sector is far from cosy, sleepy and complacent,â he added.
Keystone shareholders overwhelmingly oppose Sabaâs proposals
Shareholders in the Keystone Positive Change Investment Trust have voted by a huge majority to reject Sabaâs proposed requisitions.
Excluding Sabaâs votes, which represent around 39% of the total, just 0.8% of votes cast were in favour of its proposals.
âI would like to thank all the shareholders who stood up to vote in support of the Boardâs recommendation. Of the votes cast, nearly 99 per cent. of the non-Saba shareholders rejected its proposals,â said Karen Brade, chair of Keystone Positive Change Investment Trust.
“Now our focus returns to delivering the proposed Scheme that offers an uncapped cash exit and/or a rollover into a more liquid fund with a similar global impact strategy. We are confident that this remains in the best interests of shareholders,â Brade added. “The Board intends to re-engage with stakeholders without delay in order to implement this Scheme as soon as practicable.”
BREAKING: Keystone shareholders reject Saba proposals
A second heavy defeat in quick succession for Saba, making it three out of three trusts so far whose shareholders have voted against its requisitioned resolutions.
Baillie Gifford US Growth vote: Saba soundly beaten
A stark defeat for Saba as 65.6% of votes cast in the US Growth general meeting went against its proposals. Excluding Sabaâs own votes, 98.5% of votes went against its proposals.
The total votes cast represent approximately 78.4% of the companyâs total voting rights.
“Faced with the threat to their investment posed by Saba’s self-serving and destructive proposals, shareholders have mobilised and acted decisively to protect their investment. The result is unambiguous and conclusive,â says Tom Burnet, chair of the Baillie Gifford US Growth Trust.
âWe would like to thank shareholders for their support at this important moment for the Company. We are delighted, in particular, by the number of retail shareholders who have voted and played a key role in this positive outcome and encourage them to continue to make their voices heard.â
BREAKING: Baillie Gifford US Growth Trust shareholders reject Saba proposals
AJ Bell also sees huge proxy turnout
Weâre hopefully not far off hearing results from this afternoonâs general meetings.
In the meantime, AJ Bell has released data on proxy votes through its platform that shows an even higher retail voter turnout than Hargreaves Lansdown has registered.
76% of AJ Bell customers who hold shares in the European Smaller Companies Trust have voted on the measures through the platform. Even the lowest (besides Edinburgh Worldwide, for which voting is still open), Baillie Gifford US Growth Trust, still has a turnout of 60% on AJ Bellâs platform.
âThis is an extremely high turnout for a shareholder vote and reflects the importance of the proposals being put forward, and the ease with which platform investors can exercise their voting rights,â says Laith Khalaf, head of investment analysis at AJ Bell. âThese voting figures show that shareholder democracy is alive and well, and when important matters are on the line, ordinary investors are willing to come out to vote.
âThere had been some scepticism expressed at whether retail shareholders would exercise their voting rights, but itâs now clear that huge swathes of them have defied the doubters,â he added.
Saba proposals bring proxy voters out in record numbers
The response to Sabaâs proposals appears to be marking a turning point for shareholder voting, with investment platforms reporting a surge in shareholders exercising their rights to vote remotely.
Heraldâs defeat of the Saba proposals saw record numbers of Hargreaves Lansdown (HL) customers vote through its platform, and data released today suggests that the upcoming votes are witnessing a similar trend.
Half of HL customers that are shareholders in Henderson Opportunities Trust have voted on the proposals â more than the 41% equivalent for the Herald vote. 54% of HL shareholders in the European Smaller Companies Trust have exercised their votes through HLâs platform.
âWe are pleased to see such high engagement and record high voting levels following our campaign to encourage investors to express their right to vote,â says Emma Wall, head of platform investments at Hargreaves Lansdown. âShareholder rights are one of the key benefits of the investment trust structure and that is why we want to make it as easy as possible for HL clients to vote, whatever their choice, and why we have proactively informed impacted shareholders.â
As of 2 February the fund with the lowest proportion of HL shareholders that have voted through the platform is Edinburgh Worldwide Investment Trust, at 28%. However, Edinburgh is on a separate schedule from the other trusts, with the general meeting scheduled for 14 February, and voting open via HLâs platform up until 10 February (voting through the platform for the other trusts has now closed).
Besides Edinburgh, the Baillie Gifford US Growth Fund sees the lowest proportion of HL users that have exercised their vote, at 40%.
When will we know the results of the voting?
The requisitioned general meetings at Baillie Gifford US Growth (LON:USA) and Keystone Positive Change (LON:KPC) are just getting underway.
It could be a few hours until we know the results, though. Stay tuned through the afternoon as we bring you live updates and reaction.
AIC: Saba proposals would radically change investment trusts
In a statement to MoneyWeek, the Association of Investment Companies (AIC) said that âthese upcoming votes couldnât be more important for the shareholders of the targeted trusts.
âThe Saba proposals would radically change these investment trusts by replacing the board and changing the mandate, manager and fees. Shareholders need to look carefully at the proposals, consider the response from the seven boards and vote their shares.
âSabaâs proposals would initially replace the current, independent boards of the seven trusts with just two new directors: Sabaâs own representative and another director nominated by the firm,â says Richard Stone, CEO of the AIC. âTwo directors would be an unusually small board for an investment trust given the functions the board performs, and having both directors so closely aligned to one major shareholder inevitably raises questions.â
The AIC urges shareholders in the trust to consider whether they are comfortable with the idea of the trusts having such a small board, with such close ties to a single entity.
âAlthough Saba suggests it will appoint further independent directors at a later stage, shareholders need to think through the implications of these two new directors taking control over the strategy, manager and mandate â fundamentally changing the risk and return profile of the trust,â its statement said.
When are investment trust general meetings taking place?
The timetable for general meetings to vote on Saba’s proposals is below. As you can see, the first meetings â those of Baillie Gifford US Growth and Keystone Positive Change are taking place today. We’ll bring you live coverage of the results of these meetings as they happen.
Investment trust | General meeting date |
---|---|
Baillie Gifford US Growth | 3 February 2025 â 12 noon |
CQS Natural Resources Growth & Income | 4 February 2025 â 11am |
Edinburgh Worldwide | 14 February 2025 â11.45am |
The European Smaller Companies Trust | 5 February 2025 â 12.30pm |
Henderson Opportunities Trust | 4 February 2025 â 10 am |
Keystone Positive Change | 3 February 2025 â 12 noon |
Source: Association of Investment Companies
The Saba saga so far
On 19 December, Saba announced that, as a significant shareholder in the trusts in question, it had requisitioned general meetings at seven UK investment trusts in order to address what it called âunderperformance, persistent trading discounts and disengaged management teamsâ.
Its âMind the Gapâ campaign sought to address steep trading discounts to net asset value (NAV) at the seven trusts by displacing their boards, and replacing them with new boards that, while including independent members, would include at least one of the hedge fundâs own employees as directors.
The proposals have attracted widespread criticism from the boards of the trusts themselves as well as investment trust industry experts. Saba has responded by claiming it is acting in shareholdersâ best interests.
Sabaâs campaign stumbled at the first hurdle when Herald Investment Trust shareholders voted against its proposals, but five more general meetings are taking place this week.
Good morning, and welcome to our live blog following a crucial week for the UKâs investment trust industry.
Over the next three days, five trusts will vote on proposals from New York hedge fund Saba Capital seeking to replace their current managers with its own appointees.
Follow this live blog for all the latest updates, reaction and analysis as shareholders of the investment trusts vote on Sabaâs proposals.