Saba revives attack on Baillie Gifford trust
Notorious activist hedge fund Saba Capital has launched a fresh assault on one of Baillie Gifford’s largest investment trusts, proposing three candidates to be installed on the vehicle’s board.
In the latest offensive in a long-running onslaught on London-listed trusts, the Boaz Weinstein-run fund put forward a trio of executives for shareholders to consider for board roles at the US Growth Trust (USGT) ahead of its general meeting later this year.
The proposal, which Baillie Gifford disclosed to shareholders in a stock exchange filing on Monday, is Saba’s third move against the trust in less than two years, having had two other manoeuvres rebuffed since the start of 2025.
Saba has previously argued that misguided decision-making making USGT, which invests in a combination of high-growth public and private companies, has widened the trust’s discount relative to the value of its investments. In a statement on Monday, the company said: “Over the past five years, USA [US Growth Trust] has underperformed the S&P 500 Index on both a price – -88.4 per cent – and NAV return (-79.1%) basis.
“During that time, USA shareholders have suffered under a board that has repeatedly put Baillie Gifford’s interests first. If our nominees are elected, we would urge them to offer all USA shareholders a 100 per cent cash exit at or near NAV [net asset value] – providing a long-overdue liquidity event similar to those we have helped secure for shareholders across other UK investment trusts.”
The hedge fund has waged a years-long campaign against nearly a dozen investments trusts, a kind of closed-end fund that is structured to be listed on a stock exchange. Its initial 2024 campaign to install Saba-linked directors on seven trusts was largely rebuffed by shareholders, many of whom were concerned they would push through a sudden change in investment strategy or break up the trust and sell off its portfolio.
Baillie Gifford trust recovers from difficult patch
But since that first offensive in 2024, the activist investor has also chalked up a string of favourable results, including a deal to push the Herald Investment Trust into Aberdeen Investments and installing three directors onto the board of Baillie Gifford-run Edinburgh Worldwide Investment Trust.
Saba, which owns nearly 30 per cent of USGT, is now proposing three directors to take up positions on the Baillie Gifford trust, one of which is Sir James Waterlow, who is also a managing director at the hedge fund. At previous showdowns, Weinstein and his activist fund have argued their proposed directors would act independently from the fund’s interests.
Emma Bird, head of investment trusts research at Winterflood Research, believes that Saba’s intention is to “replace the incumbent board before putting itself forward as manager”. In that scenario, it would would then look to shift “the fund’s investment policy to one of investing in UK closed-ended funds”, she added.
The assault also places fresh scrutiny on the performance of USGT, which is trading below its share price five years ago despite it being an early investor in SpaceX and Anthropic, and its mandate focusing on the growth-led opportunities that have enjoyed a historic bull run in recent years. Baillie Gifford’s FTSE 250 trust shed more than half its value in 2022, but has since recovered almost all that lost ground having rallied 24 per cent in the past year.
“In a repeat of its previous tactics, [Saba] seems intent on repeatedly requisitioning [USGT] in the hope that other shareholders eventually tire of the process, allowing it to gain control of the board through a war of attrition,” said Matthew Read, senior analyst at Quoteddata. “The Financial Conduct Authority has proposed changes that, if enacted, should make it harder for large shareholders to use the system in this way to the potential detriment of smaller investors. However, we are not there yet.”
Baillie Gifford declined to comment.