US investor dials up attacks on investment trust before crunch vote
The American hedge fund tycoon behind a campaign to shake up Britain’s investment trust sector has ramped up his attacks on a Baillie Gifford fund ahead of a pivotal shareholder vote, demanding answers over its decision to offload shares in Space X.
Boaz Weinstein, the founder of Saba Capital, published an open letter to Edinburgh Worldwide Investment Trust’s (Ewit) board, voicing deep concerns about its alleged decision to reduce its holding in Elon Musk’s space start-up, which it said “defied commercial logic”.
Weinstein claims Ewit slashed its position in Space X by over 35 per cent in October last year, just weeks before the private firm was expected to publish a scheduled revaluation that many expected would lead it to fetch a far larger valuation.
In December, it emerged Musk’s start-up was exploring an IPO at a rumoured valuation of $1.5 trillion (£1.1 trillion) and set its current valuation at $800bn. Saba alleges the trust, which is managed by Scottish fund management giant Baillie Gifford, reported an upward revaluation on its holding but did not disclose to shareholders the fact it had sold much of its stake.
“Space X is the defining asset in [Ewit’s] portfolio and the primary reason why many shareholders purchased [its] shares in the first place,” he wrote. “Losing out on a significant proportion of gains represented by Space X’s recent revaluation represents a serious misstep.”
Saba also asked if Ewit’s recent merger with the Baillie Gifford US Growth Trust lay behind its move to reduce its holding.
Ewit denied the list of claims made in the letter, saying they add “to the numerous inaccurate statements and misleading assertions” Saba has made recently about the trust.
Investment trust sector under fire
Weinstein’s allegations represent the latest and most aggressive salvo in a long-running spat between Saba, Ewit and the wider investment trust industry. In 2024, the activist hedge fund began taking out large positions in heavily discounted trusts – the closed-end investment funds traded on public markets – in a bid to push through governance reforms and revive their languid performance.
Many investment trusts have been trading at vast discounts on the total value of their holdings, thanks to retail investors’ embrace of index-tracking funds and the well-documented struggles of many smaller listed companies on the London bourse.
But his efforts, which first came to a head in a series of crunch votes at the start of last year, have been met by a fierce rearguard action from boards, who accuse Saba exaggerating claims to pursue its own ends. They were roundly rejected by shareholders in Ewit and the 10 other targeted investment trusts at a string of general meetings.
Weinstein’s Saba has revived his campaign against the Ewit before this year’s meeting later this month. He has tabled a volley of resolutions, which include removing the entire leadership and appointing three independent nominees to the board.
In a statement on Wednesday, pensions giant Legal & General, which owns 1.5 per cent of Ewit’s shares, confirmed it plans to reject all of Saba’s resolutions, arguing the proposal “lacks sufficient detail”.
A spokeswoman for Ewit said: “Saba’s open letter today adds to the numerous inaccurate statements and misleading assertations it is making designed to mislead shareholders as part of this US hedge fund’s aggressive campaign to achieve its ultimate objective – to seize control of the company to prioritise its own commercial interests to the potential detriment of other shareholders.”