Baillie Gifford’s £800 million Edinburgh Worldwide Investment Trust has become the latest closed-end fund company to defeat New York activist hedge fund Saba Capital Management.
In its first wave of attacks on the sector late last year, the New York hedge fund forced seven UK investment trust companies “to convene general meetings of shareholders to … vote on resolutions to remove the Trusts’ existing directors and appoint highly qualified directors to replace them.”
All seven funds have now defeated Saba, including the Baillie Gifford US Growth Trust and Baillie Gifford’s Keystone Positive Change Investment Trust.
Saba in recent days launched a new campaign against several other closed-end investment trust companies, calling for them to become comparable open-ended funds.
In a stock exchange statement on Friday, Edinburgh Worldwide said: “Following a Requisitioned General Meeting of Edinburgh Worldwide Investment Trust plc, the Board of Directors announces that none of the resolutions proposed by Saba Capital Management L.P. were passed.
“Of the total votes cast, 63.8% of shares were voted against Saba’s resolutions, in line with the recommendation of the Board. A total of 36.2% of shares voted in favour of Saba’s resolutions, including the shares held by Saba.
“Shareholders representing 64.7% of the total issued share capital voted on the resolutions. The level of shareholder participation in the vote was supported by a high level of engagement by retail shareholders who hold their shares through digital platforms.
“The vote has been supervised by Civica Election Services, whom the Board appointed as independent assessor to report on the poll held at the Requisitioned General Meeting in respect of each of the Requisitioned Resolutions.”
Jonathan Simpson-Dent, Chair of Edinburgh Worldwide Investment Trust, said: “Edinburgh Worldwide’s shareholders have spoken: they have rejected Saba Capital’s proposal for a fundamentally different strategy based on fundamentally different principles with a fundamentally different investment approach.
“Today’s result confirms that this unique mandate still appeals, but shareholders also expect the Trust to deliver.
“We took decisive action in 2024 with positive early results. Our job now is to deliver the performance our shareholders rightly expect.”
Richard Stone, Chief Executive of the Association of Investment Companies (AIC), said: “Once again, shareholders have emphatically rejected Saba’s proposals. It’s tremendous to see shareholders come out and vote in such numbers and it’s testament to how much they value their investment trust.
“This is the end of round one, but Saba’s most recent requisitions show that this may not be over yet.
“Shareholders are being asked to choose between an investment trust, with its long-term approach and structural advantages, and an unknown open-ended alternative. They will need to give this careful consideration and vote accordingly.
“There are lessons to learn from these votes. It was only possible to achieve such high turnouts because of an unprecedented campaign from the companies, the industry, platforms and the media.
“We must make sure that shareholders are always informed and empowered to vote, rather than relying on goodwill and ad hoc efforts. That’s why we’re launching a campaign to change company law, ‘My share, my vote’, to ensure that voting rights and information are always passed on to shareholders.
“Boards have been rising to the challenge during this period of deep discounts. We’re seeing record levels of activity, such as share buybacks, mergers and strategic reviews.
“More than ever, boards are focused on discount management, their trust’s place in the market, and communication with existing and new shareholders.
“Independent oversight by boards is integral to the success of investment trusts and their focus on long-term objectives for the benefit of all shareholders, as opposed to short-term trading.”