Time to say tell US raider Saba Capital to get lost – again | Nils Pratley
Summary
Saba Capital, a New York hedge fund, is pushing to change the board of the Baillie Gifford US Growth Trust, a UK investment company, by trying to install three of its own nominees. Shareholders have rejected Saba’s demands twice before but now face another vote, while the trust has shown strong long-term returns despite recent ups and downs in its value.Key Facts
- Saba Capital is an activist hedge fund from New York that buys large stakes in UK investment trusts to demand changes.
- The Baillie Gifford US Growth Trust (USA) has returned about 16.7% per year since 2018, beating the S&P 500 index.
- Saba holds nearly 30% of the trust’s shares and wants to place three representatives on the board at the upcoming annual meeting.
- The trust invests in fast-growing US companies, many linked to artificial intelligence and tech sectors, like OpenAI and SpaceX.
- Saba proposes offering all shareholders a full cash exit at the net asset value (the trust’s estimated worth), which the trust says has already been offered but declined.
- There are concerns that if Saba takes control, it might change management or merge the trust into a Saba-managed fund.
- Saba’s nominees are not regarded as independent because some have close ties to the hedge fund’s boss, Boaz Weinstein.
- Broker Investec warns that Saba has no clear plan and is asking for control before explaining future strategy or management.
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