A significant power struggle is unfolding in the investment trust sector as Edinburgh Worldwide Investment Trust, which holds stakes in Elon Musk’s SpaceX, intensifies its resistance against an aggressive move by New York-based Saba Capital Management.
The trust, managed by prestigious Scottish firm Baillie Gifford, finds itself among seven investment vehicles targeted by Saba Capital Management, with combined positions worth £1.5 billion. The activist investor, led by renowned blackjack player Boaz Weinstein, seeks to install its own directors and replace existing fund managers.
Jonathan Simpson-Dent, Edinburgh Worldwide’s chairman, has issued a robust defence against the takeover attempt, emphasising the trust’s unique position in offering investors access to cutting-edge technology and scientific enterprises. The trust’s recent performance improvements, including a significant reduction in its discount to net asset value, strengthen its position against Saba’s advances.
The trust’s management has implemented strategic changes to enhance shareholder value, including a restructuring of the Baillie Gifford team overseeing the fund and a considerable portfolio consolidation. A planned £130 million share buyback programme demonstrates their commitment to shareholder returns.
Saba Capital’s ambitious strategy extends beyond Edinburgh Worldwide, targeting additional Baillie Gifford funds including US Growth Trust and Keystone Positive Change. The hedge fund’s expansion encompasses trusts managed by Janus Henderson and notably includes Herald, a substantial £1.2 billion vehicle.
The developing situation highlights growing tensions in the investment trust sector, where activist investors increasingly challenge traditional fund management structures. The outcome of this contest could significantly influence the future landscape of British investment trusts.
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