Victory for Saba as Six Directors Leave Edinburgh Worldwide Investment Trust

The directors of Edinburgh Worldwide Investment Trust have resigned following claims from the chairman that retail investors were subjected to pressure from a group of American hedge funds seeking control of the Trust’s shares in Elon Musk’s SpaceX. The Trust’s six directors are stepping down after being ousted by Saba Capital Management, an activist investor based in New York that acquired a substantial stake in the London-listed group. Saba launched a campaign against multiple investment trusts in London, rallying support from three other American hedge funds for a vote that led to the appointment of its nominees as directors.

Collectively, Saba and its American allies held more than 40 percent of the company’s shares, while only approximately 60 percent of shares were voted at the annual meeting. Jonathan Simpson-Dent, chairman of Edinburgh Worldwide, expressed concern that many retail shareholders had opted to exit the Trust, consequently being replaced by institutions aiming to harness the potential upside of the Trust’s valuable SpaceX exposure. He stated that retail and private wealth shareholders had been worn down by Saba’s ongoing attacks.

According to the Trust’s website, its holding in SpaceX constitutes 20.4 percent of its total assets. The annual meeting saw attendance from around 30 individuals, including Sir James Waterlow, managing director of Saba UK. A limited number of other shareholders were present. Simpson-Dent indicated his intention to remain a vigorous advocate for the investment trust sector. He asserted that regulatory changes are necessary and that the recent results should serve as a serious wake-up call to regulators, who he feels have been tardy in their response. He emphasized that retail shareholders deserve enhanced protections and a more secure investment environment.

Simpson-Dent lamented the current state of Edinburgh Worldwide, noting that it possesses a remarkable portfolio with great potential. He expressed disappointment at having the initiative taken from them by what he referred to as opportunistic investors. Recent developments surrounding the rocket company founded by Musk have increased the value of the Trust’s shares following revelations that SpaceX plans to seek a listing in New York with a valuation exceeding $1.75 trillion.

Richard Stone, chief executive of the Association of Investment Companies, voiced concerns that thousands of shareholders would be profoundly discouraged by the recent changes at Edinburgh Worldwide. He stated that there would be stringent scrutiny of the new board members and that it is expected they will adhere to a proper process when considering changes to the manager or the mandate. Shareholders should be granted the opportunity to exit before and after any potential SpaceX IPO, according to Stone.

Stone added that the AIC would advocate for amendments to City listing rules that would prevent large shareholders from disregarding the interests of retail investors while seizing control of listed trusts. Saba has articulated criticism towards the Edinburgh Worldwide board for its unsatisfactory performance over the previous five years, suggesting actions taken were merely to sustain the status quo and cater to the interests of incumbent directors.