New York hedge fund Saba Capital Management may target another Baillie Gifford managed investment trust after losing its attempt to oust an Edinburgh board.
For the second time in 12 months shareholders in Edinburgh Worldwide Investment Trust voted overwhelmingly against Saba’s proposal to replace EWIT’s directors with its own nominees.
However, one analyst says Saba could now turn its attention to other trusts, including the under-performing Scottish American, also managed by Edinburgh-based Baillie Gifford.
Dan Coatsworth, head of markets at AJ Bell, said: “Activist investor Saba is down but not out. Even though the disruptor has lost in its campaign to reform Edinburgh Worldwide, there are plenty of other investment trusts quivering in their boots at the presence of the activist on their shareholder register.
“Just because Saba lost with Edinburgh Worldwide doesn’t mean it won’t win elsewhere….There are also other investment trust activists beyond Saba hoping to make their mark,” he said.
“Widespread consolidation in the investment trust space can be attributed to activist involvement. We’ve also seen various manager changes.
“Boards have realised that trusts cannot limp along and hope for the best – when something isn’t working, the alternatives must be explored.
“Bankers Investment Trust is a potential candidate for a major Saba campaign, with the activist currently holding a 0.5% stake. It has underperformed over one, three, five and 10 years, and it trades on an 8.6% discount versus an average 8.0% discount for its sector.
“In 2025, Bankers proposed to change its rules in what looked like a defence against any potential activist campaign in the future.
“Scottish American also looks vulnerable to an activist campaign. It has underperformed the market over one, three, five and 10 years to the end of 2025 when looking at change in net asset value. Its shares trade on an 9.2% discount to net asset value versus a 3.1% average discount for its global equity income sector.
“The activist might feel compelled to turn the screws on Baillie Gifford, given the latest Edinburgh Worldwide defeat.”
Edinburgh Worldwide shareholders voted against Saba’s proposal to remove the current six independent non-executive directors and appoint three new directors.
The trust argued that Saba was trying to gain control to prioritise its own commercial interests, rather than doing what was best for shareholders in the long term.
Coatsworth said: “While Saba has lost several high-profile campaigns to drive change in various trusts, the number of wins is increasing.
“For example, Saba recently convinced Terry Smith’s Fundsmith asset management business that its Smithson Investment Trust would be better off as an open-ended fund, something shareholders will soon to be asked to vote on.
“Saba also persuaded CQS Natural Resources Growth & Income to buy out any shareholders seeking a full cash exit and reward remaining investors with a higher dividend yield and lower management fees.
“Meanwhile Herald and Impax Environment Markets are both trying to remove Saba from their shareholder registers via a tender offer, subject to a shareholder vote.”
EWIT shareholders reject Saba’s bid to oust board
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