Shareholders in a Baillie Gifford closed-end investment fund have rejected plans by activist investor Boaz Weinstein’s hedge fund Saba Capital to oust the board.
At a general meeting on Tuesday requisitioned by Saba, 53.2% of votes cast rejected the plan to cull six Edinburgh Worldwide Investment Trust directors and replace them with three Saba-backed candidates. Overall, 92.7% of all the EWIT shares, excluding those held by Saba, voted against the proposals.
The decision marks a second defeat for Saba Capital in its long-running and at times bitter campaign against the board of Edinburgh Worldwide, a U.K. fund which invests in cutting-edge public and private technology companies.
The New York-based $6 billion hedge fund firm, which has raised its holding of EWIT’s shares from 25% to 30%, first attempted to shake up EWIT’s board in February last year, but ultimately failed to win investor support.
Edinburgh Worldwide Investment Trust.
Jonathan Simpson-Dent, Chair of Edinburgh Worldwide Investment Trust, criticized the activist campaign as a “significant and costly distraction.”
“For the second time in less than a year, Edinburgh Worldwide’s shareholders have voted decisively to reject Saba’s proposal to install its own nominees to the board and the uncertainty that would have entailed,” Simpson-Dent said in a statement.
“Saba remains our largest shareholder and we will continue to seek constructive engagement with them to develop potential solutions that allow us to move forward.”
EWIT’s total assets stood at £847.15 million ($1.1 billion) as of Oct. 31.
‘An aggressive campaign’
Weinstein focused heavily on EWIT’s large discount to net asset value. While EWIT’s NAV discount has narrowed recently, the U.S. manager highlighted longer-term underperformance, which he called “unprecedented value destruction.”
He had also zeroed in on the trust’s largest holding, Elon Musk’s SpaceX, which makes up about 8% of its portfolio. In an open letter earlier this month, Weinstein accused EWIT’s board of “misleading” shareholders over a sell-down of its SpaceX shares.
Responding Jan. 7, EWIT said the U.S. hedge fund was running “an aggressive campaign” to “seize control of the company to prioritize its own commercial interests to the potential detriment of other shareholders.”
CNBC has contacted Saba Capital representatives for comment.
The persistent NAV discounts prevalent across many U.K. investment trusts has become a cornerstone trade for Weinstein’s firm in recent years, where the manager sees a “storm” is brewing for shareholders.
In a separate move, Saba Capital last week called for a wind-down of Workspace Group, a real estate investment trust (REIT) which operates office properties across London and the south-east of England.
