The Edinburgh Worldwide Investment Trust has generated a near-950% return on its position in Elon Musk’s Space Exploration Technologies, also known as SpaceX. The closed-end investment trust, which is managed by Baillie Gifford, invests in publicly-listed and privately-held technology companies that focus on innovation and disruption globally. Edinburgh Worldwide first invested in SpaceX in 2018. Now, the aerospace company — which specializes in rockets, satellites, space transportation, and reusable launch vehicles — is EWIT’s largest holding, making up about 16% of the trust’s overall portfolio. In a recent update, EWIT — which has about £847.15 million ($1.14 billion) in total overall assets — said the position has generated an absolute return of 947%. Jonathan Simpson-Dent, chair of EWIT, described the original investment as an early-stage “speculative” bet, with much of the hypothesis behind the investment driven by EWIT’s portfolio management team, backed by a “massively supportive” board. EWI-GB YTD mountain Edinburgh Worldwide Investment Trust. “When the fund manager came to us and said that space exploration, and the commercialization of space, was a good hunting ground for them, we got really excited about it,” Simpson-Dent told CNBC in an interview. The portfolio management team’s familiarity with Musk’s track record, particularly with Tesla , helped strengthen their conviction on SpaceX’s early potential. “We knew Musk well from Tesla, we were early investors in Tesla, and we know what he did with that company,” Simpson-Dent said, adding that the electric vehicle giant generated “disproportionate returns” over a 10-year period for Edinburgh Worldwide shareholders. EWIT’s team also saw SpaceX as a young company that could prove similarly “transformational,” Simpson-Dent explained. “As the technology grew, and as we saw Starlink start to really get traction and become the go-to satellite network for many end markets, as and when opportunity came to follow our investment and keep investing in SpaceX over the following three, four, five years, we kept investing in the business, and we saw it hit all its milestones,” he said. ‘Ongoing excitement’ EWIT recently trimmed its position in SpaceX, though the investment remains its biggest position, and is more than double the size of EWIT’s next biggest holding. In doing so, EWIT is ultimately aiming to balance investment discipline with “ongoing excitement,” according to Simpson-Dent, adding that EWIT’s investment guidelines stipulate that around 25% of the portfolio can be in unlisted assets. “If that goes up naturally through 25% because companies have been revalued upwards, then that’s fine. But when you’re at 30%, it limits your headroom to invest in other unlisted businesses. So it takes away your dry powder to go after other companies. We want to keep some dry powder, which is an important part of the equation,” he observed. “All wise investment managers will tell you about portfolio risk and concentration risk,” he said. “You do not want to be a one-hit wonder, and so for one particular investment to be 20%-plus of our holding just makes us look skewed towards that one asset. Having trimmed, we’re now about 30% unlisted.” The SpaceX investment has also become a major flashpoint in the long-running dispute between EWIT and its largest shareholder, the activist hedge fund Saba Capital. EWIT recently sold about one-third of its SpaceX position, which drew the ire of Saba Capital founder Boaz Weinstein, who criticized the sale in a strongly-worded post on X. Weinstein referred to “talk of SpaceX’s possible $1.5T valuation,” and said in his post, which was addressed to Baillie Gifford, “it’s time to finally answer the question on EWI & USA investors’ minds. What price did you sell a chunk of our crown jewel for?” Simpson-Dent explained how SpaceX regularly holds employee tenders, which gives EWIT the opportunity to sell down some of its positions while still maintaining a significant holding in the asset. New York-based Saba, which holds a 30% stake in EWIT, has secured a general meeting of investors where it is proposing to remove the current board and replace it with three of its own nominees in order to halt what it sees as “unprecedented value destruction.” EWIT is recommending that shareholders vote against the plan. The meeting is scheduled for Jan. 26.
