Two Baillie Gifford investment trusts vote against US activist

Shareholders in two Baillie Gifford investment trusts have voted against proposals put forward by US activist investor Saba Capital to overhaul their boards.

The proposals were to “remove all current directors of the trusts”, and “appoint new, highly qualified candidates to replace them”. Both proposals required more than 50% of the votes cast. Boaz Weinstein (pictured above) runs Saba Capital and oversees $5.5 billion (£4.4 billion) in assets at the New York-based hedge fund.

Of votes cast, Baillie Gifford US Growth (LSE:USA) recorded 65.6% against the proposals, while at Keystone Positive Change (LSE:KPC) just over 60% were against the proposals.

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Excluding the votes that Saba cast in favour of its own proposals, only a very small number of shareholders voted in favour of the changes. Baillie Gifford US Growth said that excluding the shares voted by Saba, approximately 98.5% of the votes cast were against the proposals, while at Keystone Positive Change nearly 99% of non-Saba shareholders rejected the proposals.  

There was a high turnout from investors, both large and small. Baillie Gifford US Growth reported 78.4% of shares voted, while Keystone Positive Change had 71.8% of shares voted.

As a result, shareholders in three of seven trusts that Saba requisitioned meetings at have voted against its proposals. Last month, at global smaller companies trust Herald (LSE:HRI), just under two-thirds of the votes cast (65.1%) were against the resolutions. 

This week, three of the remaining four will reveal how shareholders vote: Henderson Opportunities (LSE:HOT) and CQS Natural Resources Growth & Income (LSE:CYN) have their meetings tomorrow (4 February 2025), while The European Smaller Companies Trust (LSE:ESCT) meeting takes place on Wednesday (5 February). The final meeting for the Baillie Gifford-managed Edinburgh Worldwide (LSE:EWI) takes place on 14 February.

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Tom Burnet, chair of Baillie Gifford US Growth, said: “Faced with the threat to their investment posed by Saba’s self-serving and destructive proposals, shareholders have mobilised and acted decisively to protect their investment. The result is unambiguous and conclusive.

“We would like to thank shareholders for their support at this important moment for the company. We are delighted, in particular, by the number of retail shareholders who have voted and played a key role in this positive outcome and encourage them to continue to make their voices heard.”

Karen Brade, chair of Keystone Positive Change Investment Trust plc, said: “I would like to thank all the shareholders who stood up to vote in support of the board’s recommendation. Of the votes cast, nearly 99% of the non-Saba shareholders rejected its proposals.”

Brade added that Keystone Positive Change will now turn its focus back to offering shareholders an uncapped cash exit, or the option of rolling their money into a sister fund, Baillie Gifford Positive Change, which is run by the same team.

The outcome of the vote, as well as the percentage of shareholders who cast their votes, will have piqued the interest of the entire investment trust industry, given that Saba has stakes in 18 other trusts (according to analyst Numis) alongside the other trusts where it has requisitioned meetings.