Saba Capital has relaunched its attack on Baillie Gifford with proposals to add three new members to the board of the firm’s US Growth trust.
The US activist hedge fund holds 29% of the trust’s shares and has put forward a plan to install Jason Chen, Thomas H McGlade and James Waterlow to the investment company’s board at the annual general meeting (AGM) in November.
Chen was appointed to the board of Impax Environmental Markets in June as a result of Saba’s requisition. Shortly afterwards, the trust served notice on the investment manager, in line with Saba’s suggestion.
Waterlow works directly for Saba, having been appointed UK managing director in February, while hedge fund executive McGlade has previously been nominated by Saba in other requisitions.
Emma Bird, head of investment trusts research at Winterflood Securities, “suspects” that Saba’s intention is to replace the incumbent board before putting itself forward as manager and changing the fund’s investment policy to one investing in UK closed-ended funds.
It continues a longstanding battle with the incumbent board. Saba initially attempted to seize control of the trust in February 2025 but was rebutted by its fellow shareholders. Since then, the US hedge fund voted against the re-election of Baillie Gifford US Growth’s members at last year’s AGM, although it did not provide alternative candidates.
Most recently, Saba blocked a potential merger with fellow Baillie Gifford-managed trust Edinburgh Worldwide, a trust in which it has since taken control.
Matthew Read, senior analyst at QuotedData, said the latest approach appears to be “more of the same” from Saba, with “no new ideas on the table”.
“In a repeat of its previous tactics, it seems intent on repeatedly requisitioning USA in the hope that other shareholders eventually tire of the process, allowing it to gain control of the board through a war of attrition.”
In a statement, the board said: “The board recommends that shareholders take no action at this time and await a further announcement from the company in due course.”
Baillie Gifford US Growth has come under repeated approaches from Saba, which has capitalised on the share price dropping to a discount relative to its net asset value (NAV).
The trust suffered mightily in the technology-inspired sell-off of 2021 and 2022, when rising interest rates caused investors to dump growth shares.
However, over the past three years it has rebounded strongly. As a result, while it has been the worst performer in the IT North America peer group over half a decade (losing investors 3.2%), it has been the best over 36 months.
Performance of trust vs sector and benchmark over 5yrs
Source: FE Analytics
Whether the requisitioned resolutions will pass remains to be seen; however, Bird noted that there are reasons to suggest this time might be different and Saba could win.
“The fact only an ordinary resolution is proposed (requiring 50% of shares voted in favour); the high ownership by Saba itself (29%); the high proportion of retail shareholders, who tend to be less actively engaged in the voting process; and a potential element of voting fatigue following numerous requisitioned votes in the investment trust sector in recent years,” are all factors that could work against the current board, she noted.
While the Financial Conduct Authority (FCA), has proposed rule changes to make it harder for large shareholders to use the system in this way, Read noted that “we are not there yet”.
“As before, it is crucial that USA shareholders inform themselves and turn out to vote to protect their investment.”