Edinburgh Worldwide Investment Trust shareholders have been urged to make sure they vote and have their say, as US hedge fund Saba seeks to seize control of the investment trust.
The board of Edinburgh Worldwide has encouraged investors to back its strategy, highlighting its strong long-term performance, and to shun Saba’s hostile approach.
Led by Boaz Weinstein, the hedge fund has staged an attempt to take over seven UK investment trusts, replacing their boards with its own representatives and changing how they invest.
The funds affected are holding special shareholder votes and all those who invest in the investment trusts have the right to have their say, whether they invest directly or through an investing platform.
Edinburgh Worldwide’s requisitioned general meeting takes place on 14 February, but investors do not have to attend to have their say, they can do this online ahead of time and vote via investment platforms if they hold shares there.
In a letter to shareholders, Jonathan Simpson-Dent, chair of the trust’s board, said: ‘Please vote to stop Saba – this time it really matters, or you will lose Edinburgh Worldwide’s unique mandate.’
We explain what shareholders need to know and the detail the crucial voting deadlines.
What is happening with Edinburgh Worldwide?
In December, New York-listed hedge fund Saba Capital Management mounted a bid to take control of seven UK investment trusts, having built up substantial shareholdings in them.
Saba wants to replace the trusts’ current directors with two of its own candidates and take over management.
Edinburgh Worldwide is one of three trusts targeted that are managed by Edinburgh-based fund manager Baillie Gifford, alongside US Growth Trust, and Keystone Positive Change.
Other trusts in Saba’s sights are Herald, European Smaller Companies, CQS Natural Resources and Henderson Opportunities. Herald Investment Trust was the first to hold its general meeting and shareholders voted overwhelmingly against Saba’s move.
Individual investment trusts and investment platforms have published explanations of the Saba issue and how to vote.
Edinburgh Worldwide shareholders can read a letter from the board to investors and circular explaining how to vote here.
The Association of Investment Companies (AIC) has a How to vote your shares guide on its website, to explain what people need to know.
Space X is Edinburgh Worldwide’s biggest holding and has delivered big returns
About Edinburgh Worldwide
Edinburgh Worldwide Investment Trust (EWIT) is a global smaller companies specialist, which invests in a portfolio of public and private disruptive companies that operate at the frontiers of technological innovation and transformation.
It holds 60 to 100 companies and up to 25 per cent of assets can be held in private companies.
The trust’s managers said in a letter to shareholders: ‘EWIT’s portfolio is unique, featuring a diverse range of early-stage but high-potential assets from both public and private markets.
‘These private market opportunities are notoriously difficult for everyday investors to access cost-effectively. But through EWIT, you have a front-row seat to the companies shaping tomorrow. There’s simply no other investment opportunity quite like it in the UK.’
Edinburgh Worldwide’s long-term performance is good, with a ten-year share price return of 148.5 per cent to the end of December 2024. However, it suffered as growth assets slumped in late 2021 and 2022, in the aftermath of the initial Covid pandemic boom.
The trust’s performance has picked up and in 2024 its shares climbed 23.9 per cent.
Simpson-Dent said: ‘Saba has timed its raid just as Edinburgh Worldwide has turned the corner. It is betting on gaining control of the trust on the cheap as it has already done with two US-listed funds.
‘Saba is totally silent on Edinburgh Worldwide’s sustained period of outperformance from 2014 to 2021, and has focused exclusively on the turbulent period for growth investing between 2021 to 2023. This turbulent period is old news as our shareholders already know.’
Why investors should vote
Investors who hold the investment trusts need to vote to ensure that they have a say in what happens to their money.
If Saba gets half or more of the votes cast, its proposals will pass. If enough shareholders vote against the hedge fund, its plans will stall.
James Budden, Head of Global Marketing, Baillie Gifford, says: ‘We urge all shareholders to act on this occasion, to clearly understand the choices facing them, and to ensure their voices are heard. Every vote matters.’
Saba has built up significant stakes in the investment trusts and if individual investors don’t exercise their right to vote, they will find matters taken out of their hands.
Historically, retail shareholders do not vote at general meetings, often because they invest through investment platforms and do not know how they can exercise their right to vote.
Saba holds c.24 per cent of Edinburgh Worldwide at time of writing, and the board believe this could rise to 30 per cent by the voting deadline, so a lack of engagement or investor inertia could allow Saba to take over the trust.
Richard Stone, chief executive of the AIC, says: ‘It’s vital that shareholders vote on the future of their investment trust. The final decision rests with them. They can also take the opportunity to attend the general meetings and ask questions.’
> Read the AIC guide: How to vote your shares
How to vote
Investment trust shareholders are entitled to attend meetings and vote on what happens to the companies that they hold a stake in.
Edinburgh Worldwide has written to direct investors and is also contacting those who hold the trust via investment platforms.
For the Saba proposals, investors do not need to attend meetings in person and can use proxy votes. But they must ensure forms of proxy are completed by a deadline, which falls ahead of the vote itself.
The Edinburgh Worldwide deadline for proxy vote forms is 11.45am on 12 February.
Investment platforms’ voting deadlines vary and will be earlier, so shareholders should check with them directly, some are as early as 6 February.
The major investment platforms are committed to increasing shareholder engagement and many make it quick and simple for investors to have their say. Platforms have been seeking to get individual investors to vote on the Saba proposals, which can be done via their websites.
Some deadlines and explanations are listed here on Edinburgh Worldwide’s how to vote page.
Information for shareholders
> AIC: How to vote your share guide
The chart shows the substantial returns Edinburgh Worldwide has made on some investments
What does Edinburgh Worldwide say
The board of Edinburgh Worldwide has strongly recommended that investors vote against the Saba proposal.
Speaking on behalf of the board, Simpson-Dent said: ‘Edinburgh Worldwide is run solely and independently for you, our shareholders. You have chosen Edinburgh Worldwide for its unique and early access to hidden gems, ground-breaking businesses which in many cases are not available on the public markets. Let’s not let Saba take that away. This is about consumer choice, allowing you the freedom to decide how, where and when to invest your money.’
He added:’ On a personal level, I am deeply troubled by Saba’s proposals. Investment trusts are extremely democratic by construction – Saba’s proposals are not.
‘Saba’s overt land grab for its own end game exploits our long-standing retail Shareholder base, many of whom find it cumbersome to vote.’
A shift in emphasis has taken place in Edinburgh Worldwide’s investing strategy with a move to more profitable companies being held
What do Edinburgh Worldwide’s managers say?
Douglas Brodie, Luke Ward and Svetlana Viteva, the managers of Edinburgh Worldwide have written to shareholders outlining where the trust stands and why they believe investors should back the current strategy.
They said that Edinburgh Worldwide’s portfolio’s top-line growth has meaningfully accelerated over the past year – with its share price up 32 per cent and net asset value up 16 per cent in the second half of 2024 – and is set to accelerate further.
The trio added that valuations in the portfolio remain attractive, with small-caps continuing to trade on a significant discount relative to their long-term average and larger peers. The unwinding of this will create a ‘helpful tailwind’ and that the trust had ‘turned a corner’.
The managers said: ‘EWIT’s shareholders have seen highs and lows over the past decade, and we recognise how frustrating the past three years of poor performance have been for shareholders.
We have learnt important lessons and, over the past year, sought to apply these to our investment processes and portfolio management, with the crucial challenge and support of the Board.
‘As such, we have improved our ability to patiently support management teams while holding them accountable for strong execution. We have introduced additional process checks and balances to ensure that patience doesn’t stretch too far for holdings encountering a bumpy ride. This affects how we size portfolio positions and time their eventual exits.
‘We have also sought to increase the share of profitable, cash-generating names in the portfolio and bolster industrial diversification to reflect the investment environment we anticipate in the years ahead. This has resulted in a better-balanced portfolio with stronger sales and earnings growth.’
