After hedge fund Saba Capital requested the Baillie Gifford US Growth trust appoint three of its nominees to the board, the trust released a circular today (17 September) in response to the US activist.
Boaz Weinstein’s vehicle, which owns 29% of shares in the £1bn trust, nominated Jason Chen, Thomas H. McGlade and James Waterlow as new directors. The hedge fund pointed to “suffering of shareholders” and insisted its nominated directors would offer a cash exit at 100% or near NAV.
In its response today, the trust said it strongly believed Saba’s resolutions would “severely compromise the independence of the board” and herald “the end of the company’s existing US growth strategy as shareholders know it”.
As such, the board unanimously recommended voting against the resolutions at the upcoming AGM on 23 October 2026. Given the Saba team has not made its longer-term intentions for the company clear, beyond the liquidity event, shareholders risk not having a wholly independent board, they added.
If Saba’s resolutions fail and the trust secures a mandate to continue in its current form, the board said it will seek to re-engage with Saba to allow it to exit at close to NAV.
Annabel Brodie-Smith, director of the Association of Investment Companies, said: “This is a critical vote for this investment trust which has performed strongly recently, returning 123% over the last three years.
“Investors must make their voices heard at this AGM,” she added. “Otherwise they could see the mandate and manager change.”
See also: Saba requisitions Baillie Gifford US Growth Trust
The board pointed to the strategy’s performance since IPO in March 2018, with annualised NAV total return ranking in the top decile of all UK listed investment companies.
According to the firm’s year-end results released today, the trust delivered an NAV total return of 31% for the year to 31 May 2026, above the S&P 500, while the discount has significantly narrowed from 9.4% to just 0.1%.
Gary Robinson, portfolio manager of the trust, said: “We remain optimistic about the long-term prospects for innovation and entrepreneurship in the United States, while recognising that the path to AI adoption will not run in a straight line. We should expect ups and downs in the fundamentals.”
Meanwhile, the trust also cited the potential threat posed by Saba, noting that shareholders have rejected Saba’s proposals in the past and the board attempted to explore an exit opportunity. This included offering Saba the opportunity to take a cash exit close to NAV with less realisation costs, with the investment manager offering to bear other costs.
“Saba rejected all of those proposals and has requisitioned resolutions to appoint the Saba nominees,” the board said. “Saba’s actions lead the board to believe that Saba is not interested in achieving liquidity for itself but is intent on obtaining control of the company at the expense of other shareholders.”
James Carthew, head of investment companies at QuotedData, slammed the behaviour of the US activist. He argued that despite Saba’s main message of wanting a cash exit for shareholders, its rejection of a 99.75% NAV exit demonstrates a discrepancy between words and actions.
“So, what, exactly, is Saba playing at?” Carthew asked. “Sticking its own nominees on the board will not get it a better exit deal, and trying to get itself appointed as manager is likely to fall foul of the new rules being implemented by the FCA.
“Is it aiming to extract a payment in exchange for a promise not to attack the trust for a while – on top of a cash exit opportunity?”
Carthew argued this approach fundamentally will favour Saba over other shareholders, while “giving lie to the claim” it’s acting in shareholders’ interests, all the while boards and shareholders suffer the expense and disruption of rallying to reject its proposals.
Saba already has a litany of failures under its belt, Gore Street Energy Storage being the latest, he said. “It is time that it walked away from the UK investment companies’ market and left us in peace.”
See also: ‘Our patience is not inexhaustible’: Gore Street survives Saba requisition
