Saba Capital has made a second attempt to replace the board of Edinburgh Worldwide investment trust.
In an open letter to the board, Saba founder and CIO Boaz Weinstein called for an EGM to vote on replacing the entire board.
In its place, Saba is seeking to appoint a new board composed solely of qualified, independent directors.
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The US hedge fund owns approximately 30% of Edinburgh Worldwide’s shares.
Weinstein said the firm had been “profoundly disappointed” by the trust’s share price performance for some time.
Over the past five years, the trust’s net asset value is down 30.8%, while its share price has fallen 35%.
The average AIC Global Smaller Companies sector trust has risen 5% over the same period. However, Weinstein compared the trust to the FTSE All-Share Index, which is up 71.4%.
“We do not have faith in the current board’s ability to implement the necessary strategic changes. As the company’s largest shareholder, we feel a duty to our fellow shareholders to drive this essential change,” Weinstein said.
Shareholders rejected Saba’s previous attempt to replace the board in February. Of the shares voted at the time, 63.8% rejected Saba’s proposals. Excluding the votes casted by Saba, 98.4% of shares voted against the changes.
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Update: Edinburgh Worldwide response
Responding to Saba’s open letter, Edinburgh Worldwide chair Jonathan Simpson-Dent said Saba does not recognise the “significant progress” the trust has made since the first vote.
Since then, Simpson-Dent said NAV total return has been 17.5% to date, well ahead of the 4.8% posted by the trust’s S&P Global Small Cap Index benchmark.
He also rejected the comparison made with the FTSE All-Share Index.
“It makes little sense to judge a global small-cap trust against a UK all-cap benchmark, a point noted by the sell-side analyst community today.”
“While we are open to discuss Board composition with Saba, we would strongly reject any proposal to replace the entire Board and the ambiguity that would follow,” he added.
