The battle between Baillie Gifford US Growth (USA) and shareholder Saba Capital has swung in the trust’s favour, as shareholders re-elected the existing board of directors.
As a result, Saba’s proposed resolutions to appoint Jason Chen, Thomas H McGlade and James Waterlow were rejected by a vote of 47.2% to 52.8%.
USA’s board noted the votes in favour of Saba’s resolutions were mostly attributed to Saba and Sessa Capital.
Matthew Read, senior analyst at QuotedData, described the results as a “victory for common sense and shareholder democracy”, as 99.5% of non-Saba and Sessa shareholders voted in line with the board.
Tom Burnet, chair of Baillie Gifford US Growth, thanked shareholders for their “clear support” for the current board for the third time.
See also: Saba requisitions Baillie Gifford US Growth Trust
“Repeatedly revisiting matters on which almost all of our independent shareholders have plainly already expressed their view places an unnecessary burden on the company, diverting management time and resources from the delivery of the company’s strategy and the creation of long-term shareholder value and incurring significant costs.”
Over the past five years, the trust has struggled in the IT North America sector, according to data from FE fundinfo, up just 8.7% compared to the S&P 500’s 82.7% return.
However, results are far more positive in the medium term, with the three-year total return of 158.7%, more than doubling the S&P 500 over the same period.
Burnet said: “We are pleased the AGM result represents a clear endorsement from the vast majority of independent shareholders for the current differentiated and high-performing strategy to continue.”
Richard Stone, chief executive at the Association of Investment Companies (AIC), said: “This is the third time the trust’s shareholders have voted to endorse the current board, but the result was not a foregone conclusion.
“It was only possible due to a big push from the trust, its manager, the wider industry and the media – resulting in a very high turnout of over 82%.”
Looking ahead, Burnet and the board stressed that they “welcomed engagement with all shareholders” and hope to work constructively with Saba and Sessa for a long-term solution.
“We strongly welcome the reforms under consideration by the FCA, and the efforts of the AIC and others, to strengthen protections for all shareholders,” Burnet continued.
“It is critical that these new rules take effect as soon as is practicable so that trusts are better protected from opportunism that is not in the interests of shareholders as a whole.”
See also: Baillie Gifford US growth hits back at Saba Capital
That said, the AGM results also showed that roughly 36.6% (mostly Saba and Sessa) voted against two resolutions: the directors’ annual report of remuneration, and the authority to allot shares or C shares, while 63.6% opposed buybacks, an act which QuotedData’s Read criticised.
“Saba and Sessa’s substantial shareholdings have still enabled them to block the renewal of the trust’s buyback authority, potentially frustrating efforts to narrow the discount and harming the very shareholders whose interests they claim to represent.
“There is nothing wrong with shareholder activism when it holds underperforming boards to account, but repeatedly pursuing an agenda that almost all other shareholders oppose is another matter.”
