Saba Capital seeks three board seats at Baillie Gifford US Growth Trust

Voting deadline for platform-held shares arrives as early as Wednesday

US hedge fund Saba Capital is seeking to install three of its nominees on the board of Baillie Gifford US Growth Trust at the London-listed trust’s annual meeting on October 23, according to a Monday column by Nils Pratley in The Guardian. Saba, founded by Boaz Weinstein, holds a near-30% stake in the trust, which trades under the ticker USA and is a constituent of the FTSE 250 index. An additional 7.7% is held by Sessa Capital, which The Guardian characterized as an assumed sympathiser of Saba.

The campaign is Saba’s third attempt in 18 months to win board representation at USA, after shareholders rejected the activist’s prior proposals twice during that period, according to Pratley. This time, Saba’s stated request is for its three nominees to be elected to the board; if elected, the nominees would “urge” an offer to all USA shareholders of a 100% cash exit at or near net asset value.

The existing board of USA has said it has already offered Saba the opportunity it says it wants — a chance to exit at a price nearly equivalent to the value of the trust’s assets — but that Saba declined, Pratley reported. He added that the suspicion is that Saba’s nominees could attempt to appoint Saba itself as USA’s manager or wrap the trust into a Saba-managed vehicle, though Saba has not spelled out that intention publicly.

USA’s portfolio includes stakes acquired when the companies were smaller and sometimes still privately held, including in Anthropic, Databricks, OpenAI, SpaceX, and Stripe. According to Pratley, USA has delivered a 16.7% annualized return since its 2018 launch, beating the S&P 500 over the period and placing the trust within the top 10% of all UK investment companies by performance. The trust’s five-year statistics are less impressive, because a pop in AI valuations in late 2022 compressed earlier gains; that weakness, Pratley wrote, “has provided… an opening, of a sort” for Saba’s case. USA currently trades at roughly a 3% discount to net asset value, which Pratley noted is narrower than the discounts at which Saba’s main US funds now trade.

All three of the proposed nominees are linked to Saba, according to Pratley. One is a Saba employee; the other two have been serial picks in Weinstein’s various activist campaigns. “Saba’s nominees cannot possibly be regarded as independent,” Pratley wrote, attributing the assessment to the disclosed affiliations of the nominees.

Broker Investec published an assessment of the proposal. “Saba offers no credible plan,” the broker said, according to The Guardian. “Shareholders are being asked to give its nominees potential board control on the strength of a conditional, non-binding liquidity proposal, with no roadmap for the future manager, strategy or governance: vote first, then find out later what you’ve voted for.” Broker Panmure Liberum issued a shorter warning: “Not voting is a vote for Saba.” Investec separately urged shareholders to “support the board, or suffer the consequences.” Both brokers recommended that shareholders vote against Saba’s nominees.

The annual meeting is set for October 23. For shareholders holding USA through investment platforms — among them Hargreaves Lansdown, AJ Bell, and Interactive Investor — the effective voting deadline can arrive as early as this Wednesday, Pratley reported, because platforms typically need several business days to process investor instructions ahead of a meeting record date. The platforms “should be warning clients of deadlines right now,” Pratley wrote, urging they be highlighted “preferably in red for danger.”

The campaign is the latest in a series of Saba assaults on UK investment trusts, in which the hedge fund has taken large positions in UK-listed funds and demanded change at companies whose share prices trade at sustained discounts to the value of their underlying assets. Pratley credited Saba with disturbing what he called “the complacency that used to infect corners of the UK investment trust world,” while criticising its methods as “too often” self-interested, short-termist, or damaging for long-term UK investors.

The vote on October 23 will determine whether USA continues to pursue its long-duration US growth strategy under the existing board or transitions to nominees backed by Saba’s near-30% stake and Sessa Capital’s additional 7.7% holding. Pratley has urged existing shareholders to reject the activist’s slate; the broker recommendations and platform voting deadlines will test whether the coalition that twice turned Saba back over the past 18 months can do so again.