Baillie Gifford claims Saba is trying to destroy its independence

On January 6, 2025, a significant conflict arose between Saba Capital Management, an American hedge fund, and seven UK-listed investment trusts, including Baillie Gifford US Growth Trust, Keystone Positive Change Investment Trust, and Edinburgh Worldwide. Tensions escalated as several of the trusts issued statements accusing Saba of acting opportunistically and undermining their boards and governance practices. Keystone’s chair, Karen Brade, expressed fears for the entire investment trust industry, calling Saba's tactics 'daylight robbery' and highlighting the gravity of the situation as the trusts rushed to mobilize their shareholders against Saba's proposals. Saba has amassed significant stakes in these trusts, with holdings ranging from 19% to 29%. The hedge fund's overarching strategy involves taking control of the boards to implement initiatives aimed at providing shareholders with liquidity options to sell their investments at or near net asset value. This controversial proposition has led to an alarmed response from the targeted trusts, who argue that Saba's intentions would jeopardize the independence of their boards and disrupt their investment strategies significantly, thereby threatening overall shareholder value. Various trust executives asserted that if Saba’s proposals were actualized, it could lead to chaos in decision-making processes and destabilization of established governance. In response to these contentious claims, Saba defended itself, asserting that the accusations were baseless and misrepresented its proposed nominees' independence and their capability to enhance long-term returns for investors. The hedge fund criticized what it termed inaccurate assertions about its fund's performance, emphasizing that the existing boards were failing to maximize value for shareholders. As the battle intensified, Saba required a 50% majority vote from shareholders to advance its proposals. Approximately 14.8% of Baillie Gifford US Growth Trust’s shares are held through Hargreaves Lansdown, with a notable 40% of Keystone shareholders using retail platforms. As meetings are scheduled in the upcoming weeks to further discuss these issues, the fate of the trusts hangs in the balance, raising questions about governance, shareholder rights, and the role of external hedge funds in the management of investment trusts. The situation has garnered considerable media attention, as both sides prepare for upcoming shareholder votes that could reshape the future of these investment entities.