U.S. activist investor Boaz Weinstein has encountered an initial setback in his efforts to revamp the British investment trust landscape. Despite this defeat, executives in the sector, valued at an impressive £269 billion (approximately $333 billion), are likely facing heightened anxiety. Weinstein, through his firm Saba Capital Management, is seeking to gain control of seven investment trusts in which he holds significant shares. He has criticized the 160-year-old investment trust sector for what he perceives as pervasive underperformance—a claim that the management of these trusts categorically disputes.
Last week marked the first battleground when shareholders of the Herald Investment Trust, the largest of the seven targets, overwhelmingly rejected Saba’s attempt to oust its board. This decision was a clear signal in the ongoing conflict, but the stakes remain high as more votes approach. On the upcoming Monday, shareholders in Baillie Gifford U.S. Growth Trust (USAB.L) and Keystone Positive Change Investment Trust (KPCK.L) will cast their votes. Following those, three additional trusts will conduct their votes on Tuesday and Wednesday.
Daniel Lockyer, a senior fund manager at Hawksmoor Investment Management, has noted the precarious situation facing some investment trusts, stating, “Boards and managers must heed this reality; any trust that has a liquid portfolio but is trading at a significant discount, without mechanisms to control those discounts, is at risk of takeover.” This commentary underscores the pressure exerting on trust management teams to address performance concerns and shareholder grievances effectively.
