Baillie Gifford US Growth Trust Shareholders Reject Hedge Fund Saba's Takeover Bid

Investors in the Baillie Gifford US Growth Trust have voted down a bid by Saba Capital to take control of the investment trust, marking the hedge fund's third unsuccessful attempt to influence its direction over the past 18 months.

Shareholders cast 52.8 percent of their votes against Saba's proposed board resolutions at the trust's annual general meeting. Saba, led by Boaz Weinstein, had amassed a 29 percent stake in the trust with the aim of reshaping its strategy and appointing three directors to its board.

The US Growth Trust argued that Saba's proposed directors, including managing director Sir James Waterlow, would steer the company towards serving Saba's interests rather than those of the broader shareholder base. The trust highlighted its long-term investments, such as SpaceX, which predates its public listing, and its significant stake in AI firm Anthropic, alongside publicly traded companies like Nvidia, as reasons for maintaining its current strategy.

Baillie Gifford welcomed the outcome, with chair Tom Burnet stating that the vote represented a "clear endorsement from the vast majority of independent shareholders." He added that repeatedly revisiting decisions already made by shareholders places an "unnecessary burden" on the company. The meeting saw a turnout of over 82 percent.

Saba Capital's founder, Boaz Weinstein, has previously criticized the US Growth Trust for underperformance, despite its early investments in companies like SpaceX, OpenAI, and Anthropic. Weinstein has targeted several other investment trusts in recent years, including Impax Environmental Markets, Keystone Positive Change, and Herald, aiming to improve their performance.

Earlier this year, Weinstein was successful in ousting the board of the Edinburgh Worldwide Investment Trust, also managed by Baillie Gifford. This success has prompted Baillie Gifford to urge the Financial Conduct Authority to expedite reforms aimed at protecting investment trusts from what it terms "opportunism that is not in the interest of shareholders as a whole."

The city watchdog had proposed changes to listing rules in June to curb the influence of activist investors like Saba. Analysts have noted that while shareholder activism can hold underperforming boards accountable, repeated pursuit of an agenda opposed by the majority of shareholders can be costly and disruptive, diverting focus from investment returns. Matthew Read, a senior analyst at QuotedData, described the vote as a "victory for common sense and shareholder democracy."