US activist hedge fund Saba Capital has suffered a setback in its campaign to shake up the UK’s closed-ended investment trust sector, as shareholders of Herald Investment Trust decisively rejected its proposal to replace the board, according to a report by the Financial Times.
At a shareholder meeting on Wednesday, more than 65% of votes cast opposed Saba’s bid to oust Herald’s board and install its own nominees. Saba, led by activist investor Boaz Weinstein, accounted for nearly 35% of the votes in favour, with an additional 0.15% supporting the motion.
Andrew Joy, Chair of Herald Investment Trust, described the outcome as “a clear, complete and incontrovertible rebuttal of Saba’s attempt to take control of your company and change its strategy against the wishes and interests of its non-Saba shareholders.”
Joy emphasised that Herald’s shareholders are long-term investors focused on supporting smaller technology companies, stating: “They do not wish to be deprived of the opportunity to enjoy more of the same” and “did not invest in Herald to become part of a short-term trading strategy.”
Saba’s defeat at Herald is the first setback in its broader campaign against seven UK-listed investment trusts, which collectively manage £266bn. The hedge fund has accused the boards of these trusts of failing to hold managers accountable for poor performance.
Saba’s stakes in the targeted trusts range from 19% to 29%, amounting to a combined £1.5bn.
Despite the loss, Saba reaffirmed its commitment to its activist strategy. In a statement, the hedge fund said, “We remain committed to putting shareholders’ interests first, delivering returns for UK trust investors, and ultimately rehabilitating this broken sector.”
