Shareholders of Edinburgh Worldwide reject Saba's proposals

The management of activist investor Saba Capital has suffered yet another setback at the requisitioned general meeting of Edinburgh Worldwide shareholders today

Saba Capital Management (Saba), an activist investor hedge fund based in the United States, was unsuccessful in its attempt to replace the board of Edinburgh Worldwide Investment Trust (EWIT).

Saba called a general meeting of Edinburgh Worldwide (LON:EWI) shareholders in November. This afternoon, January 20, the shareholders cast their votes on Saba's proposals to replace the investment trusts board with three independent directors that Saba had chosen.

Saba questioned EWIT's sell-down of its SpaceX holding in addition to what it called persistent underperformance and a stubborn discount to net asset value. It claimed that in order to facilitate a merger with Baillie Gifford US Growth (LON:USA), the stake in Elon Musk's space exploration company had been cut well below its potential value (assuming a £1.5 trillion IPO next year).

The majority of people rejected Sabas' proposals. The proposals received a total of 53.2 percent of the vote. Ninety-two percent of votes, excluding Sabas votes, were cast against the proposals.

"Saba's proposal to install its own nominees to the Board and the uncertainty that would have entailed has been decisively rejected by Edinburgh Worldwide's shareholders for the second time in less than a year," stated Jonathan Simpson-Dent, the company's chair.

A record number of shareholders cast ballots on the resolutions, accounting for more than 70% of the issued share capital.

Glass Lewis and ISS, two shareholder advisory services, had suggested that shareholders oppose the proposals prior to the vote.

What does Edinburgh Worldwide's loss signify for Saba?

After recently advocating for a managed wind-down of real estate investment trust Workplace Group (LON:WKP), Saba has been strengthening its position in other closed-ended funds.

However, given the series of setbacks it has now experienced, including two straight votes at Edinburgh Worldwide, it may be difficult to defend ongoing attention in the UK investment trust industry.

Herald Investment Trust (LON:HRI) and Impax Environmental Markets (LON:IEM), two other trusts in which Saba has accumulated a sizable stake, have anticipated any attempt to contest their management by putting forth a share tender at a price near NAV, subject to Saba tendering (materially) all of its shares.

Simpson-Dent stated, "Saba is still our biggest shareholder and we will keep looking for constructive engagement with them to develop potential solutions that allow us to move forward."

"After a year of significant and costly distraction, we are prepared to return our full attention to our primary purpose: investing in innovation, transformation, and exceptional potential in a way that respects the clear wishes expressed by the majority of shareholders both last February and again today," he continued.