Herald urges traders to oppose Saba’s ‘opportunistic’ coup plans

Herald Investment Trust is urging shareholders to reject Saba Capital’s ‘opportunistic’ attempt to gain control of the company.

Saba wrote a bombshell open letter last month targeting the investors of seven London-listed investment trusts, including Herald, urging them to remove their boards, and revamp their investment managers and mandates.

The New York-headquartered hedge fund is now the biggest shareholder in all the trusts, with stakes of between 19 per cent and 29 per cent, having built up large positions throughout last year. 

The other affected trusts are Baillie Gifford US Growth, CQS Natural Resources Growth & Income, Edinburgh Worldwide, European Smaller Companies, Henderson Opportunities, and Keystone Positive Change.

Boaz Weinstein, founder and chief executive of Saba, lashed out at the trusts’ relative underperformance, ‘disengaged’ management and a ‘persistent’ discount to their net asset value (NAV).

Saba has subsequently requisitioned a general meeting for all seven trusts, where investors can decide whether to expel all current directors and appoint ‘new, highly qualified’ candidates as their replacements.

Turning down: Herald Investment Trust is urging shareholders to reject hedge fund Saba Capital’s ‘opportunistic’ attempt to gain control of the company

It wants Paul Kazarian, principal executive officer of Saba’s publicly traded investment trusts, and former finance and banking executive Jassen Trenkow to join Herald’s board.

‘If you are ready for positive change, then we strongly urge you to vote in favour of the resolutions as we firmly believe they are the only credible, long-term way to earn outsized returns on your investment,’ Weinstein said.

However, Herald’s bosses have hit back, saying Saba’s proposal to take control of the business was ‘opportunistic’ and being done for its own economic benefit instead of concerns about the firm’s performance or share rating.

They also said the firm had not given ‘concrete details’ of its investment strategy for Herald and warned that shareholders could lose ‘significant value’ if the hedge fund sells portions of the portfolio after gaining ownership.

As a result, Herald wants all shareholders to reject Saba’s resolutions at the upcoming general meeting on 25 February.

Bosses at European Smaller Companies have already advised its shareholders to vote against Saba’s takeover, while the other trusts have called on investors to ‘take no action’ at their respective general meetings.

Andrew Joy, chairman of Herald, said: ‘Since launch in 1994, Herald Investment Trust’s investment strategy has delivered outstanding investment performance and substantial returns for its shareholders.’

According to the business, it has achieved a 2,612 per cent NAV return throughout its lifetime, but Saba has ‘materially underperformed’ with an 865 per cent return since 2009.

Herald runs four technology-focused funds, such as Herald Worldwide Technology, whose largest holdings include Apple, Microsoft, and Google’s parent company, Alphabet.

The firm said the technology industry is ‘experiencing a particularly dynamic phase,’ with artificial intelligence creating new products and services, and geopolitical instability driving innovation in the defence and cybersecurity sectors.