Saba scores a pyrrhic victory as Aberdeen takes the reins at Herald, says ALEX BRUMMER

There must be sympathy for Katie Potts, the lead fund manager at Herald Investment Trust (HIT). 

In a field where performance is everything, Potts delved into early-stage tech and came up trumps, producing annual returns as high as 40 per cent.

This should have bought Potts and her fund stellar support from investors in London looking for a route into the world’s most promising tech.

Instead, a discount to asset value opened, and in marched American activist Boaz Weinstein of Saba, who has launched attacks on at least seven UK funds.

Saba has unnerved a sector of the London market comprising some 300 firms and £260billion in assets.

The Herald board has found haven for its £1.6billion of trusts at fund manager Aberdeen, itself the product of a troubled merger between Aberdeen and the old Standard Life in 2017.

The three-way deal involving Aberdeen, Saba and Herald offers shelter for Herald, an escape route for Saba and an accord under which Weinstein pledges to keep his hands off a further eight trusts in the Aberdeen stable worth £12.5billion. All parties are claiming victory.

Saba makes much of how activism has shaken the Herald board and investors out of their stupor, closed the discount to net asset value (NAV), and produced a profit (undisclosed) for Saba.

It is hard to know what happens under the bonnet at Saba since many holdings are held in complex derivatives.

Aberdeen has done well out of this. It gains the valued Herald brands for nothing and bought itself protection from Weinstein and his backdoor tactics. 

These involve using minority holdings to force its nominees on to investment trust boards.

For Potts and her investment team, this tawdry exercise has been both a personal trauma and an unnecessary digression from making money for savers.

Cash outflows since the saga began, together with forced asset sales to fund an alternative tender offer, mean HIT is now half the size it once was, at around £600million.

It is giving up independent governance to Aberdeen and is having to shed more than half its key executives, leaving just Potts and seven others in place.

There are bitter complaints about the failure of the City enforcer, the Financial Conduct Authority, to become involved.

It argues that the trusts themselves, under company law, have all the weapons they need to show Weinstein, if only they displayed a flash of steel.

Best defence for the sector is maximum transparency, doubling down on efforts to close the valuation gap and making sure that savers, investing through platforms, are given tools to vote with ease.

Soft Shell

Protests by climate change and left-wing groups at Shell’s first-quarter profits of $6.4billion (£4.7billion) were predictable.

There are allegations of ‘blood money’ from the conflict in the Middle East, and of profiteering.

Chancellor Rachel Reeves opened the door to ill-thought-out criticism of energy groups, banks and supermarkets at the start of the conflict, with warnings against price-gouging.

Drill into the Shell figures and there is little to see. Profits are up from last year when the oil price was around half where it is now.

The balance sheet looks less healthy, with debt up sharply and cash generation down. The war raised the cost of holding inventory, waiting for refining, and its capacity was hurt by damage to the Pearl gas plant in Qatar.

Still, there was room for a $5billion (£3.7billion) dividend even if share buybacks have been slowed. That should help all our pension funds – other than those boycotted by green extremists.

Staying firm

A word of encouragement to chairman Andrew Martin and the board of product testing pioneer Intertek for keeping Swedish private equity barons EQT at bay.

By standing firm, they have seen the offer price climb from an initial £51.50 per share, to £54, and now £58, placing a value of £10billion on the group.

If it is worth this much to interlopers, then surely the company should hold out for independence and deliver directly to shareholders.