The heads of seven investment trusts under attack by a US corporate raider have urged Mail readers who hold shares to exercise their right to vote and oppose plans to overhaul their businesses.
Saba Capital, run by Wall Street financier Boaz Weinstein, is proposing to replace directors at the trusts with its own nominees, saying leaders have ‘failed shareholders’ and made poor decisions.
It has stakes in each firm ranging from 19 per cent to 29 per cent and needs to win 50pc support from voting shareholders to succeed.
As a result, it will win if other investors do not actively vote against the proposals.
The trust chairmen have accused Saba of trying to ‘bulldoze’ its way into gaining control of their businesses by relying on many ordinary shareholders not voting.
The main industry lobby group for UK investment trusts has warned the City watchdog that current rules ‘do not protect the interests of retail shareholders’ on concerns smaller investors have not been properly informed about Saba’s plans.
Power grab: Saba Capital, run by Wall Street financier Boaz Weinstein, is proposing to replace directors at the trusts with its own nominees
Andrew Joy, chairman of the Herald Investment Trust, which is the first to face a vote on Wednesday, told the Mail ‘every shareholder’s voice matters’.
He urged them to ‘protect your investment’ and ‘vote against Saba’s proposals’.
Tom Burnet, chairman of the Baillie Gifford US Growth Trust, said many small shareholders believe ‘their votes don’t count’ despite holding 30 per cent of the trust’s stock, against the 25 per cent held by Saba.
He said: ‘We don’t want investors to be complacent. We want to defeat Saba significantly.’
While the hedge fund holds substantial stakes in each of the trusts, it is outnumbered in almost all by private investors.
Christopher Casey, chairman of the CQS Natural Resources Growth & Income Trust, said its small investors, which hold 44 per cent of the trust, were at risk of ‘becoming disenfranchised’ if Saba succeeds.
‘People should understand the importance of their vote,’ he said, adding it was ‘no coincidence’ the US firm had targeted trusts with large numbers of retail investors. ‘They are trying to bulldoze their way in.’
The comments came as the Association of Investment Companies wrote to the Financial Conduct Authority urging it to change rules so retail investors were automatically informed of plans to change investment trust strategy or their leadership.
‘With so much at stake, the regulator can’t just rely on people doing the right thing,’ said the association’s chief executive Richard Stone.
He added that when ‘significant changes’ to a trust were proposed, investment platforms such as Hargreaves Lansdown, AJ Bell and Interactive Investor should ‘actively contact their clients to encourage voting’.
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