Herald calls on investors to oppose Saba’s ‘opportunistic’ coup plans
- New York-based hedge fund Saba Capital is Herald’s largest shareholder
- Herald manages four technology-focused funds, such as Herald Worldwide Technology
Herald Investment Trust is calling on shareholders to reject Saba Capital’s ‘opportunistic’ attempt to gain control of the company.
Saba wrote an open letter last month targeting investors of seven London-listed investment funds, including Herald, urging them to remove their boards and renew their investment managers and mandates.
The New York-based hedge fund is now the largest shareholder of all trusts, with stakes between 19 and 29 percent, after building large positions over the past 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 CEO of Saba, hit out at the trusts’ relative underperformance, “disengaged” management and a “sustained” discount to their net asset value (NAV).
Saba then called a general meeting for all seven trusts, where investors can decide whether to dismiss all current directors and appoint ‘new, highly qualified’ candidates as their replacements.
Dismissive: Herald Investment Trust urges shareholders to reject hedge fund Saba Capital’s ‘opportunistic’ attempt to gain control of the company
It wants Paul Kazarian, director of Saba’s listed investment funds, and former financial and banking director Jassen Trenkow to join Herald’s board of directors.
‘If you are ready for positive change, we strongly urge you to vote in favor of the resolutions as we believe they are the only credible way to achieve an outsized return on your investment in the long term ‘, said Weinstein.
However, Herald bosses have hit back, saying Saba’s proposal to take control of the company was “opportunistic” and made for its own economic benefit rather than concerns about the company’s performance or share valuation.
They also said the company had not provided “concrete details” about its investment strategy for Herald and warned that shareholders could lose “significant value” if the hedge fund sells parts of the portfolio after taking ownership.
As a result, Herald wants all shareholders to reject Saba’s resolutions at the upcoming general meeting on January 22.
Bosses at European smaller companies have already advised their 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 its launch in 1994, Herald Investment Trust’s investment strategy has delivered excellent investment performance and substantial returns for its shareholders.’
According to the company, it has achieved a NAV return of 2,612 percent over its lifetime, but Saba has “materially underperformed” since 2009 with a return of 865 percent.
Herald manages four technology-focused funds, such as Herald Worldwide Technology, whose largest holdings include Apple, Microsoft and Google’s parent company, Alphabet.
The company said the technology industry is “going through a particularly dynamic phase,” with artificial intelligence creating new products and services and geopolitical instability driving innovation in the defense and cybersecurity sectors.
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