Investors urged to fight back against US power grab as hedge fund targets seven London-listed trusts

Private shareholders have been called on to vote on the future of seven investment funds, amid an attempted coup by a US hedge fund.

Boaz Weinstein, founder of Saba Capital, is calling for a massive shake-up that would see the trusts’ directors replaced by him and his allies.

The Association of Investment Companies (AIC), which represents the investment trust industry, said Saba is proposing “major changes” to the targeted companies and that it is “critical” that shareholders make their voices heard.

“Investors need to understand the details of what Saba is proposing, including changes to the trusts’ governance, strategy, manager or fees,” said AIC boss Richard Stone.

‘They should consider whether the investment trust would still meet their needs, and what possible tax implications there are.’

The AIC has written to Britain’s main retail investment platforms and ‘urged them’ to inform investors of upcoming meetings at the trusts so they can vote on Saba’s proposals.

It comes as two of the investment funds Saba targeted encouraged shareholders to oppose the US company’s plans.

James Williams, chairman of The European Smaller Companies Trust, said Saba was trying to take control by removing “a highly qualified, independent board that acts in the interests of all shareholders.”

He added that Saba’s motives were “self-interest” and could “jeopardize shareholder protection.”

Meanwhile, Wendy Colquhoun, chair of the Henderson Opportunities Trust, said Saba’s plans would pose ‘significant’ uncertainty and risks and implored investors to vote against the proposals.

“The message from the board to the shareholders is clear: please cast your vote and do not let Saba take unnecessary risks with your money,” said Colquhoun. It follows similar comments Tuesday from CQS Natural Resources Growth and Income, another trust in Weinstein’s crosshairs.

Chairman Christopher Casey said Saba’s plans were “without merit” and the US company’s claims about the trust’s underperformance were misleading.

Saba hit back, accusing Casey of making “inaccurate, unsubstantiated claims” about her record, adding that the chairman was endangering shareholder value.

The company also targeted trusts European Smaller Companies and Henderson Opportunities, saying their boards had “let shareholders down” and made a number of poor investment decisions.

Overall, Saba is calling for a shake-up of seven London-listed investment trusts, which together have a market value of around £4 billion.

Evelyn Partners on Tuesday became the first shareholder to oppose Weinstein’s plans.

The group will vote against the proposals at Baillie Gifford US Growth, where it is the fourth largest investor with a 5 percent stake, and at Herald Investment Trust, where it has a 1 percent stake.

Yesterday it was joined by Rossie House Investment Management, a shareholder in five of the seven trusts Saba focuses on.

Rossie House partner Scott Baikie said the hedge fund’s proposals were “opportunistic” and would be “damaging to the trusts”.