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

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

Saba wrote a bombshell open letter last month targeting investors at seven London-listed investment trusts, including Herald, calling on them to remove their boards and overhaul their investment managers and mandates.

The New York-based hedge fund is now the biggest shareholder in all the trusts, with stakes between 19 percent and 29 percent, after building large positions over the past year.

Other affected trusts include 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, attacked the trusts’ relative poor performance, ‘disengaged’ management and a ‘persistent’ discount to their net asset value (NAV).

Saba subsequently requested a general meeting for all seven trusts, at which investors can decide whether to oust all current directors and appoint ‘new, highly qualified’ candidates as their replacements.

He wants Paul Kazarian, chief executive of Saba’s publicly traded mutual funds, and former finance and banking director Jassen Trenkow to join Herald’s board.

“If you are ready for positive change, then we strongly encourage you to vote for the resolutions because we strongly believe they are the only credible, long-term way to get a huge return on your investment,” Weinstein said.

However, Herald bosses hit back, saying Saba’s proposal to take control of the business was ‘opportunistic’ and was made for its own economic gain rather than concerns about the company’s performance or share rating.

They also said the firm did not provide ‘concrete details’ of its investment strategy to the Herald and warned shareholders could lose ‘significant value’ if the hedge fund sells parts of the portfolio after taking ownership.

As a result, the Herald wants all shareholders to reject Sabine’s decisions at the upcoming AGM on February 25.

Bosses of smaller European companies have already advised their shareholders to vote against Saba’s takeover, while other trusts have urged investors to ‘do nothing’ at their AGMs.

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

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

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

The company said the tech 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 cyber security sectors.