NextFin News - Boaz Weinstein's Saba Capital has opened another front in its widening campaign against the UK investment trust sector, requisitioning board-change votes at Baillie Gifford US Growth Trust and setting up a November showdown with one of Scotland's most prominent fund managers. The move comes two months after Saba won control of Impax Environmental Markets and months after it finally seized the board of Edinburgh Worldwide — the same trust whose merger with US Growth Saba vetoed in December. The question is no longer whether Saba can win a vote. It is whether the sector's rulebook will change before the attrition campaign runs its course.
The New Requisition and What Is at Stake
Baillie Gifford US Growth Trust confirmed on Monday that it had received a requisition notice from Saba Capital Management, acting through nominee Vidacos, asking that three Saba-backed candidates — Jason Chen, Thomas H. McGlade and James Waterlow — be put to shareholders as ordinary resolutions for director appointment at the trust's annual general meeting in November. The board's response was terse: "The Board recommends that shareholders take no action at this time and await a further announcement from the Company in due course."
The stakes are concrete. Saba holds 29% of the roughly £900m trust, whose shares eased to 327.3p in early trading after closing the prior Friday at a 7% discount to net asset value. The trust has recovered sharply from the 2022 growth crash: a 123% total return over three years under fund managers Gary Robinson and Kirsty Gibson, powered by a 13.6% stake in SpaceX and positions in Anthropic, Nvidia, Databricks and Meta. Baillie Gifford's own performance table shows the rebound — the share price is up 12.9% over the past year and 85.5% over three. Yet the shares still trade below the value of the assets they hold, and that gap is exactly the opening Saba has exploited across seven investment trusts.
This is not Saba's first attempt on US Growth. In February 2025 it requisitioned a general meeting to replace the board and failed, with 98.5% of independent non-Saba shareholders backing the incumbents. In October it turned up to the annual meeting anyway and voted against the re-election of all four incumbent non-executive directors. The board survived — but only narrowly, with just over 51% of votes cast on turnout of just under 59%, and 48.7% of votes against chair Tom Burnet. Months later, Saba used its roughly 28% stake to veto a proposed merger between US Growth and Edinburgh Worldwide that would have offered shareholders a cash exit of up to 40%. Now, with its nominees already sitting on the boards of Impax and Edinburgh Worldwide, Saba is back with a cleaner path: ordinary resolutions require only a simple majority of votes cast, not a majority of the register.
The Mechanism: Why the Discount Is an Invitation, Not an Accident
The investment trust structure was designed to give managers permanent capital. It carries a flaw: the shares trade on an exchange, and when sentiment sours they can trade at a persistent discount to the assets inside. For years that was treated as a fact of life. Saba's move was to treat the discount not as a market condition but as a governance failure — and to build a repeatable machine for monetising it.
The machine has four moving parts. First, accumulate a large but not controlling stake — typically 25% to 30% — while the trust is out of favour. Saba began building its position in US Growth in 2024. Second, use the trust's own governance rules: a shareholder holding as little as 5% can requisition a general meeting, and director appointments pass by ordinary resolution, meaning 50% of votes cast rather than 50% of the register. Third, exploit chronically low turnout. UK investment trusts are heavily held by retail investors who rarely vote; across three Baillie Gifford trusts, turnout had been below 40% of issued capital at their 2024 annual meetings. Fourth, wait. If the first requisition fails, requisition again.
That last step is the crux. A board can win one vote. Winning three or four in a row, while paying lawyers and advisers each time, drains the target's resources and patience far faster than the attacker's. Matthew Read of QuotedData put it plainly after Monday's announcement:
Saba seems "intent on repeatedly requisitioning USA in the hope that other shareholders eventually tire of the process."
This is not activism as a one-off intervention. It is activism as a war of attrition.
The backdrop is a sector that has been living with wide discounts for years. The average investment trust discount, excluding 3i, stood at 12.5% at the end of 2025, down from 15.0% a year earlier, even as buybacks hit a record £10.22bn. Investment trusts have traded at an average discount for at least 53 consecutive years, and the current stretch of double-digit discounts has lasted more than three and a half years. For a long-only investor that is a frustration. For an activist with a requisition tool and a low-turnout register, it is an addressable market.
Cyclical or Structural? The Discount Is Cyclical; the Arbitrage Is Structural
The boards' defence rests on a cyclical story, and it is not without merit. US Growth's discount widened during the 2022 rate shock that hammered every long-duration growth vehicle; the trust bought back 6.1% of its own shares in response, and the discount has since returned toward its long-term average. Baillie Gifford's numbers show the recovery: share price up 12.9% in a year, 85.5% over three. On this reading, Saba is harvesting a cyclical dislocation that management was already fixing.
But that reading misses what is structural. The arbitrage does not depend on any single trust's performance. It depends on the trust structure itself — the permanent separation of share price from net asset value, the low retail turnout, the 5% requisition threshold, and the ordinary-resolution rule. Those are features of the legal and market architecture, not of the economic cycle. They will not mean-revert on their own. That is why Saba can lose at US Growth in February 2025, lose again at Edinburgh Worldwide in January 2026, and still end the year with three boards under its control. The losses are tactical; the structure is the edge.
The distinction matters because it determines the endpoint. If this were cyclical, the campaign would end when discounts narrow. If it is structural, it ends only when the rules change — which is why the real clock is not the November annual meeting but the UK regulator's rulebook.
The Second-Order Trade: A Race Between Attrition and Regulation
The first-order read of the news is simple: Saba wants the board, then the management contract, then the discount closes. The second-order question is who else is playing. At Edinburgh Worldwide, Saba's April victory came with the aid of three other US funds that bought in near asset value and backed the removal resolutions. That raised an immediate governance question: if those funds were acting in concert with Saba, they could have been obliged to launch a full takeover bid for the company. No disclosures have identified them, and the suspicion has been flagged to the market.
The same dynamic now shadows US Growth. A 29% stake plus a handful of aligned institutional voters is enough to carry an ordinary resolution at low turnout. The second-order implication is that Saba's model is becoming a template for a broader coalition of discount arbitrageurs — and that the UK's listing regime is being stress-tested in real time by activists who understand its plumbing better than many of the incumbent boards do.
Which is precisely why the Financial Conduct Authority's intervention matters. The regulator published proposals in June to prevent substantial shareholders from voting on resolutions that would appoint them as fund manager — with options including excluding their votes entirely or capping them at 20% of shares. Comments were due by mid-August, with final rules expected before year-end if the proposals proceed. That creates a race: can Saba secure its board and lock in a manager change before the window closes? For US Growth, November is the first checkpoint; for the sector, the FCA's final rule is the terminal one.
Saba, for its part, has been building infrastructure that does not depend on winning every board fight. The firm launched a UCITS exchange-traded fund targeting investment trusts in March, listed in London under the ticker UKIT, giving it a regulated vehicle to hold and trade the sector's discounts without requisitioning a single meeting. That is the hedge on the hedge: if the FCA slams the governance door, the ETF keeps the arbitrage open.
The Counter-Thesis: Is Saba the Villain or the Symptom?
The strongest case against Saba is not that it is wrong about the discounts, but that its tactics impose costs on the very shareholders it claims to defend. Requisitioned meetings are expensive. Management time spent fighting activists is time not spent managing portfolios. Edinburgh Worldwide chair Jonathan Simpson-Dent called Saba's campaign a "significant and costly distraction," and the trust told shareholders the activist was running "an aggressive campaign" to "seize control of the company to prioritize its own commercial interests to the potential detriment of other shareholders." Baillie Gifford is likely to make the same argument at US Growth, rallying wealth managers such as Brewin Dolphin, JPMorgan and RBC Europe alongside private investors.
There is also a genuine question about what happens after victory. At Impax, 80.5% of non-Saba shareholders took a tender exit earlier this year, leaving Saba with a quarter of a much smaller vehicle. The new board was immediately urged to terminate the manager's contract and run a selection process. For shareholders who stayed, the outcome is a narrower, more concentrated fund run at Saba's direction — which may or may not suit them. The counter-thesis, in short, is that Saba solves the discount problem by shrinking the trust around itself.
But the counter-thesis has a hole. It assumes shareholders are being manipulated into voting against their interests. An alternative reading is that boards had years to address persistent discounts through buybacks, tender offers and mandate changes, and only moved decisively once an activist put their jobs at risk. Baillie Gifford's buybacks at US Growth came during the downturn; the merger proposal came only after Saba's pressure. The uncomfortable question for incumbents is whether the discount would have narrowed as fast without Saba at the gate.
The falsifying signal is quantifiable. The attrition thesis rests on two observable conditions: low turnout and no regulatory intervention. If turnout at the November annual meeting exceeds 60% of issued capital and Saba's resolutions fail with less than 40% of votes cast, the war-of-attrition model is broken for this target — at least until the next requisition. Conversely, if the FCA's final rules take effect before year-end with a vote-exclusion provision, Saba's path to a manager appointment at US Growth is blocked regardless of who wins the board. Either signal would redraw the map; until then, the structure favours the activist.
Conclusion: What to Watch and Who Has the Edge
The base case is that Saba wins at least some of its demands at US Growth. Ordinary resolutions need only 50% of votes cast, Saba already holds 29%, and its nominees include Jason Chen, who won a seat at Impax in June, and James Waterlow, a former Singer Capital Markets partner who joined Saba as UK managing director in February. A board controlled by Saba would likely move to replace Baillie Gifford as manager, as the Impax board has begun to do.
The upside case for Saba: the FCA rule change is delayed or watered down, allied funds quietly back the resolutions, and US Growth follows Impax and Edinburgh Worldwide into Saba's column — a third mandate won in 2026. The downside case: Baillie Gifford successfully mobilises institutional holders, turnout swells, and the resolutions fail — in which case Saba can simply requisition again, but the political pressure on regulators to act intensifies.
The signals to watch, in order:
- Turnout and the split at the November annual meeting — above 60% turnout with strong institutional opposition would be the clearest sign the board can hold.
- Whether Saba discloses any concert-party arrangements ahead of the vote.
- The FCA's final rule on large-shareholder voting, expected potentially by year-end 2026.
- Any tender offer or buyback escalation from Baillie Gifford before November — a defensive move that would signal the board believes the discount, not the activist, is the real problem.
Across time horizons, the picture splits. In the short term, the share price will track the vote mechanics and any defensive buyback or tender. Over the medium term, the outcome hinges on whether Baillie Gifford can rally its wealth-manager distribution network and whether the FCA's final rules land before the AGM. Over the long term, the structural question dominates: the UK investment trust will either reform its voting architecture to close the requisition loophole, or it will remain a hunting ground for activists who treat persistent discounts as a governance failure rather than a market condition.
For the wider sector, the lesson is narrower than the headlines suggest. Saba is not a storm that passes; it is a structural arbitrage built on the trust form itself. Boards that treat it as a cyclical nuisance — win one vote and return to normal — are likely to face the same requisition next year, and the year after. The discount is the invitation. The structure is the trap.
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