The seven investments trusts called out for poor performance by Saba Capital Management LP defended themselves in statements issued on Wednesday and Thursday.

The seven trusts highlighted by Saba were Baillie Gifford US Growth Trust PLC, CQS Natural Resources Growth & Income PLC, Edinburgh Worldwide Investment Trust PLC, European Smaller Companies Trust PLC, Henderson Opportunities Trust PLC, Herald Investment Trust PLC, and Keystone Positive Change Investment Trust PLC.

Saba called on investors of the seven trusts to oust current management after ‘underwhelming’, and in some cases ‘disastrous’ shareholder returns.

‘We believe that the current boards have failed to hold the investment managers accountable, which is why we want to offer you the opportunity to elect new directors with a concrete plan to deliver shareholder value,’ Saba said in a letter to shareholders.

Saba has been steadily accumulating shares in all seven, building stakes of between 19% and 29%, it said.

The hedge fund, founded by former Deutsche Bank banker Boaz Weinstein, said it is the largest investor in each trust.

Weinstein, who is chief investment officer at Saba, believes change is urgently needed at these trusts.

‘We believe that the boards have not minded the trading gap, which is why we want to offer you the opportunity to elect new directors with a concrete plan to deliver shareholder value,’ he added in a letter to shareholders of all seven investment trusts.

Weinstein said the Trusts have delivered ‘underwhelming, and in some cases disastrous, total shareholder returns’ compared to their respective benchmark indices during the last three years.

This left Saba with ‘no choice’ but to take the ‘extraordinary’ step of requisitioning a general meeting for each of the seven Trust, it said. Saba has requested these are scheduled by early February 2025 at the latest.

At each of these meetings, shareholders will have the opportunity to vote on two critical resolutions to remove all current directors of the Trusts, and appoint new, ‘highly qualified’ candidates to replace them.

By fully reconstituting the boards, Saba believes that it can ‘unlock greater value for shareholders and address the long-term structural issues that have hamstrung the trusts’ return potential under current leadership’.

Baillie Gifford US Growth Trust urged shareholders to take no action at this time.

It said it considers these proposals to be ‘fundamentally without merit, and in contravention of shareholder interests as a whole.’

European Smaller Companies Trust said it is ‘committed to acting in the best interests of all shareholders and is carefully evaluating the requisition’.

‘The board firmly believes in the strength of the company’s existing strategy and governance and will continue to focus on delivering positive total shareholder returns for its investors.’

Edinburgh Worldwide Investment Trust said it retains a ‘strong conviction’ in its vision and strategy.

It urged shareholders take no action and await further announcements.

Henderson Opportunities Trust PLC said it will convene the meeting in accordance with the statutory timelines.

However, it stressed the board ‘does not believe these resolutions are in the best interests of shareholders and will be advising shareholders to vote against them.’

The trust pointed out it had already instructed advisers to start work on putting forward a scheme of reconstruction to give all shareholders choice between ongoing investment and a full cash exit.

‘The board intends to continue with these plans and expects to be in a position to announce the detail in the short term,’ it added.

The trust advised shareholders to ‘take no action at this time’.

Keystone Positive Change Investment Trust also recommended shareholders ‘take no action’ and await further announcements from the company.

‘The board remains confident in the long term prospects for Baillie Gifford’s ’positive change’ strategy, which seeks to generate attractive long term capital returns and to contribute towards a more sustainable and inclusive world,’ it added.

In September, Keystone confirmed that, following shareholder feedback, it will undertake a scheme of reconstruction and members’ voluntary winding-up of the company.

‘The board reiterates its recommendation that shareholders vote in favour of the scheme which it believes is in the best interest of shareholders as a whole.’

CQS Natural Resources Growth &Income said it considers these proposals are ‘without merit and remains fully committed to act in the best interests of all shareholders’.

It advises shareholders to take no action at this time.

Herald Investment Trust PLC issued a response on Thursday, also asking shareholders to take no action on the Saba Capital letter. It confirmed that Saba has a 19% stake.

Herald said it will convene a general meeting ‘in due course’, but it said: ‘The board does not believe the resolutions are in the best interests of shareholders and will be advising shareholders to vote against them.’

Baillie Gifford US Growth Trust was down 3.6% to 280.00 pence each in London on Thursday. CQS Natural Resources Growth & Income was down 3.1% to 187.50p. Edinburgh Worldwide Investment Trust was down 2.5% to 189.45p. European Smaller Companies Trust was down 0.1% at 166.50p. Henderson Opportunities Trust was down 1.7% to 229.03p. Herald Investment Trust was down 1.8% at 2,436.13p and Keystone Positive Change Investment Trust was down 3.2% to 244.05p.

Over the past month, the seven stocks are down 3.8%, up 11%, down 0.5%, up 4.7%, up 15%, up 29%, and up 12%, respectively.

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