Herald Investment Trust PLC on Friday urged shareholders to vote against motions proposed by Saba Capital Management LP, which had last month hit out at an ‘underwhelming’ performance at a number of London-listed trusts.
Herald, which invests in firms in technology and communications, believes its strategy has ‘been highly successful over the long term’.
‘The board believes that, since its inception, Saba has materially underperformed Herald,’ Herald said. ‘Your board believes that if Saba gains control and seeks to implement a different strategy, significant value could be lost for shareholders as a result of forced selling of parts of the portfolio.’
Herald pointed out Saba had ‘failed to provide concrete details’ of its proposals and planned to ‘take control of the company for its own economic benefit and to change the company’s investment strategy.’
A general meeting takes place on January 22.
Shares in Herald Investment Trust were 0.7% lower at 2,442.51 pence each in London on Friday morning.
Last month, Saba called on investors of seven investment 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.
The other six trusts trusts called out were Baillie Gifford US Growth Trust PLC, CQS Natural Resources Growth & Income PLC, Edinburgh Worldwide Investment Trust PLC, European Smaller Cos Trust PLC, Henderson Opportunities Trust PLC, and Keystone Positive Change Investment Trust.
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.
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