Wall Street raider Boaz Weinstein has suffered a crushing defeat after shareholders decisively voted against his plans to oust the board of a London-listed investment trust.
Weinstein’s firm Saba Capital had proposed that backers of the £1.3billion Herald Investment Trust kick out board members and replace them with its own nominees.
Herald is one of seven London-listed trusts to be targeted by the US hedge fund in a campaign that threatens one of the biggest-ever shake-ups of the 150-year-old industry.
But in a stinging rebuke yesterday, Herald’s shareholders overwhelmingly rejected Saba’s proposals, with just under two-thirds opposing the plans.
Once the shares controlled by Saba are excluded, more than 99 per cent of independent shareholders opposed the proposals. The total turnout amounted to nearly 81 per cent of Herald shares.
The US firm needed at least 50 per cent of voting shares to win, meaning if investors did not vote against the plans they could have been passed without support from a majority of shareholders.
Snubbed: Boaz Weinstein’s firm Saba Capital had proposed backers of Herald Investment Trust vote to kick out the existing board members and replace them with its own nominees
It pitted Weinstein against fund manager Katie Potts, who has led the trust since its inception 30 years ago and has been hailed for backing successful British firms in their infancy.
Herald chairman Andrew Joy said the results were a ‘clear, complete and incontrovertible rebuttal’ of the Wall Street raider.
He added: ‘It is perfectly clear that the reason Saba’s proposals were rejected is that they were intended to lead to an outcome, namely Saba managing Herald, which the existing shareholders were simply not interested in.’
Meanwhile, Richard Stone, head of industry body the Association of Investment Companies, said it was a ‘victory for shareholder democracy’ and turnout from investors had been ‘encouraging’.
It followed a tense meeting between shareholders and the board near its offices on Charterhouse Square in the City.
The affair, which saw upwards of 60 people in attendance, was a much busier gathering than most investment trust meetings, with turnout among small investors a key issue at the heart of Saba’s assault.
At the meeting, Joy bemoaned the ‘not inconsiderable cost’ caused by Saba’s actions as Herald scrambled to arrange a general meeting as well as recruit public relations and administrative staff to mount a defence against the takeover swoop.
Attendees also took issue with the fact that the two nominees Saba had selected to replace the existing board members – Paul Kazarian and Jassen Trenkow – had not attended to make their case in person. ‘They don’t even have the decency to turn up,’ one said, attracting applause.
The resounding rejection of Saba was also met with relief from the bosses of six other London-listed investment trusts who are also facing down attacks by the US hedge fund in the coming weeks.
‘Saba has been defeated convincingly,’ said James Williams, chairman of The European Smaller Companies Trust.
But Jonathan Simpson-Dent, chairman of the Edinburgh Worldwide Investment Trust, warned that shareholders cannot be complacent. ‘If you want to stop Saba, and protect your trust, you have to vote,’ he said.
Saba’s defeat came after it backed away from a separate campaign to overhaul the boards of 50 investment trusts which are run by fund management giant BlackRock.
On Tuesday, Weinstein’s outfit agreed to drop its proposals in exchange for BlackRock’s Innovation and Growth Term Trust and its Health Sciences Term Trust, buying back 50 per cent and 40 per cent of their shares respectively at a price equal to 99.5 per cent of their net asset value.
‘Our settlement shows that there is a path to a win-win outcome for managers and shareholders,’ Weinstein said.
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