Keystone Positive Change Archives | Portfolio Adviser Investment news for UK wealth managers Tue, 04 Feb 2025 08:50:44 +0000 en-US hourly 1 https://wordpress.org/?v=6.7.1 https://portfolio-adviser.com/wp-content/uploads/2023/06/cropped-pa-fav-32x32.png Keystone Positive Change Archives | Portfolio Adviser 32 32 Saba loses Keystone and Baillie Gifford US Growth votes https://portfolio-adviser.com/saba-loses-keystone-and-baillie-gifford-us-growth-votes/ https://portfolio-adviser.com/saba-loses-keystone-and-baillie-gifford-us-growth-votes/#respond Mon, 03 Feb 2025 16:07:50 +0000 https://portfolio-adviser.com/?p=313313 Saba Capital suffered a further setback in its bid to shake up the UK investment trust industry, after it lost votes on the future of both Keystone Positive Change and Baillie Gifford US Growth trust.

The meetings, which saw shareholders vote on Saba’s proposals to replace the current boards with their own nominees, both saw investors back the incumbent leadership.

Over 60% of votes cast in each meeting were against Saba’s proposals. 98.5% of Baillie Gifford US Growth’s non-Saba shares voted against the resolutions, while just 0.8% of Keystone’s non-Saba shares backed the US hedge fund’s proposals.

See also: Gold funds surge in January as tariff fears mount

The result follows on from a similar vote at Herald Investment Trust on 22 January, at which investors also backed the existing board.

CQS Natural Resources Growth & Income and Henderson Opportunities Trust will hold their own general meetings on Saba tomorrow, before the European Smaller Companies Trust meets on 5 February.

Edinburgh Worldwide shareholders will vote on 14 February.

As with Herald, shareholder engagement was high with 78.4% of total voting rights being used at the Baillie Gifford US Growth trust meeting.

Richard Stone, chief executive of the Association of Investment Companies (AIC), said: “It’s encouraging to see so many shareholders of Baillie Gifford US Growth and Keystone Positive Change come out and vote on this critical issue.

“The impressive turnout of retail investors demonstrates what can be achieved when shareholders are informed, enabled and motivated to have a say on their trust. Our campaign ‘My share, my vote’ aims to change the Companies Act so everyone receives information on their company and can vote.”

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Keystone postpones wind down proposals due to Saba action https://portfolio-adviser.com/keystone-postpones-wind-down-proposals-due-to-saba-action/ https://portfolio-adviser.com/keystone-postpones-wind-down-proposals-due-to-saba-action/#respond Mon, 13 Jan 2025 11:07:19 +0000 https://portfolio-adviser.com/?p=313075 The Keystone Positive Change investment trust board has postponed a vote on plans for the trust’s future due to Saba Capital’s action to replace the trust’s directors.

Last September, the trust’s board set out proposals to fold the trust into the open-ended Baillie Gifford Positive Change fund following a challenging period for performance.

Shareholders were due to vote on the proposals in February. However, it has been postponed until after the outcome of Saba’s requisitioned general meeting.

See also: Update: Saba plans full cash exit option for Herald

Karen Brade, chair of Keystone Positive Change, said due to the size of Saba’s holding in the trust, the board’s proposals for the trust’s future were guaranteed to be voted down.

The requisitioned meeting, at which shareholders will vote on replacing the current board with Saba’s nominations, will take place on 3 February.

Voting on the proposals closes at 12pm on 30 January, or as early as 23 January if invested through a platform.

Keystone has urged its shareholders to vote against Saba’s proposals.

“Unfortunately, Saba waited until 18 December to requisition a general meeting to remove your independent Board and formally inform us that it intends to vote against the scheme, which would guarantee its failure,” Brade said.

“This destructive behaviour highlights just how disingenuous Saba has been and demonstrates its desire to take control of your company.

“In light of Saba’s current voting intentions, the board has decided it is in the best interests of all shareholders to adjourn the scheme meetings to a later date.”

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Baillie Gifford: ‘We are appalled by Saba’s actions and conduct’ https://portfolio-adviser.com/baillie-gifford-we-are-appalled-by-sabas-actions-and-conduct/ https://portfolio-adviser.com/baillie-gifford-we-are-appalled-by-sabas-actions-and-conduct/#respond Mon, 06 Jan 2025 08:08:24 +0000 https://portfolio-adviser.com/?p=312969 Board members of the Baillie Gifford US Growth and Keystone Positive Change trusts have today (6 January) condemned the requisition bids made by Saba Capital and urged all shareholders to vote against its proposals.

The US hedge fund acquired large stakes in each trust and used its influential position to recommend the complete replacement of both boards, as well as five other UK trusts.

It claimed the move would improve performance, yet Keystone’s chair Karen Brade said Saba’s proposal was made purely in its own self-interest.

“We are appalled by Saba’s actions and conduct,” she said. “We believe its proposed resolutions would be highly detrimental to the interests of all other shareholders.

“Be under no illusion – we believe this US hedge fund manager is acting opportunistically, seeking to seize control of the board without a controlling shareholding, to pursue its own agenda.”

Saba’s plan to replace each board with its own candidates would give it “effective control of the company,” added Tom Burnet, non-executive chair of Baillie Gifford US Growth.

While returns did drop 9% over the past three years, the trust’s board has been proactive in making improvements, with performance soaring 61.7% in the past year.

“Saba wants to subvert all of this,” Burnet  said. “Their proposals lack detail and if implemented, could destroy the board’s independence, radically alter the investment strategy of the company and prove highly disruptive to shareholder value.

“We urge all shareholders to make their voices heard and to vote against Saba’s self-serving and destructive proposals.”

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Saba Capital launches campaign to replace seven investment trust boards https://portfolio-adviser.com/saba-capital-launches-campaign-to-replace-seven-investment-trust-boards/ https://portfolio-adviser.com/saba-capital-launches-campaign-to-replace-seven-investment-trust-boards/#respond Wed, 18 Dec 2024 12:03:48 +0000 https://portfolio-adviser.com/?p=312711 After months of curiosity around its intentions for the investment trust sector, activist investor Saba Capital has launched a campaign to replace seven investment trust boards.

The US hedge fund has requisitioned the boards of Baillie Gifford US Growth Trust, CQS Natural Resources Growth & Income, Edinburgh Worldwide Investment Trust, European Smaller Companies Trust, Henderson Opportunities Trust, Herald Investment Trust and Keystone Positive Change Investment Trust.

Saba, which owns 19-29% shares in each trust, is seeking to replace the boards of each trust. The activist investor said that it believes new boards are necessary to narrow discounts and correct underperformance.

See also: Saba Capital and its intentions for the UK investment trust industry

Boaz Weinstein, founder & CIO of Saba Capital, said in an open letter to shareholders: “Performance demonstrates that they have not taken sufficient steps to resolve the trusts’ structural issues, depriving shareholders of superior returns. While there are multiple levers to narrow these persistent discounts, inaction has been the consistent course of current leadership.”

At each meeting, which Saba said would be scheduled by early February, shareholders of the trusts will vote on removing all current directors of each trust and replacing them with new candidates.

If appointed, Weinstein said the new directors would assess all options available to the trusts, including terminating the trusts’ current investment management agreements and potential combinations with other investment trusts.

Reaction

Saba has been building its positions in investment trusts over the last two years and, after a long wait, it has finally publicly declared its intentions.

Stifel analyst Iain Scouller said: “Overall, we think it is helpful for the sector to have Saba’s game plan revealed and shareholders and boards can now take positions for or against these proposals. We also think given Saba’s significant voting power by the virtue of the size of their stakes, that they will be successful in changing the boards of a number of the trusts involved.

“We think it is now over to the boards of the Trusts to argue why Saba’s proposals should not be supported – they will need to come up with some strong counter-proposals themselves.”

Matthew Read, senior analyst at QuotedData, said that while clarity on Saba’s interests in the sector was welcome, he argues there is an ‘obvious flaw’ in their strategy.

“Saba wants shareholders to replace the current boards and deliver on its plan to ‘quickly deliver substantial liquidity and long-term returns for all shareholders’.

“However, those two are often mutually incompatible, particularly for some of the funds it is targeting where the underlying holdings are less liquid – Herald being the obvious example as it is a big fund with a huge tail of small illiquid positions that trade by appointment that could take years to sell off and you would likely move the market against you in many of these, particularly once the market spots you as a forced seller.”

See also: How do asset managers logistically prepare for major events?

He added that the call for substantial liquidity also ignores the unquoted positions held by trusts such as Baillie Gifford US Growth and Edinburgh Worldwide, while Read questions the logic behind targeting Keystone Positive Change, which is considering folding into its open-ended sister fund.

“This and the other challenges we highlighted above have long made us feel that Saba doesn’t really understand some of the funds that it is invested in,” Read added.

“It is well-documented that Saba has been successful with similar attacks in the US but the UK closed end fund market is fundamentally different. Standards of corporate governance are higher, and returns have generally been better, so this sort of approach makes less sense, particularly now that progress has been made on addressing problems such as the cost-disclosure issues and so discounts are now retrenching.

“It seems to us that their approach is very short-term in nature and this highlights a long running issue that, because many retail investors hold their shareholdings through platforms and do not tend to vote, that large professional investors get a disproportionate amount of the vote.

“This can lead to outcomes that are not in the interests of all shareholders and so we think that it is all the more important that shareholders in these funds make sure their interests are being protected and that they make sure they get out and vote.”

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Keystone Positive Change board considers folding into open-ended vehicle https://portfolio-adviser.com/keystone-positive-change-board-considers-folding-into-open-ended-vehicle/ https://portfolio-adviser.com/keystone-positive-change-board-considers-folding-into-open-ended-vehicle/#respond Mon, 09 Sep 2024 15:05:45 +0000 https://portfolio-adviser.com/?p=311378 The Keystone Positive Change trust board is considering options for the trust’s future, including a rollover into the open-ended Baillie Gifford Positive Change fund, following a challenging period for performance.

The trust’s total return is down almost 40% over three years, according to FE FundInfo data.

In a stock exchange announcement, the Baillie Gifford trust’s board said it believes action to address the size of the trust, the low liquidity in its shares and its discount would be in the best interests of shareholders.

See also: AIC tables proposal for partnership with National Wealth Fund

The board will consult with shareholders on options for the trust, including a rollover into the £1.8bn Baillie Gifford Positive Change fund.

It added that any proposal would include a cash exit option. The trust would also need to take into account the illiquidity of its five private investments, which comprise 4.3% of the portfolio at the end of August.

While the open-ended Positive Change fund has also been hit by a tough period for performance over three years, down 28.7%, it is a top quartile performer in the IA Global sector over five years.

The two funds seek to generate long-term returns while contributing towards a more sustainable and inclusive world.

Keystone currently trades at a 7.4% discount to its net asset value, according to the Association of Investment Companies.

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