Saba Capital’s Boaz Weinstein units his sights on the expertise fund led by Baillie Gifford

Boaz Weinstein is calling for the removal of the entire board of a technology fund managed by Baillie Gifford to reverse what the activist investor sees as “unprecedented” destruction of value.

In a letter to the board of the Edinburgh Worldwide Investment Trust on Thursday, Weinstein – whose activist investment firm Saba Capital owns around 30% of the trust’s shares – said the board had “objectively and categorically failed” to deliver the performance expected by shareholders.

EWIT’s portfolio includes a global mix of smaller and emerging public and private companies focused on technical innovation and transformation and targeting “significant disruptive growth potential,” according to London-listed Baillie Gifford’s website.

His holdings include Elon Musk’s Space Exploration Technologies, or SpaceX, which accounts for 8.4% of his portfolio.

Weinstein said EWIT’s net asset value had fallen 30.8% over the past five years, while its share price return had fallen 35%, having “significantly underperformed” its chosen benchmark, the FTSE All-Share Index, which rose 71.4% over the same period.

That means the company’s NAV return and share price performance ultimately underperformed the benchmark by more than 100% over the five-year period, Saba noted in the letter.

Stock chart iconStock chart icon

Edinburgh Worldwide Investment Trust.

“The scale of this value destruction is unprecedented for comparable UK equity investment funds over this period,” Weinstein wrote.

Jonathan Simpson-Dent, chairman of EWIT, expressed disappointment at Saba’s open letter.

He said EWIT’s benchmark was the S&P Global Small Cap Index – not the FTSE All-Share Index cited in Weinstein’s letter.

“It makes little sense to judge a global small-cap trust against a UK all-cap benchmark,” Simpson-Dent said in a statement, adding that EWIT’s NAV total return to date was 17.5%, above the S&P Global Small Cap Index’s 4.8%. Representatives for Saba Capital did not immediately respond to a request for comment on this matter.

The trust’s total assets stood at 847.15 million pounds ($1.1 billion) as of October 31.

Weinstein is calling for a general meeting to appoint a new board composed entirely of “qualified, independent directors… committed to creating long-term value for all shareholders.”

“We remain deeply frustrated by the Board’s continued inertia,” the activist investor wrote in Thursday’s letter. “We have no confidence in the ability of the current board to implement the necessary strategic changes.”

Simpson-Dent said the EWIT board would continue to seek “constructive dialogue” with Weinstein to find a “fair and holistic” solution, including the return of capital. But he warned: “While we are open to discussing the composition of the board with Saba, we would strongly reject any proposal to replace the entire board and the resulting ambiguity.”

He added: “The company’s actions over the last year have supported a tightly managed discount currently at 5.6%, which is significantly lower than the global small business peer group’s weighted average discount of 10.9%.”“

The move follows an earlier attempt by Saba last year to shake up EWI Trust’s board, an attempt that ultimately failed to win investor support.

Weinstein – whose $6 billion New York-based hedge fund runs credit-relative value opportunities – has recently built a number of positions in the UK mutual fund space.

Outlining two new bets at the annual Sohn investment conference in London last week, he said “a storm” was brewing in the UK investment trust sector, where discounts had widened sharply.