Saba Capital Management is attempting to force a liquidity event for shareholders of Baillie Gifford US Growth Trust PLC (USA) by challenging the current board composition. As the largest shareholder, Saba has proposed resolutions for the upcoming Annual General Meeting to install three new directors. This move aims to address significant long-term underperformance and lack of exit options for investors.
Saba Nominees and the Proposed Cash Exit
Saba is pushing for the election of Jason Chen, Thomas H. McGlade, and Sir James Waterlow to the Baillie Gifford US Growth Trust PLC board. If these nominees secure their seats, Saba is recommending they facilitate a 100% cash exit for all shareholders at or near the net asset value (NAV). This strategy is designed to provide a liquidity event for investors who have been unable to exit their positions efficiently. Saba argues that the current board has prioritized the interests of Baillie Gifford over those of the trust's shareholders, contributing to a lack of actionable exit pathways during periods of market volatility.
Five-Year Performance and Market Context
The campaign is driven by severe performance deficits observed over the last five years. According to Saba, the trust has underperformed the S&P 500 Index on both a price return basis (-88.4%) and a NAV return basis (-79.1%). Saba is leveraging its recent track record in the UK investment trust market, where it claims to have delivered nine successful outcomes since late 2024. By positioning this as a "long-overdue liquidity event," Saba is testing whether its activist model—which has previously utilized record buybacks to boost NAVs—can be applied to resolve the structural discount issues currently affecting this specific US growth vehicle.
Key Takeaways
- Saba Capital has proposed three new director nominees: Jason Chen, Thomas H. McGlade, and Sir James Waterlow.
- The trust has seen a -88.4% price return and a -79.1% NAV return relative to the S&P 500 over five years.
- Saba recommends that elected nominees offer a 100% cash exit at or near NAV.
FinanceInsyte's Take
In our view, Saba is executing a classic activist playbook aimed at unlocking value from a distressed investment trust. By linking board replacement directly to a 100% cash exit at NAV, Saba is not just seeking governance changes; it is demanding a terminal liquidity event. This signals an aggressive stance against the traditional management-centric model of UK investment trusts, placing direct pressure on Baillie Gifford to resolve the massive gap between current pricing and underlying asset value.
Questions & Answers
What is the specific financial objective of Saba's proposal?
Saba is seeking to enable a 100% cash exit for all shareholders at or near the net asset value (NAV), providing a liquidity event to resolve long-term underperformance.
How has Baillie Gifford US Growth Trust PLC performed against the S&P 500?
Over the past five years, the trust has underperformed the S&P 500 on a price return basis by -88.4% and on a NAV return basis by -79.1%.
Who are the proposed directors for the Baillie Gifford US Growth Trust PLC board?
The three proposed nominees are Jason Chen, Thomas H. McGlade, and Sir James Waterlow.
What precedent is Saba citing to support its activist strategy?
Saba points to nine successful outcomes in the UK investment trust market since late 2024, where its engagement has reportedly delivered hundreds of millions of pounds for retail investors.
Source: Businesswire
