UPDATE: Edinburgh Worldwide Investment Trust (LSE:EWI) is facing a significant challenge as activist investor Boaz Weinstein, founder of Saba Capital, pushes to replace the entire board amid a staggering 50% decline in share price since February 2021. This urgent move comes after Weinstein’s hedge fund acquired approximately 30% of the trust’s shares, raising alarms about its management and future direction.
In a scathing open letter dated November 27, 2023, Weinstein criticized the trust for its “massive underperformance” against its benchmark, the FTSE All-Share Index, which has surged 71.4% over the same period. He highlighted the trust’s inability to close the ongoing discount to net asset value (NAV), which currently stands at 5.6%, significantly narrower than the peer group average of 10.9%.
The Edinburgh Worldwide Investment Trust, a £715 million fund managed by Baillie Gifford, aims to discover groundbreaking growth companies. However, its strategy has not yielded the expected results, underperforming its benchmark over three, five, and ten years. This has led to mounting frustrations among investors, particularly Saba Capital, which has called for a complete overhaul of the board.
In response, Jonathan Simpson-Dent, chair of Edinburgh Worldwide, defended the trust’s performance, asserting that it has outperformed its designated global small-cap benchmark recently. He emphasized the importance of maintaining stability in leadership during this turbulent period, stating, “We would strongly reject any proposal to replace the entire Board and the ambiguity that would follow.”
As the situation unfolds, Edinburgh Worldwide has already begun to adapt its strategy by appointing two new co-managers and reducing the number of holdings, aiming to focus on larger, more stable growth companies. Since these changes, the share price has rebounded by 40% since mid-2024, with notable investments in companies like SpaceX, Axon Enterprise, and Alnylam Pharmaceuticals.
This dramatic confrontation raises questions about the future direction of the trust and its appeal to investors. For those with a high-risk tolerance seeking exposure to innovative companies, Edinburgh Worldwide may present a potential buying opportunity, currently trading at 206p.
Immediate reactions are expected as shareholders weigh the implications of Saba Capital’s aggressive stance. Investors are watching closely to see if this battle will spark broader changes within the FTSE 250 landscape.
As developments continue to unfold, the financial community remains on high alert. Investors are encouraged to stay informed about the latest updates regarding Edinburgh Worldwide and its strategic decisions in the coming days.
