Saba makes fresh attempt to oust EWI board

(Sharecast News) - Saba Capital Management said on Thursday that it has written to Edinburgh Worldwide Investment Trust - in which it has a 30% stake - to request a general meeting as it looks once again to oust the entire board.

New York-based Saba, which is run by Boaz Weinstein, said in an open letter to EWI: "We do not have faith in the current board's ability to implement the necessary strategic changes.

"As the company's largest shareholder, we feel a duty to our fellow shareholders to drive this essential change.

"Therefore, we will requisition a general meeting of the company to remove the entire incumbent board and, in its place, appoint a new board composed solely of qualified, independent directors who are committed to delivering long-term value for all shareholders."

Saba had already requisitioned a general meeting nearly a year ago, saying it had been "profoundly disappointed" with the share price performance "for some time".

"At that time, you vigorously rejected our legitimate concerns and encouraged shareholders to dismiss them, imploring them to 'Protect your Trust'," it said in Thursday's letter.

"Following last year's general meeting, Mr. Simpson-Dent, as chair of the board, appeared to belatedly acknowledge the validity of our campaign, stating: '...Our job now is to deliver the performance our shareholders rightly expect'."

Since then, Saba said, the board has "objectively and categorically" failed to execute that job.

It said the trust's failure to deliver was "undeniable".

Saba pointed out that the trust's net asset value is down 30.8% over the last five years and the share price has dropped 35%, "massively" underperforming its self-selected benchmark, the FTSE All-Share Index, by more than 100 percentage points.

"The magnitude of this value destruction is unprecedented among peer UK equity investment trusts over this period," Saba wrote in the letter.

It said the company has "consistently underperformed" across the one-, three-, and five-year periods and that its buyback activity over the past three years has fallen below the average for UK investment trusts executing buybacks over the same period.

"We remain profoundly frustrated by the board's prolonged inertia, especially given the decisive actions taken by the boards of several other UK investment trusts to increase share prices and narrow persistent discounts to NAV," Saba said.

As at the end of October, EWI's total assets stood at �847.15m.

Responding to the open letter, EWI chair Simpson-Dent said: "We are disappointed by Saba's open letter. Throughout the last year we have sought to engage with Saba to understand their objectives and to enter into a constructive dialogue regarding options for an equitable and holistic solution, including a return of capital."

"Saba's open letter does not represent the significant progress EWIT has made since this board reset the company on a path for growth a year ago," he said.

Simpson-Dent pointed out that since then, NAV total return has been 17.5% to date, well ahead of the S&P Global Small Cap Index - the company's benchmark index - up 4.8%.

He said the benchmark index cited in Saba's open letter, the FTSE All-Share, is not the trust's.

"It makes little sense to judge a global small-cap trust against a UK all-cap benchmark, a point noted by the sell-side analyst community today," he said.

"Furthermore, the company's actions over the last year have supported a tightly managed discount, currently 5.6%, significantly narrower than the Global Smaller Companies peer group weighted average discount of 10.9%."

Simpson-Dent said the trust was open to discuss board composition with Saba, but would "strongly reject" any proposal to replace the entire board "and the ambiguity that would follow".

"The board continues to seek constructive dialogue with Saba," he said.

"The board's financial adviser had already requested a meeting with Saba ahead of receiving today's open letter, which Saba had requested be deferred until next week."

Broker Peel Hunt said this opens up another chapter to Saba's campaign in the UK investment trust sector but suggests a seasonality, given the last round of requisitions appeared around this time last year.

"Whilst the formal requisition documents have not yet been filed, this action is intentionally disruptive and is to, once again, require shareholders to stand up and be counted.

"EWI is a �700m market cap trust, which trades on 6% discount to NAV, marginally wider than its 12-month average discount of 5% but narrower than the Global Smaller Companies peer group weighted average discount of 10.5%. According to our datasheet, EWI's 12-month NAV total return of +15.9% makes it the best performing trust in the peer group over that time period, although three- and five-year returns have lagged."

Analyst Anthony Leatham said he was surprised that Saba has chosen to reference the FTSE All Share index as a benchmark given the company's investible universe, where EWI's own factsheet points to the S&P Global Small Cap index as the more relevant comparator.

"This would also make more sense as EWI's portfolio as at end-October 2025, had 71% in North America and only 6% exposure to UK. We would also note that EWI has 22% exposure to private companies."