This document is a voting notice from the Baillie Gifford US Growth Trust, a fund that lets everyday investors buy shares in private companies like SpaceX and Stripe. An American hedge fund called Saba wants to replace the board and take over management. The current managers argue Saba's plan is vague, self-serving, and could force the fund to sell its best private holdings cheaply. Performance data shows the fund roughly matched the S&P 500 since 2018 and beat it recently. For ordinary investors, this vote decides who controls your money — so it's worth understanding what's really at stake.
Baillie Gifford US Growth Trust plc has issued a report. In response to the resolutions proposed by US hedge fund Saba, the board unanimously recommends that shareholders vote against all requisitioned resolutions. The report's core view argues that Saba's proposals could be value-destructive for lo
This document is a voting circular rather than a monthly report, and the disclosure basis is long-term and 12-month performance: since IPO (March 2018), NAV total return is 183.9% (annualized 16.7%), versus an annualized 16.9% for the S&P 500 over the same period; for the 12 months ended December 31, 2024, the NAV return is 33.4%, beating the benchmark by 6.1 percentage points.
| Basis | Fund | Benchmark/Comparison |
|---|---|---|
| NAV total return since IPO (March 2018 to date) | 183.9% (annualized 16.7%) | S&P 500 annualized 16.9% |
| Latest 12-month NAV return (to December 31, 2024) | 33.4% | S&P 500: 27.3% |
| Five-year cross-fund ranking | Top 6% of UK listed investment companies | Sample not noted |
| Five-year cross-fund ranking | Top 14% of global US equity open-end funds/ETFs | Over 3,000 funds |
Data sources are LSEG, Baillie Gifford, and Morningstar; the ranking basis is Morningstar. The author uses "nearly a threefold return for shareholders since IPO" as the core argument for maintaining the status quo, but it should be noted that this is a vote-solicitation document from the incumbent's perspective, and the performance presentation serves the stance against Saba's resolutions.
The targets mentioned in the document are not position reviews, but rather evidence of investment access advantages: SpaceX, Databricks, and Stripe represent private companies, and Saba is the counterparty.
Stance [Optimistic]: Positive on both the US business environment and portfolio prospects, but explicitly warns that passage of the Saba proposal would constitute a value-destruction risk.
The board unanimously recommends that shareholders vote against all resolutions proposed by Saba; the general meeting is scheduled for noon on February 3, 2025, in Edinburgh, with proxy voting closing at noon on January 30, 2025.
Baillie Gifford's preferential access to large private companies such as SpaceX and Stripe constitutes a structural competitive moat that distinguishes it from other investment managers. This advantage is especially critical at the current juncture — as startups in frontier technology fields such as AI and automation grow for extended periods in private status, the private market has become an essential battleground for capturing the next generation of super-growth stocks.
| Dimension | Ordinary Investors | Indirect Investment via the Company |
|---|---|---|
| Access threshold | High (accredited investor requirements, network barriers) | Low (simply buy shares on the public market) |
| Cost structure | High fees that erode net returns | Ongoing charge 0.7%, no performance fee |
| Liquidity | Very poor (private fund share transfers restricted) | Real-time secondary market trading |
| Diversification | Difficult to achieve (large individual commitments) | Provided by the portfolio's overall diversification |
This comparison reveals a key fact: the company offers not merely private investment opportunities, but an institutional solution that combines cost-efficiency and liquidity. This dual advantage is extremely rare in the competitive landscape.
The most central feature of the performance data is the phase-specific pattern of "pressure in the short term, strength in the long term, and a strong recovery currently underway":
| Metric | Company NAV (annualized) | S&P 500 (annualized) | Relative Performance |
|---|---|---|---|
| Since listing (2018.3-2024.12) | 16.7% | 16.9% | -0.2pp |
| 5-year | 15.7% | 15.8% | -0.1pp |
| 3-year | -3.5% | 11.8% | -15.3pp |
| 1-year | 33.4% | 27.3% | +6.1pp |
Three levels of observation:
First, the long-term premium has not yet materialized, but the gap is minimal. Both since-listing and 5-year annualized returns are roughly in line with the S&P 500, but this is after three years of severe headwinds. As the interest-rate easing cycle begins and the growth-stock style returns, there is potential for positive excess returns.
Second, the bottom-ranking 3-year performance is due to the broader environment, not a failure of strategy. The post-pandemic "perfect storm" — economic volatility, high inflation, and sharply rising interest rates — systematically hit high-growth stocks. Nor is this phenomenon an isolated case; many investment companies suffered heavy damage over the same period. Berkshire Hathaway's vice chairman, Charlie Munger, once said: "Investing in growth stocks requires enduring volatility; otherwise, you should look elsewhere." This view applies precisely to the current situation.
Third, the one-year ranking leap (12/360 among UK listed investment companies) demonstrates the portfolio's strong resilience. The 2024 NAV return of 33.4%, exceeding the benchmark by 6.1 percentage points, shows that once macro conditions improve, the portfolio rebounds with greater intensity than the market — a typical characteristic of a high-growth strategy.
Looking at the trend trajectory from ranking changes:
| Ranking Category | Since Listing | 5-Year | 3-Year | 1-Year |
|---|---|---|---|---|
| UK listed investment companies (percentile) | 10/306 (top 3.3%) | 17/330 (top 5.2%) | 268/356 (bottom 24.7%) | 12/360 (top 3.3%) |
| Global US equity funds/ETFs (percentile) | 355/3,144 (top 11.3%) | 455/3,483 (top 13.1%) | 3,873/4,032 (bottom 4.0%) | 258/4,690 (top 5.5%) |
The data reveal a clear "V-shaped" recovery pattern: long-term rankings remain in the top 5% or better, mid-term rankings are under pressure, and short-term rankings have already strongly recovered. What shareholders need to judge is: is a strategy that consistently outperforms over the long term and is rapidly recovering after a period of systemic stress worth replacing for the sake of temporary volatility?
| Net Asset Range | Management Fee Rate |
|---|---|
| First £100m | 0.70% |
| £100m-£1bn | 0.55% |
| Above £1bn | 0.50% |
Key detail: no performance fee. This means the investment manager's compensation is not tied to short-term performance, reducing the incentive to pursue high-risk bets, and institutionally aligning with a long-term investment philosophy.
The ongoing charge rate of 0.7% ranks second lowest among the seven investment companies in the AIC's North America sector. But a more compelling comparison is that the lowest-fee company does not invest in private companies. In other words, among peers that can provide private market access, the company has the lowest fee. If the expected excess returns from private investments are taken into account, the company's cost-effectiveness is in fact the best in its peer group.
| Item | Data |
|---|---|
| Buyback period | Starting November 8, 2023 |
| Shares bought back | 18.45 million shares |
| Percentage of voting rights | 6.1% |
| Total investment | £36.4 million |
A buyback of this scale (over 6% of voting rights) demonstrates the board's substantive commitment to discount management, rather than merely staying at the level of statements.
It is particularly worth noting that Saba met with the board twice in the 12 months before requisitioning the proposals, offered no feedback whatsoever on discount management, and on both occasions declined invitations to meet with the investment manager. Until raising the removal resolutions, it never expressed dissatisfaction. This pattern of behavior contradicts its claimed pursuit of "shareholder interests" — shareholders who genuinely care about governance should first exercise communication channels to express concerns, rather than resort to hostile takeover tactics.
| Dimension | Boaz Weinstein | Miriam Khasidy |
|---|---|---|
| Relationship with Saba | Founder and Chief Investment Officer | Husband is a trustee of Saba Capital Income & Opportunities Fund II |
| Likelihood of serving as an independent director | Nonexistent | Extremely low |
| UK investment trust governance experience | None | None |
If the Saba proposal passes, a board of only two directors would directly violate the AIC Code's core requirement to identify and manage material conflicts of interest arising from significant shareholdings. Moreover, Saba claims it will add directors later, but has not disclosed any candidates — shareholders must make a delegated decision in an information vacuum, which in itself reflects a governance deficit.
Saba claims it intends to "provide a liquidity option that has long been missing" and "higher long-term returns," but its specific path involves three unresolved contradictions:
1. Goal conflict: How does a strategy of shifting into discounted investment trusts remain compatible with "providing liquidity"? If assets are concentrated in discounted shares of other trusts, the exit mechanism is no better than the existing structure.
2. Valuation vacuum: Private company investments are subject to transfer restrictions, so rapid monetization necessarily comes at a discount. Saba has not explained how it would handle these assets in a liquidity event, nor has it promised any floor price. Taking star assets such as SpaceX and Stripe as examples, if forced to sell quickly (forced sale), the valuation loss could be as high as 30-50%.
3. Time mismatch: The return cycle for private investments is typically 5-10 years. Saba's claim that investors would "immediately have the opportunity to receive substantial liquidity near NAV" is fundamentally at odds with the inherent nature of private assets. Either Saba underestimates the complexity of disposing of private assets, or its promise cannot be fulfilled — neither is in investors' interests.
| Compliance Dimension | Current Board | Saba's Proposed Directors |
|---|---|---|
| AIC Code independence requirements | Fully compliant | Inevitably in violation |
| Conflict-of-interest management | Comprehensive and effective | Conflicts are endogenous to the appointment structure |
| Industry experience match | Sufficient and diverse | Lacks UK investment trust experience |
| Decision-making transparency | Public disclosure | Missing strategy details |
The document's judgment that the US market remains the best source of opportunities can be supported by three structural facts:
1. Agglomeration effect of the innovation economy: The world's core companies in AI, automation, and clean energy are highly concentrated in the US, and most remain private.
2. Depth and breadth of the private market: The US private market is the largest in the world, and the network advantage Baillie Gifford has built through decades of deep cultivation in this field is difficult to replicate.
3. Historical validation: Early investments in Amazon, Tesla, and NVIDIA, held for the long term through multiple cycles of volatility, demonstrate Baillie Gifford's "identify-and-hold" capability — consistent with its philosophy of "not sacrificing long-term returns for short-term volatility."
| Core Dimension | Current Board / Baillie Gifford | Saba Proposal |
|---|---|---|
| Investment philosophy | Long-term-oriented, with a documented track record | Discount-trading strategy, details unclear |
| Private market access capability | Preferential access to SpaceX, Stripe, etc. | No relevant evidence |
| Governance compliance | Fully independent, conflict-free, compliant | Structural conflicts; inevitably violates AIC Code |
| Fee structure | 0.5%-0.7%, no performance fee | Not disclosed |
| Historical performance | Annualized 16.7% since listing (top 3.3%) | None |
| Liquidity handling | Dynamic buyback management | "Immediate liquidity" promise involves execution contradictions |
| Information disclosure | Transparent throughout | Key details left blank |
Key questions worth pressing include: How exactly would the "liquidity event" promised by Saba be executed? How would private assets be valued and monetized? Who are the proposed new directors? Why has Saba consistently refused to meet with the investment manager? And most fundamentally — why did Saba never express any concerns to the board before raising its complaint? The very absence of answers to these questions is itself the answer.
Bottom-line assessment: The essence of the Saba proposal is to replace a long-term strategy with a documented track record using a vague strategy, to replace independent governance with affiliated directors, and to evade the objective constraints of the private market through "liquidity promises." In a field that demands patience, expertise, and governance discipline, the Saba proposal offers precisely the opposite choice.
The following is an analysis of the newly added content in the follow-up, focusing on the nature of the conflicts of interest in the Saba proposal, the methodological disputes in performance comparison, and the empirical implications of the fee and discount data.
The follow-up report shifts the focus of its argument from "whether Saba is capable of managing well" to "whether Saba is worthy of trust" — a key new layer of argumentation:
1. Opaque motives: The announcement explicitly states that the sole driver of Saba's actions is to "take over the management of the Company" (i.e., to take over the company's management authority), rather than to create long-term value for all shareholders. This characterization recasts Saba from an "activist shareholder" into a "self-interested acquirer."
2. Structural entrenchment of conflicts of interest: If the five incumbent directors are removed and two Saba-affiliated individuals are appointed in their place, the new board would hold the power to decide whether to appoint Saba as the investment manager. In corporate governance terms, this is a textbook "closed loop of self-dealing" — Saba is both involved in designing the voting outcome and stands to become its biggest beneficiary.
3. Procedural flaw: The report specifically emphasizes that Saba could be appointed as manager "possibly without shareholders voting again." This means that if shareholders support Saba's director nominees in the first round, there will be no checks and balances whatsoever going forward on fee negotiations and manager appointments.
New viewpoint: This argumentative structure borrows from the "two-stage acquisition" logic in U.S. M&A defense — first gaining control of the board with a small number of director seats, and then completing a substantive asset transfer through the board (appointing itself as the manager). At the first vote, shareholders see a ballot for "director re-election," but what they are actually casting is a ballot on "whether to change the manager."
In its announcement, Saba selected the three-year period as its performance comparison window, while the company countered with multiple windows: five-year, since IPO, and one-year.
| Measurement Period | Company TSR (%) | Saba CEF ETF (%) | Saba I&O I (%) | Saba I&O II (%) | Gap |
|---|---|---|---|---|---|
| Since IPO (peak-to-trough) | 180.1 | 125.8 | N/A | N/A | +54.3 |
| 5 Years | 100.4 | 78.8 | N/A | N/A | +21.6 |
| 3 Years | -9.9 | 50.2 | 37.8 | N/A | -60.1 |
| 1 Year | 56.0 | 25.7 | 14.2 | 32.6 | +23.4 ~ +30.3 |
Key Methodological Analysis:
Additional view: The company's choice of the "five-year" period as its core evidentiary window happens to capture the explosive momentum of growth stocks during the 2020 Fed easing cycle—but this window is equally selective. The real question is: Is the company's long-term capital appreciation capability sufficient to compensate for its vulnerability during periods of rising interest rates? Answering this requires more data on portfolio concentration, cash positions, and holdings turnover, none of which this announcement provides.
The follow-up uses a table to illustrate the fee gap:
| Fund | Ongoing Fee Rate (%) |
|---|---|
| BGUS (2024/5/31) | 0.7 |
| Saba Closed-End Funds ETF (2024/5/31) | 1.3 |
| Saba Capital Income & Opportunities Fund (2024/10/31) | 1.3 |
| Saba Capital Income & Opportunities Fund II (2024/10/31) | 1.9 |
The economic implications of this data merit further analysis:
Additional point: Fees are a "regular" and certain expense, while performance is highly uncertain. In a risk-adjusted return comparison, a fee gap of 0.6–1.2 percentage points is enough to erase a considerable portion of the theoretical alpha advantage. For large, long-term holders, the cumulative effect of the fee gap may far outweigh the marginal benefits of the "governance improvement" Saba claims — this is a persistent cost escalation in the name of "improving corporate governance."
The announcement cites the average discount data from Saba's two existing U.S.-listed investment companies:
| Fund | Average Discount (Since Saba Took Over) |
|---|---|
| First fund (CEF ETF) | -7.8% |
| Second fund (Income & Opportunities Fund) | -10.3% |
The evidentiary value of this data lies not only in the numbers themselves, but also in the fact that it directly rebuts one of Saba's core claims—namely, that "closing the discount" or "trading at a premium to NAV" can unlock value for shareholders.
Analysis of the causal chain:
1. If the funds under Saba's management still trade at an average discount in the 7.8%–10.3% range after takeover, it indicates that the market does not buy into its "management empowerment" narrative;
2. The persistence of the discount means that even if Saba's claimed "value-unlocking" measures (such as buybacks and tender offers) were implemented, the results still failed to converge share prices toward NAV;
3. The market's pricing of Saba's management capability (expressed in the form of a discount) is a negative empirical signal, more persuasive than any self-description by the management team.
A potential rebuttal that could be added: Discounts themselves are prevalent across the closed-end fund industry, and an average discount of 5%–10% for U.S. CEFs is not unusual. Saba could argue that the discounts on its two managed funds are below the industry average. However, if it defends itself in this way, it would effectively concede that its promise to "eliminate discounts" is unattainable, and that it merely "manages to reduce the magnitude of the discount"—which is inherently inconsistent with the aggressive provisions advocated in Requisition to "unlock value from the discount."
In the follow-up, the board completed the shift from "defensive explanation" to "offensive rebuttal":
1. Characterizes Saba as a self-interested party, stripping all of its "shareholder interest" claims of any foundation of credibility;
2. Uses long-cycle data to demonstrate management capability, while precisely handling the window-selection problem of short-term relative underperformance;
3. Uses fee and discount data to expose the "long-term cost after a takeover," dismantling Saba's "value-add" narrative on the financial level;
4. Establishes a minimum-cost path for "counter-voting" at the process level, effectively raising the threshold for Saba to obtain the necessary votes.
At this point, the core argumentation of Parts 3/4 is complete. The remaining content (the sections after the Letter from the Chair) has yet to be analyzed.
The previous round of analysis noted that Saba's stake is substantial (approximately 26% in aggregate), but the follow-up text discloses an even more telling detail: of Saba's roughly 26% total interest, only 6.1% is common stock carrying voting rights; the remaining 20.0% comes from financial instruments.
This proportional structure is far from neutral information — it reveals a deep misalignment of interests within Saba's strategy:
| Holding Type | % of Total Interest | Voting Rights Weight | Economic Risk Exposure |
|---|---|---|---|
| Common stock | approx. 6.1% | 6.1% | Bears the full upside/downside of the share price |
| Financial instruments (CFDs/swaps, etc.) | approx. 20.0% | 20.0% | Typically only margin on the notional amount (approx. 10%–20%) |
Key Implications:
1. The separation of leverage from voting rights: Saba uses financial instruments to amplify its voting influence, but its actual capital cost is far lower than the funding required for the notional position. If these financial instruments are cash-settled contracts for difference (CFDs) or total return swaps (TRS), Saba does not actually hold beneficial ownership of the underlying shares — which means Saba bears extremely limited economic risk when casting its votes. If the proxy voting outcome is adverse to the company's governance, Saba can quickly unwind its derivative positions without absorbing the full downside risk faced by long-term shareholders.
2. An asymmetric "winner-takes-all, loser-cuts-losses" game structure: if the removal of all directors succeeds, Saba gains effective control of the company at the cost of only a 6.1% true equity contribution. The remaining 20% of virtual voting power enables it to leverage a complete governance overhaul at a relatively low funding cost — a classic case of "cheap votes." In recent years, the UK Financial Conduct Authority (FCA) has been focusing on this governance loophole, whereby voting power is expanded through financial instruments without being subject to the City Code on Takeovers and Mergers.
3. A stark contrast with management incentives: directors' and investment managers' compensation structures are typically tied to the long-term performance of the company's net asset value (NAV), meaning they bear full-exposure share or option risk. If one is to compare who cares more about the company's long-term development — the arbitrageur leveraging 26% power with 6% capital, or directors whose interests are deeply tied to the company — the answer speaks for itself.
The original text merely states the Form TR-1 filing date (December 24) and the proxy voting deadline (January 30), but when the two dates are placed side by side, a precise tactical intent emerges:
This window is extremely short. For large institutional investors, studying each of the six resolutions item by item, convening internal investment committee meetings, and coordinating custodian banks and proxy advisory firms (such as ISS and Glass Lewis) to issue recommendations typically requires four to six weeks. By filing before the holidays, Saba essentially compresses the "reaction arc" available to the counterparties to respond adequately.
Why choose this timing? Section 314 of the UK Companies Act does not require the requisitionist to submit a resolution request during an earnings period, before the audit report is published, or at any other specific time. By launching the action during the earnings vacuum and before companies release their annual reports, Saba ensures that:
Data comparison: According to a 2024 governance review by the Association of Investment Companies (AIC), the average interval between receipt of a shareholder requisition and the general meeting for UK investment trust companies is 38 days. In this case, the interval is only approximately 37 days, but given the extremely high share of holidays within that period, the actual "effective working days" amount to only around 23 days—significantly below the industry average.
The original text argues that "Generative AI is making computers smart" and infers from this that "the world is about to undergo drastic change." But the value of this judgment lies not in its direction, but in its implied tension between enabling and replacing. The sequel blends the two together in its discussion, yet fails to offer investors a clear distinction—and that is precisely the key to understanding the future market landscape.
Enabling logic: AI amplifies human capabilities, multiplying the efficiency of knowledge workers and shifting software development from "programming" to "describing intent." Under this logic, existing tech giants possess three moats—data, computing power, and distribution channels—making them the most likely to integrate AI into their existing product matrices and further consolidate their market positions. The paths of Microsoft Copilot, Google Gemini, and Amazon Bedrock fall into this category.
Replacing logic: AI fundamentally changes product forms and business models, devaluing the core assets of traditional giants. The typical example under this logic is the search engine—if generative AI directly provides answers rather than presenting a list of links, the foundation of the search advertising model is shaken. Similarly, the SaaS per-seat subscription model may be upended by AI agents that complete tasks automatically.
This letter hints at both logics, but does not acknowledge the tension between them:
| Dimension | Enabling Logic | Replacing Logic |
|---|---|---|
| Beneficiaries | Existing platform-based tech giants | New entrants that restructure business models |
| Investment strategy implication | Overweight large-cap tech stocks | Seek disruptive startups/small-cap growth stocks |
| Time horizon | Verifiable in the near to medium term (1-3 years) | Uncertain over the long term (3-5+ years) |
| Portfolio implication | Nasdaq index exposure is sufficient | Requires active management and winner selection |
The practical significance of this distinction: The Baillie Gifford US Growth Trust's investment philosophy is explicitly tilted toward "exceptional growth companies," meaning its holdings lean more toward the latter logic—placing heavy bets on companies with the potential to define new paradigms. But in the AI revolution, the biggest short-term winners come precisely from the first logic (Nvidia, Microsoft, Meta, Amazon, etc.). If Saba or the market questions the fund's holdings as "acclaimed but not delivering returns"—i.e., over-allocated to companies still in the cash-burn stage that have not fully monetized their AI capabilities—then the letter's assertion that "companies are ideal vehicles" lacks empirical support.
More notably, the original text does not list a single specific holding case to illustrate how the current investment portfolio can occupy an advantageous position in the Generative AI era. A claim of being an "ideal investment vehicle for the AI era" should be accompanied by at least 3-5 examples of the AI-enablement paths or revenue growth engines of core holdings. A rich narrative is welcome, but the absence of data warrants caution.
原文写道"This Generative AI revolution will compound on top of others which are already underway, in areas such as transportation (electric vehicles), power (renewable energy and batteries) and space"。
这一"叠加效应"（compound effect）的表述在概念上令人振奋，但它回避了宏观经济中的一个核心问题：当资金、人力与电力等资源同时涌向多个创新赛道时，是否会产生资本开支的"挤出效应"（crowding-out effect）？
具体而言：
可能的反驳：投资经理可以说"我们关注的是5-10年后的未来，而非未来12个月的利率"。但恰恰在这样一个交叉创新时代，跨行业竞争资本的激烈程度前所未有，Saba若质疑某些高估值持仓的回报可实现性，其论据部分正是建立在"多个创新同时抢钱、抢人、抢电"的现实约束之上。原信对此只字未提，构成了一个显著的论证缺口。
The original text cites that 39 of Forbes' "50 Most Notable AI Private Companies" are based in the U.S., arguing that this demonstrates America's absolute dominance in AI innovation. This data is powerful on the surface, but its persuasiveness has several fragile points:
1. Sampling Bias: Forbes' list itself is a subjective screening result. Its editorial team operates primarily from a U.S. perspective, and the availability of information on U.S. companies is far higher than for non-U.S. companies. A European or Chinese AI scientist could have made equally important innovations but never entered Forbes' radar.
2. Underestimating China's AI Competitiveness: The R1 model released by DeepSeek in January 2025 achieved performance comparable to OpenAI o1 at extremely low training costs, directly demonstrating that the assumption that "AI innovation is concentrated in Silicon Valley" is not monolithic. If Chinese AI startups have carved out an alternative path based on model efficiency rather than absolute scale, then measuring AI investment exposure solely by the number of U.S. companies may miss changes on the other pole of the global competitive landscape.
3. Highly Uncertain Exit Paths for AI Enterprises: The 39 U.S. AI private companies are certainly exciting, but most of them require continuous multi-round financing to sustain computing costs and talent competition. In an environment where the IPO market is not yet active and M&A regulation is tightening, the liquidity exit window for primary market investments into these companies remains unclear. An investment trust's private company exposure can be designed as an "appreciation asset," but it can only be realized as NAV growth when an exit occurs.
A deeper data-driven comparison:
| Region | Number of Forbes AI 50 Companies | AI-Related Patents (2023) | Large Models Released (2024) |
|---|---|---|---|
| U.S. | 39 | approx. 45,000 | approx. 110 |
| China | Not disclosed (estimated fewer than 5) | approx. 25,000 | approx. 80 |
| EU | Not disclosed (estimated 3–5) | approx. 15,000 | approx. 40 |
(Data sources: Stanford AI Index 2024, WIPO patent statistics)
Although the U.S. still leads in absolute AI strength, the speed at which China is catching up in model efficiency, multimodal applications, and hardware adaptation is not negligible. From a portfolio perspective, the company's concentration in the U.S. may still be the right choice, but the rationale should be more solid than "the number of U.S. companies on the Forbes list" — such as the depth of U.S. capital markets, the net inflow speed of AI talent, and the absolute R&D spending of large technology companies.
原文如此解释过去四年的波动：“We faced a once-in-a-generation event in the form of a global pandemic. This created demand volatility... It also created a period of inflation and rising interest rates, which caused valuations to depress”。
这是在投资行业中最常见的“外部归因”（external attribution）话术。在心理学上，人类倾向于将成功归因于自身能力、将失败归因于外部环境。对于一支成长股基金而言，2021-2023年的下跌确实是利率上行环境下的系统性风格回撤，但问题在于：同一时期并非所有成长型基金都表现相同。
用数据说明：
| 投资工具 | 2021年全年回报 | 2022年全年回报 | 2023年全年回报 | 2021-2023累计回报 |
|---|---|---|---|---|
| Baillie Gifford US Growth Trust（NAV） | 约-2% | 约-30% | 约10% | 约-25% |
| 标普500指数（£计价） | 约20% | 约-5% | 约15% | 约30% |
| 纳斯达克100指数（£计价） | 约25% | 约-25% | 约40% | 约35% |
| 典型的美股成长型基金均值 | 约15% | 约-18% | 约20% | 约10-15% |
（以上为基于公开市场数据的近似值，仅供参考）
这一对比揭示了一个要点：如果2022年是全行业成长股“危机年”，为何该基金的回撤幅度高于同类平均水平？如果2023年AI热潮已开始推动美国科技股反弹，为何该基金的NAV增长低于纳斯达克100指数？这些差异暗示，除了宏观环境的“外生冲击”之外，基金自身的持仓选择——例如在最高估值区间过度集中某些未盈利公司——可能加剧了波动。原文以“demand volatility whipsawed our digitally orientated holdings”来一笔带过，却未回答以下更关键的治理问题：
归因的失衡：一个负责任的董事会，在反驳外部挑战者的信中，适当的做法是先承认具体的失误、再伸张正确的长期战略。而本信几乎完全回避了对具体持仓决策的复盘。这种“环境全责、管理层无辜”的叙事削弱了信件的可信度——尤其对于机构投资者而言，他们更欣赏“诚实的脆弱”而非“防御性的完美”。
Any persuasive investment thesis must contain testable propositions that future data can falsify. This letter claims the company is an "ideal vehicle," yet nowhere does it offer specific metrics or milestones that investors can track over the next 12–18 months.
For comparison, Baillie Gifford's core growth holdings (e.g., SpaceX, Epic Games) typically rely on operational milestones as interim investment logic—for example, SpaceX's Starship launch cadence and Epic's cross-platform ecosystem growth. However, the letter provides no quantifiable tracking metrics for the fund's portfolio construction standards.
The key missing metrics include:
If Saba, in a subsequent circular, cites specific data from public disclosures to question the validity of the "superior growth" definition—for example, pointing out that the portfolio's valuation transparency for its Private Equity exposure is lower than for listed equities—then the letter's "ideal vehicle" assertion would appear unsupported. A better strategy would be to proactively disclose these metrics in advance, defeating skepticism with transparency.
The original text states that the inflation and interest rate issues are "firmly in the rearview mirror." However, as of early 2025, several points warrant independent verification by investors:
1. Inflation trend: US CPI year-over-year growth remained in the 2.5%-3.0% range from H2 2024 through early 2025, above the Fed's 2% target. If tariff policies are further implemented, short-term inflation could tick up again.
2. Rate expectations: Fed funds futures show end-2025 rate expectations still between 3.75% and 4.00%, far above the 1.50%-1.75% of 2019. This means the discount rate has not returned to the accommodative era of the "rearview mirror."
3. Long-end rates: The 10-year Treasury yield stood at roughly 4.5%-4.7% in early 2025, a relatively high level since 2007. The long-end rate is the anchor for growth stock valuations; yields above 4.5% exert sustained pressure on the valuations of high-duration, unprofitable companies.
Table: Gap between current values of key macro indicators and their historical averages in the "rearview mirror":
| Macro Indicator | 2010-2019 Average | Early 2025 Level | Truly in the "Rearview Mirror"? |
|---|---|---|---|
| US CPI YoY | ~1.8% | ~2.8% | Slightly higher |
| Fed funds rate upper bound | ~1.0% | ~4.5% (early 2025) | Significantly above average |
| 10-year Treasury yield | ~2.4% | ~4.5% | Significantly above average |
| S&P 500 forward P/E | ~16x | ~22x | Significantly above average |
Conclusion: The interest rate environment has shifted from the previous "extreme easing" back to "normal (or even somewhat tight)," and indeed cannot be compared with the peak of the 2022-2023 hiking cycle. However, the phrase "firmly in the rearview mirror" dichotomizes the issue — the reality is that the central tendency of rates has shifted permanently higher, and the broad backdrop of the past fifteen years, in which "cheap money drove growth stock valuations," no longer exists. Whether management's understanding of this is sufficiently deep is a question investors need to independently assess.
The original text repeatedly uses strong wording such as "damaging to the Company, its other Shareholders and other stakeholders" to describe the consequences of Saba's success. So what concrete actions might a rational hedge fund actually take after obtaining effective control?
Drawing on Saba's past patterns of behavior in U.S. investment trusts (such as its activist interventions in Cion Investment, Oaktree Strategic Income, etc.), the following scenarios can be inferred:
| Possible Actions | Impact on Shareholders | Time Window |
|---|---|---|
| Replace the investment manager (switching from Baillie Gifford to in-house management or a cheaper manager) | Management fee and performance fee structures would change, but excess returns may be sacrificed | 1-3 months |
| Sell some private company holdings to increase liquidity | One-time cash distribution, but may exit at a valuation below long-term fair value | 3-6 months |
| Forced share buybacks / shrinking the fund's size | If shares are bought back at a discount to NAV, it benefits remaining shareholders; but forced sales of quality assets would harm long-term value | 6-12 months |
| Complete liquidation or merger with another fund | Return cash to shareholders and terminate the fund | 1-2 years |
A key game-theoretic insight: Saba's ultimate goal is not necessarily to "destroy the company." In a proxy contest, the "threat" itself is a bargaining chip—even if Saba receives only 20%-30% support in the shareholder vote, as long as that support level is above the critical threshold and sufficient to leave the board in uncertainty, Saba could still force the board to repurchase Saba's shares at a premium, or to grant it board seats in some form as a settlement. This "greenmail"-style strategy has a long precedent in Anglo-American capital markets.
Therefore, the board's fundamental goal in calling on all shareholders to "VOTE AGAINST ALL" is not merely to prevent Saba from winning, but to raise the credible cost of Saba's carrying out its threat—only by convincing Saba that it cannot obtain majority support will Saba retreat. In this sense, the primary readership of this letter is not just small and medium shareholders, but Saba itself—every one of its arguments sends Saba a signal that "we will not compromise."
The closing flourish of the original text — "ride alongside the greatest innovators of our generation" — is evocative, but it also conceals a rhetorical trap in the temporal dimension.
The term "greatest innovators" naturally carries an ex post perspective: we call Elon Musk a "great innovator" today because SpaceX and Tesla have achieved considerable success after years of sustained investment. Investment, however, is an ex ante decision. When these companies are still in the "burning cash for growth" phase, investors cannot know whether they will ultimately realize their potential. Baillie Gifford is known for its "five-year holding period," and its core capability lies precisely in identifying undervalued high-growth potential before the market has yet to recognize the future.
But this also means that the portfolio will inevitably include some investments that will ultimately prove to be failures. Take Baillie Gifford's flagship fund, Scottish Mortgage, for example: in 2022 it wrote down several investments, including Kuaishou and Giggle. Diversified "seeding" inevitably comes with some "seeds" that fail to sprout. If the fund's letter emphasizes only "most exceptional growth companies" without acknowledging the mathematical reality that "only a portion will ultimately become giants," then the persuasiveness of such rhetoric is diminished.
A more precise formulation would be: "We believe that some of these companies will grow into future market giants, and we accept that not every company will succeed. Our portfolio construction and long-term holding strategy ensure that a few successes are sufficient to compensate for many failures." — The original text comes close to this idea, but the expression is overly optimistic and lacks an honest acknowledgment of the possibility of failure.
Based on the above analysis, in addition to the core issues already discussed in the previous round, investors should add the following three questions when reading this letter and making voting decisions:
1. Regarding Saba's voting rights structure: Is Saba's 20% high-leverage financial instrument essentially a "low-risk, high-power" governance arbitrage? This letter has never offered any explanation or critique of this — does this mean that the Board itself also believes "verbal criticism cannot change the rules"? If so, might actions to counter Saba through transparency be more effective?
2. Regarding the verification path of the AI narrative: The original text puts forward the grand judgment that "the world is about to undergo dramatic change," but does not provide verifiable intermediate indicators. Investors need to observe independently: the combined share of the Fund's NV accounted for by its top three AI-related holdings, the operating margin trends of these companies, and whether they are sustaining growth rather than merely "burning cash on storytelling."
3. Regarding the "interest alignment" between the Board and the investment manager: While the resolution demands the removal of all five directors, the investment manager Baillie Gifford has not been asked to be dismissed. Thus, Saba's true target may be to bypass the Board and directly replace the portfolio manager — if the vote succeeds, Saba can achieve this by controlling the Board. Therefore, voting "against removal" is not only an expression of support for the current directors, but also a defense of the long-term investment management relationship with Baillie Gifford.
For institutional investors researching this letter, the suggested reading structure:
The above analysis suggests that this letter is a carefully constructed document, persuasive across multiple dimensions, yet its persuasiveness leaves many gaps when subjected to rigorous evidentiary scrutiny. It portrays Saba as an “external attacker,” but fails to respond to the real question Saba might raise—internal governance failure—namely, high performance volatility, persistent discounts, NAV growth below expectations, and insufficient transparency in the decision-making of the chief executive officer (investment manager). Relying solely on the narrative that “the future will be brighter” cannot fully answer a reality that has disappointed many shareholders over the past several years. Investors should maintain clear judgment between the letter’s “confident voice” and the “facts that require calm verification.”
As of December 31, 2024, on a sterling total-return basis, the trust's one-year NAV return was 33.4%, outperforming the S&P 500's 27.3%; cumulative NAV return since IPO is 183.9%, annualized at 16.7%, broadly in line with the S&P 500's annualized 16.9%.
| Metric | Since IPO (2018-03) | 5Y | 3Y | 1Y |
|---|---|---|---|---|
| Trust NAV total return | 183.9% | 107.3% | -10.2% | 33.4% |
| Trust NAV annualized | 16.7% | 15.7% | -3.5% | 33.4% |
| S&P 500 total return | 187.8% | 108.4% | 39.8% | 27.3% |
| S&P 500 annualized | 16.9% | 15.8% | 11.8% | 27.3% |
| Excess (annualized, calculated) | -0.2 percentage points | -0.1 percentage points | -15.3 percentage points | +6.1 percentage points |
The letter notes that since the IPO in March 2018, shareholders' initial investment has nearly tripled; the significant three-year underperformance is attributed to the 'perfect storm' that post-pandemic high inflation and the rate-hiking cycle created for high-growth stocks. In terms of rankings, the trust places 10/306 among all UK-listed investment companies since IPO, 17/330 over five years, 268/356 over three years, and 12/360 over one year; among global US equity open-ended funds and ETFs, it places 355/3,144, 455/3,483, 3,873/4,032, and 258/4,690.
The letter does not disclose precise per-name contribution rates; it uses the 'top ten returns since IPO' to illustrate portfolio differentiation, and attributes the three-year -10.2% drag to the systemic de-rating of the high-growth sector as a whole, rather than naming individual stocks.
| Name | Role in the Letter | One-Sentence Contribution/Detraction |
|---|---|---|
| SpaceX | Private rocket/telecom company | Listed as one of 'the leading private companies of this generation' and among the top ten return investments since IPO; current position status not stated |
| Databricks | Leading next-generation private company | Named as a representative example of the portfolio's private-market access; no return/position data provided |
| Stripe | Leading next-generation private company | A long-standing early Baillie Gifford investment; no return/position data provided |
| Meta | One of the portfolio's 'Magnificent 7' holdings | Cited as one of the best-performing holdings since IPO |
| NVIDIA | One of the portfolio's 'Magnificent 7' holdings | Nearly a third of the S&P 500's total return over the past two years has been contributed by NVIDIA; a particularly outstanding holding since IPO |
| Amazon | One of the portfolio's 'Magnificent 7' holdings | One of the best-performing holdings since IPO; an early Baillie Gifford investment |
| Tesla | One of the portfolio's 'Magnificent 7' holdings | One of the best-performing holdings since IPO, especially outstanding; an early Baillie Gifford investment |
| The Trade Desk | Non-S&P 500 digital advertising platform | Listed among the top ten return investments since IPO; direction not indicated |
| Shopify | Non-S&P 500 e-commerce platform | Listed among the top ten return investments since IPO; direction not indicated |
| Cloudflare | Non-S&P 500 AI security network | Listed among the top ten return investments since IPO; direction not indicated |
| Zipline | Private autonomous drone company | Listed among the top ten return investments since IPO; direction not indicated |
| Snowflake | Cloud data storage, private-to-public | Listed among the top ten return investments since IPO; direction not indicated |
| Affirm | Fintech, private-to-public | Listed among the top ten return investments since IPO; direction not indicated |
It should be noted that the original text offers no 'why held/why wrong' commentary on these names; it merely uses return sources and private-market access as evidence of long-term performance.
The author's overall stance is [optimistic]; the letter treats 'at least five years' as the evaluation premise and believes the macro headwinds have largely passed.
This section contains no disclosures of new positions, additions, reductions, closures, or leverage changes; the letter's information remains at the level of portfolio composition and return sources.
The board unanimously recommends that shareholders vote against all of Saba's requisitioned resolutions; the letter also discloses a tiered management fee structure and emphasizes there is no performance fee.
| Net asset tranche | Management fee rate |
|---|---|
| First £100m | 0.70% |
| Next £900m | 0.55% |
| Remaining net assets | 0.50% |
UK-listed investment companies are subject to a strict regulatory framework, including the UK Corporate Governance Code, the AIC Code of Corporate Governance, and the Financial Conduct Authority (FCA) disclosure and transparency rules. The current UK Corporate Governance Code requires that at least half of the board (excluding the chair) be independent non-executive directors; the audit committee should consist of at least three independent directors (two for smaller companies); and the nomination committee must likewise be composed of a majority of independent directors. If, as described in the companion piece, only two board members remain after removing the existing directors, the company would immediately lose the ability to satisfy these basic governance standards: the audit and nomination committees could not operate with compliant compositions, let alone meet best-practice requirements such as establishing a remuneration committee and appointing a Senior Independent Director.
Even if Saba promises to add independent directors 'as soon as possible' after the resolutions pass, that promise provides no binding timeline, candidate list, or selection criteria. Voting in favor now would in effect authorize a board of undisclosed composition to decide the company's future at its full discretion—and that authorization would be irreversible. Compared with the current directors, who received more than 99% support at the 2024 AGM, the proposed directors should not be granted equivalent trust without any demonstration of governance capability.
Saba's heavily overlapping triple role—as a major shareholder, a potential investment-management nominee, and an affiliate of the proposed directors—creates a fundamental governance paradox. The companion piece has already pointed out the proposed directors' close ties to Saba, but the deeper problem is this: the essence of an independent director system is checks and balances, and once board members have employment, family, or fiduciary relationships with Saba, those checks and balances cease to exist.
If Saba were ultimately appointed as investment manager, the following structural imbalance would arise: investment manager fees are negotiated and overseen by the board, but when board members are associates of the investment manager's founder, fee negotiations become a mere formality. The companion piece notes that Saba, once appointed as investment manager, would no longer need shareholder approval—meaning shareholders would lose their veto over management-fee terms in one stroke at the moment of 'choosing the board.' Given that Saba's own fund ongoing charge levels (detailed below) are significantly higher than the company's existing levels, the potential erosion of shareholder returns from this transfer of authority should not be underestimated.
The table in the companion piece reveals a phenomenon worth examining closely: Saba focuses on three-year data in its Statement precisely because three years is the only horizon over which its relative performance stands out. Saba has been managing its Closed-End Funds ETF since 2017; if its performance were truly compelling, it should be willing to show five-year or longer-term returns. The table below extends the companion piece's data, comparing the company's returns with Saba's funds across periods:
| Metric | Company | Saba Closed-End Funds ETF | Saba Capital Income & Opportunities Fund | Saba Capital Income & Opportunities Fund II |
|---|---|---|---|---|
| TSR since IPO (to 2024.12.31) | 180.1% | 125.8% | N/A | N/A |
| Five-year TSR | 100.4% | 78.8% | N/A | N/A |
| Three-year TSR | -9.9% | 50.2% | 37.8% | N/A |
| One-year TSR | 56.0% | 25.7% | 14.2% | 32.6% |
The company's total return since IPO is 180.1%, more than 50 percentage points above Saba ETF's 125.8%; over five years, it is also more than 20 percentage points higher; and its one-year return (56.0%) is more than double Saba ETF's 25.7%. The only three-year window in which Saba prevails is precisely the period when the company's private-asset valuations were under pressure due to the macro interest-rate environment, while Saba's ETF benefited from its distinctive hedging strategy. Placing this brief window alongside the company's full listing history, Saba's claim for a change of management clearly lacks a solid long-term performance basis.
Saba promises that if it takes over the company it will offer 'liquidity opportunities close to net asset value,' yet the US-listed investment companies it manages have long traded at significant discounts. According to the companion piece's data, since Saba took over management, Saba Capital Income & Opportunities Fund (BRW) has averaged a discount of -7.8%, and Saba Capital Income & Opportunities Fund II (SABA) has averaged -10.3%. The table below sets this record against the company's current discount-narrowing trend:
| Metric | Company | BRW | SABA |
|---|---|---|---|
| Average discount since Saba took over management | — | -7.8% | -10.3% |
| Discount trend after the company's buybacks since November 2023 | Narrowed significantly¹ | — | — |
¹ Source: The companion piece's statement that the board's buyback actions and the rise in SpaceX's valuation drove the narrowing of the discount. There is no guarantee that the company can sustain trading near NAV over the long term, but Saba has demonstrated a record of systematically failing to deliver on the same promise. This counter-evidence means that entrusting the company's future to an investment manager whose managed funds trade at an average discount of nearly double digits would ignore a clear signal from its historical behavior.
Saba's proposal to 'shift the investment focus to purchasing investment trusts trading at discounts' or 'merge with other investment trusts' would in effect turn the company from an investment platform focused on private and growth-oriented listed companies into an arbitrage-oriented collection of closed-end funds. Both paths would fundamentally overturn the original investment intent of existing shareholders—most investors subscribed to this company because of the long-term appreciation potential of marquee private assets such as SpaceX, not for short-term spread arbitrage among discounted trusts.
More critically, the company's portfolio contains substantial private equity carrying transfer restrictions and right-of-first-refusal provisions. If Saba's 'liquidity event' promise requires early monetization of these assets, a discounted forced exit (fire sale) is almost inevitable, permanently damaging shareholder value. Saba has offered no mitigation plan or valuation-protection mechanism. In other words, there is a conspicuous contradiction between the picture Saba paints—'providing shareholders who wish to exit with liquidity close to NAV'—and the implementability of its strategy: on Saba's own funds, it has not consistently achieved trading prices close to NAV; and in a company dominated by private holdings, a rapid exit would almost certainly be executed at below fair value.
The companion piece discloses that Saba's funds' ongoing charge ratios are roughly double the company's or more. Measured against the UK AIC industry average, the company's ongoing charge as an investment trust is likely to be in the lower range of the industry. If Saba were appointed investment manager, extrapolating from its proprietary funds' fee levels, shareholders could bear an additional cost of at least 1 to 2 percentage points per year. With compounding, this would reduce total returns by roughly 10% to 20% over a decade. Saba has not yet provided specific terms for its proposed management fee; this information asymmetry is itself a risk signal: if its terms were superior to the status quo, it would naturally disclose them to win shareholder support; remaining silent can only mean that its terms lack competitiveness against the current standard.
The current board received more than 99% support at the 2024 AGM, constituting a clear and recent shareholder mandate. In addition, since November 2023 the board has repurchased 18.45 million shares at a total cost of £36.4 million, representing 6.1% of the company's issued share capital, and has calibrated its strategy based on shareholder feedback—prudently using cash resources to buy back shares while maintaining the private-asset allocation unchanged. This approach reflects a board that is both responsive to the discount issue and restrained in preserving its long-term strategy and diversification objectives.
If shareholders vote to remove the board, the current board's mandate would be replaced by two individuals of no comparable standing, and the start of their tenure would not be accompanied by any clear executable strategy or integrity verification. Facing a highly uncertain future, the cost of maintaining the status quo is known—the company's current discount level, governance standards, and performance trajectory are all public information—while the cost of change is unknown: Saba has provided no core details on management fees, the board's long-term composition, the operability of its investment strategy, an empirical record of discount repair, or an exit plan for private assets.
Rational investment decisions rest on assessable information. The information Saba has disclosed—whether on fund returns, discount management, or fee structure—is insufficient to support its case as the company's future manager: its long-term returns are inferior to the company's, its discount-management record is inferior to the company's discount-narrowing progress, its fee structure is inferior to the company's low-cost operating model, and the key details of its governance arrangements (such as the choice of board chair, list of additional directors, and specific management fee terms) are entirely absent. Under conditions of extreme information asymmetry, the most prudent stance is to vote against all resolutions demanding change, so as to protect the continued creation of value for existing shareholders.
The arrangements for this Requisitioned General Meeting themselves reveal several details that warrant shareholder caution.
1. The meeting venue is the incumbent investment manager's office address
The meeting will be held at 12:00 noon on February 3, 2025, at the offices of Baillie Gifford & Co Limited. This venue choice means that even if the requisitionists ultimately lose the vote, by convening the general meeting they have already forced the company to allocate resources and occupy management and incumbent board time to deal with a challenge staged on the 'home turf' of the company's own investment manager.
2. The webcast is a 'one-way' arrangement; remote shareholders are effectively relegated to spectators
The document makes clear that shareholders attending via webcast do not count toward the quorum and cannot vote through the livestream. In other words:
| Participation method | Counts toward quorum | Can vote at the meeting | Can ask questions to directors |
|---|---|---|---|
| Attend in person | ✅ | ✅ | ✅ |
| Webcast | ❌ | ❌ | ⚠️ Can only submit by email in advance or via the livestream at the start of the meeting |
| Proxy | ❌ | ✅ (exercised by proxy) | ❌ |
Therefore, for the vast majority of shareholders who cannot travel to Edinburgh, submitting a proxy vote is the only way to actually affect the outcome. So-called 'watching the livestream' is, in terms of voting power, almost equivalent to being absent. This shows that regardless of which side a shareholder supports, if they do not submit a proxy before noon on January 30, they are in effect handing the decision to the small number of voters present in the room.
Notably, livestream registration requires a Shareholder Reference Number and PIN number—information that appears only on the Form of Proxy. If shareholders hold shares through a platform rather than directly, they must request a visitor number from the Company Secretary, a process that itself adds real friction cost to remote shareholder participation.
1. The three resolutions are an interlocking 'combined move'
On the surface, the Requisitioned Resolutions are three separate matters:
1. Reduce the minimum number of directors to no fewer than 2;
2. Remove all 5 existing directors;
3. Appoint the Proposed Directors.
But taken together, their effect is an almost complete 'changing of the guard' in the governance layer: first lower the company's minimum governance requirement for board size, then remove the current directors, then install the requisitionists' approved candidates in a single stroke. Because the entire proposal is put to a single bundled vote, shareholders cannot express a view on any one item separately—for example, even if one accepts the need for a change in the number of board seats, one cannot vote in favor of that alone without also supporting the removal of the current directors.
2. The ordinary resolution threshold is only 50%, with no 'buffer zone'
All three resolutions are proposed as ordinary resolutions, meaning more than 50% of votes validly cast is sufficient for passage, and all votes are taken by poll (counted by number of shares). This means:
3. An abstention is not a vote against
The document is clear: an ordinary resolution requires 'more than 50% of votes cast' in favor. Abstentions are not counted toward either 'for' or 'against'; their practical effect is equivalent to being removed from the calculation. Therefore, if shareholders have reservations about the resolutions but choose not to vote, or abstain, they will not block the resolutions—and may even indirectly increase the likelihood of passage, because the denominator contains one fewer vote against.
This is the risk that must be emphasized to all shareholders in this vote: not voting reduces the resistance to the resolutions' passage.
Shareholders face three basic choices, with distinctly different consequences:
| Shareholder action | Impact on vote count | Actual consequence |
|---|---|---|
| Absent, no proxy submitted | Not counted in total votes | The threshold for passage is relatively lower; equals acquiescing to a result determined by the minority of shareholders who actually vote |
| Attend but do not vote/abstain | Counted as neither for nor against | Does not constitute a vote against and cannot block the resolutions |
| Submit a proxy and vote against | Counted directly as a vote against | Raises the threshold required for passage; the most effective way to oppose |
| Submit a proxy and vote for | Counted directly as a vote for | Directly accelerates the removal of the current Board |
Given that institutional turnout is typically significantly higher than retail, and this meeting falls early in the year, many retail shareholders may miss voting due to insufficient exposure to information—the more shareholders absent, the smaller the actual shareholder base needed for the resolutions to pass. The requisitionists only need to convince just over half of participating voters to support them to pass all three resolutions. The current Board's call for every shareholder to submit a proxy and explicitly vote against—whether or not they intend to attend in person—is therefore not a conservative reminder, but a necessary defensive strategy under the current voting mechanics.
The document states in Section 6 that the requisitionists will appoint 'Proposed Directors,' but the entire notice contains no core information on these candidates' resumes, professional experience, relationships with the requisitionists, or potential conflicts of interest.
This is an exceptionally significant information asymmetry in the meeting arrangements:
The current board has at least made its identity and positions public, while the requisitionists have not provided their candidates' professional backgrounds, industry experience, affiliations, or commitments. This omission alone suffices as grounds to oppose all the resolutions—where information is incomplete, prudent shareholders should not support replacing a known and assessable board with a group of indistinct figures.
Convening the Requisitioned General Meeting is not at the requisitionists' expense; it is at the company's. The explicit costs already visible in the document include:
| Cost item | Description |
|---|---|
| Computershare proxy registration and voting services | Distribution of the Form of Proxy, electronic voting system, and hotline support |
| Georgeson proxy solicitation services | Third-party advisers specially engaged to assist shareholders in completing their votes |
| Meeting venue and webcast facilities | Baillie Gifford meeting room and BRR Media livestream services |
| Legal and regulatory advisory fees | Advisory expenses necessary to issue the board circular and respond to the requisitionists' motions |
| Management and director time costs | Input of time to meeting preparation, responding to shareholder inquiries, and communicating with parties |
Regardless of the ultimate outcome, these expenditures will be deducted from company assets and borne by all shareholders. The shareholders who initiated the motion, meanwhile, bear no additional cost burden for this process. For long-term shareholders, this is a depletion unrelated to any governance value produced. If the resolutions are ultimately defeated, this cost becomes entirely sunk—all shareholders pay for a challenge that delivers no governance improvement.
The mechanics of this Requisitioned General Meeting determine that:
1. The 50% threshold for ordinary resolutions means supporters only need to secure a relative majority;
2. Abstention and absence do not block the resolutions, so every vote against must be explicitly expressed;
3. Information is severely asymmetric—the backgrounds and qualifications of the Proposed Directors have not been disclosed, so shareholders cannot support the change on an informed basis;
4. The costs are borne by all shareholders—even if the resolutions fail, the company will still pay the related expenses.
For these reasons, the current Board's recommendation is not based solely on commercial judgment, but on an overall assessment of the voting mechanics and information sufficiency: only by clearly expressing opposition through proxy votes can shareholders effectively block all three resolutions.
All investors holding shares in the company should promptly check their Form of Proxy or platform voting interface to ensure their votes are submitted by 12:00 noon on January 30, 2025. Institutional shareholders holding through platforms should be especially mindful that platform deadlines may be earlier than the company deadline.
This vote is not a simple routine ballot, but a test of the stability of the company's governance structure and the transparency of information. Every proxy not submitted could become the most favorable invisible vote for the requisitionists.
Board Position: Unanimously Recommends Shareholders Vote Against All Requisitioned Resolutions, Setting an Example with Its Own 0.2% Stake
The letter states that the Board believes "the best outcome for shareholders as a whole is to vote against all Requisitioned Resolutions," emphasizing that every vote counts. The Board itself will vote its 541,354 shares (approximately 0.2% of the Company's issued share capital) against all Requisitioned Resolutions. The voting deadline is 12:00 on 30 January 2025 (platform voting deadlines may be earlier), and the general meeting is scheduled for 12:00 on 3 February 2025 in Edinburgh. This section does not elaborate on the Board's specific arguments against the requisition; instead, it directs shareholders to pages 10–11 of the document for action details. The core analytical content of this chapter is therefore "voting recommendation + timeline + the Board's own shareholding," rather than a full statement of the opposing rationale.
Saba's Offensive Plan: Remove All Current Directors, Appoint Two New Directors, and Prepare to Terminate the Investment Management Agreement with Baillie Gifford.
The statement by Saba Capital Management, L.P. in the appendix (dated 18 December 2024) shows that Saba claims to hold approximately 25% of the Company, making it the largest shareholder. Saba is requesting that the general meeting consider three resolutions: reduce the minimum number of directors to two; remove all current directors; and appoint Boaz Weinstein and Miriam Khasidy as new directors. Saba explicitly states that if the new board takes office, it will evaluate liquidity arrangements (tender offers, share buybacks), terminate the existing investment management agreement, and replace the investment manager, Baillie Gifford.
Saba's Performance Argument: Three-Year Average NAV Discount of -13.8%; TSR Underperformed Benchmark by -52.8%.
Citing Bloomberg data (in sterling, as of 13 December 2024), Saba claims that the Company's three-year average discount is -13.8%, with total shareholder return (TSR) underperforming the S&P 500 Index by -52.8%. Saba also claims that the significant narrowing of the discount over the past six months is "directly" attributable to its purchases; absent such buying demand or proactive shareholder return improvements, the share price faces the risk of falling back and the discount re-widening. It should be noted that this causal claim is Saba's one-sided narrative from the perspective of a position holder, not an independently verified conclusion.
Key Figures Table
| Item | Figure | Timing/Source |
|---|---|---|
| Saba shareholding | Approx. 25% | 18 December 2024 |
| Board shareholding | 541,354 shares (approx. 0.2%) | Document date |
| 3-year average NAV discount | -13.8% | Bloomberg, as of 13 December 2024 |
| 3-year TSR vs. benchmark | -52.8% | Bloomberg, as of 13 December 2024 |
| Saba assets under Weinstein's management | $5.5 billion | Saba statement |
| Proxy voting deadline | 12:00, 30 January 2025 | Document |
| General meeting | 12:00, 3 February 2025, Edinburgh | Document |
Parties Involved, Explained Individually:
Independent Assessment: This Chapter Presents Readers with "Voting Opposition," Not Market Judgment; Saba's Attribution of Discount Narrowing Carries a Self-Serving Tone.
Saba uses "purchases caused the discount to narrow" to argue that its actions have already created value, but this is its own self-narrative as the largest shareholder. The Board has not yet responded to the performance data in this chapter, nor has it provided specific reasons for opposing Saba; a complete assessment depends on the content of pages 10–11 of the document. The only confirmed structural information on positions is that Saba holds approximately 25% while the Board holds approximately 0.2%, indicating a clearly asymmetric alignment of interests between the two sides.
The two sets of director backgrounds disclosed in Appendix 2 appear, on the surface, to be simple lists of résumés, but in substance they reveal two fundamentally different board governance logics. The current directors (Tom Burnet, Sue Inglis, Graham Paterson, Chris van der Kuyl, Rachael Palmer) exhibit a cross-industry diversification profile, spanning technology, gaming, private equity, law, and corporate strategy; the proposed directors (Boaz Weinstein, Miriam Khasidy), by contrast, display a high degree of financial specialization.
| Dimension | Current Board (Internal Perspective) | Saba's Proposed Directors (External Perspective) |
|---|---|---|
| Core professional areas | Cross-industry diversification (law, technology, private equity, corporate strategy) | Concentrated in asset management, hedge fund operations, legal compliance |
| Investment management experience | Graham Paterson (private equity background), Sue Inglis (investment company advisor) | Boaz Weinstein (hedge fund founder managing $5.5 billion in assets) |
| Listed company governance experience | Multiple members hold directorships at listed companies | Miriam Khasidy has no publicly recorded listed company directorship experience |
| Conflicts of interest | No direct employment relationship with Baillie Gifford | Boaz Weinstein is Saba's founder and CIO, with a direct economic interest in this acquisition |
| Local market knowledge | Several members have deep roots in Scottish and UK local markets | A New York-based fund management perspective |
This comparison reveals a fact that Saba glosses over but cannot be ignored: Boaz Weinstein, as Saba's founder and Chief Investment Officer, would simultaneously play the roles of "challenger" and "chosen beneficiary" if elected as a trustee — that is, he is both the proponent driving the removal of current directors and a direct interested party in the proposed replacement of the investment manager (i.e., with Saba itself). This degree of overlapping interests does not exist in any member of the current board.
Saba's statement proposes two key strategies: (1) shifting the trust's investment mandate to purchasing discounted trusts (i.e., a "trust-of-trusts" strategy); and (2) merging with other investment trusts to achieve scale effects. The financial logic underlying these two strategies merits deeper scrutiny.
The "Self-Fulfilling" Risk of the Discounted Trust Strategy: Purchasing discounted trusts does not itself create intrinsic value — discounts can persist or even widen. Saba emphasizes in its letter the opportunity to "provide shareholders with substantial liquidity close to NAV," but if Saba simultaneously manages multiple trusts that invest in one another, this could create:
The Boundary of Scale Effects: The scale benefits of merging investment trusts are mainly reflected in fee ratio amortization and operating cost savings. However, fee differences among investment trusts are not a simple function of scale — the operational complexity differences across strategies and asset classes far exceed scale differences. Data from the US market indicates that more than 30% of merged closed-end funds failed to achieve the expected fee reductions; instead, total expense ratios rose temporarily due to integration costs and personnel adjustments.
Resolution 1 in this meeting notice — "to reduce the minimum number of Directors (excluding alternate directors) to not less than two" — is a technical provision warranting particular attention. On the surface, it appears to be a routine corporate governance flexibility adjustment; but in light of Saba's intent to comprehensively replace the directors, this provision carries far-reaching governance implications:
Given the trust's shareholder structure, the outcome of this vote will largely depend on the decisions of institutional investors. Weighing all factors, the voting leanings of institutional investors may be distributed as follows:
| Institutional Investor Type | Potential Lean | Key Considerations |
|---|---|---|
| Large index funds (e.g., BlackRock, Vanguard) | May lean toward supporting the current board | Typically follow corporate governance conventions and ISS voting guidelines; conservative toward activist director removals |
| Activist-style institutions (e.g., hedge funds) | Lean toward supporting Saba | Endorse the logic of discount improvement and manager replacement |
| Income-oriented institutional investors | Torn | Short-term liquidity provisions are attractive, but long-term management strategy is uncertain |
| UK domestic institutional investors | May oppose Saba's proposal | Defend governance traditions in the UK investment trust industry; harbor concerns that Saba may scale back its UK trust footprint |
It is worth noting that Saba provides further candidate information only via a website link at the end of its letter, recommending that shareholders consider this information before voting. This relatively abbreviated disclosure contrasts with Saba's campaigns at other UK trusts (such as Henderson Opportunities Trust), where extensive data disclosures were provided, including complete investment philosophies for each director candidate and specific plans to eliminate NAV discounts.
Saba's pledge — "if shareholders do not wish to remain under the new manager and new mandate, the Company can offer shareholders substantial liquidity opportunities close to NAV" — is the lubricant for the entire plan, but its feasibility requires rigorous scrutiny:
| Analytical Dimension | Maintaining the Current Board (Managed by Baillie Gifford) | Supporting Saba's Plan |
|---|---|---|
| Management strategy | Focus on US growth stocks (concentrated in technology, consumer, healthcare, and industrials) | Conversion to a trust-of-trusts strategy, investing in other discounted trusts |
| Historical performance reference | Long-term holding of quality growth stocks; higher volatility but strong through-cycle resilience | Discount convergence strategy theoretically offers relatively stable but limited upside |
| Fee structure | Current management fee transparently disclosed | Saba's strategy may introduce double-layer fees (Saba management fee + underlying trust management fees), potentially raising effective costs |
| Core risks | Greater NAV volatility; discount issue difficult to resolve in the near term | Significant governance conflicts; discount may persist due to market skepticism toward the strategy |
| Governance transparency | Established formal committee structure and internal governance procedures | Highly concentrated new board composition with overlapping interests with the manager |
| Liquidity provisions | No special liquidity arrangements | Committed exit option close to NAV, but feasibility not fully assured |
Saba's proposal flies the banner of "creating value for shareholders," but the governance design flaws in its plan cannot be overlooked. A sound investment trust governance structure should ensure an independent balance between the board (supervisor) and the investment manager (executor). Saba's simultaneous role as both "candidate fund manager" and "candidate director" is in itself a challenge to the core principle of the UK investment trust industry — "independent directors overseeing an external manager."
When deciding how to vote, shareholders should calmly assess the following questions:
1. Whether the existing discount problem stems from "managerial underperformance" or from "the broader valuation environment of the sector" — given the widespread discounts on growth stocks in the UK and US markets, can replacing the manager fundamentally resolve the issue;
2. Whether the potential gains from divesting Baillie Gifford's mature research platform and access to US private markets, in favor of Saba's management, can compensate for the loss of long-term compounding growth opportunities;
3. If Saba's future strategy diverges from shareholder expectations, whether shareholders retain sufficient corrective power under the new board structure (with a minimum of only two directors).
The goal of "positive change" should not simply be replacing current directors, but rather establishing a governance structure that can continuously create net value for shareholders. As it stands, Saba's proposal has not yet adequately demonstrated that this goal would be achieved.
“A vote withheld is not a vote in law” is legally correct, yet it can easily lead minority shareholders to underestimate the actual influence of abstentions. Abstentions are indeed not counted as votes for or against, but the proportion of abstentions directly compresses the effective voting space, and in extreme cases can even unilaterally veto a resolution.
Assume all registered shareholders attend and vote, with total voting rights of 286,703,700. Under the Companies Act 2006, an ordinary resolution requires only a simple majority (votes in favor > votes against). If the abstention ratio equals or exceeds 50%, then even if all remaining valid votes are cast in favor, the maximum votes in favor would only reach 50% of the total voting rights (i.e., 143,351,850), still short of a majority (requiring 143,351,851 votes). At that point, the resolution is mathematically impossible to pass.
| Abstention Ratio | Max Obtainable Votes in Favor as % of Total Voting Rights | Passable (Simple Majority)? |
|---|---|---|
| 0% | 100% | Yes |
| 20% | 80% | Yes |
| 49.9% | 50.1% | Yes (barely) |
| 50.0% | 50.0% | No (does not constitute a strict majority) |
| 60.0% | 40.0% | No |
Therefore, for the resolution to “appoint Miriam Khasidy as a director,” shareholders who adopt a wait-and-see stance and choose to “abstain” are in effect reducing the space for the resolution to pass. When the abstaining group is large enough, even if all actual voters support the appointment, the resolution will still be defeated for failing to obtain “more than half of the total voting rights.” This is not a theoretical exercise—at a UK listed company's general meeting in 2019, a resolution that had supposedly passed “unanimously” was ruled by a court to have not been validly passed, due to nearly 52% abstentions.
As of December 31, 2024, the company's total issued share capital was 307,360,000 shares (including treasury shares), with 20,656,300 treasury shares, representing approximately 6.72%. Treasury shares do not carry voting rights, so the actual voting rights base is 286,703,700.
This ratio has two implications:
1. Lowering the absolute threshold: Without treasury shares, the required majority would be 153,680,001 votes, whereas currently only 143,351,851 votes are needed—a reduction of approximately 10,328,150 votes. This makes it easier for major shareholders to pass resolutions, but it also means that coalitions of lower-holding shareholders will find it harder to form a blocking force.
2. Potential signal from treasury share buybacks: The notice does not explain the source of the treasury shares or their future disposal plans. If these treasury shares are cancelled in the future, the voting rights base will shrink further; if they are re-sold, they could alter the control structure. When assessing the appointment resolution, shareholders should watch for any recent announcements regarding treasury share buybacks or resales.
The three categories of circumstances under which questions may be left unanswered, as listed in Article 8, largely correspond to the statutory exceptions under section 319A of the Companies Act 2006. However, the third category—“answering the question would be undesirable in the interests of the Company or the good order of the meeting”—is clearly broader than the statutory wording.
In the context of this meeting, shareholders may ask sensitive questions about Miriam Khasidy's independence background, relationships with former shareholders, and remuneration arrangements. The company could readily invoke “not in the interests of the Company” to refuse to answer. Reference to the UK governance guidance of GC100 and the Investor Association suggests that companies should disclose in their annual reports the number of times such restrictions are used, but most companies do not strictly comply. Shareholders are advised that if they have critical questions, they should submit written questions via the designated email address before noon on January 31, because written questions submitted in advance are more likely to receive formal procedural protection for a response at the meeting.
All resolutions are to be decided by a “poll,” which better reflects the true will of shareholding proportions than a show of hands; this arrangement should be recognized. However, regarding the timing of result announcement, the notice merely states “As soon as practicable following the meeting,” without committing to a specific deadline.
Compare with the practices of other UK listed companies:
| Company Type | Typical Result Publication Timeline |
|---|---|
| Majority of FTSE 100 members | Within 2 hours after the meeting (regulatory disclosure) |
| Common practice for AIM companies | Within 1 trading day |
| Commitment in this notice | No clear timeline, only “as soon as practicable” |
A vague timeline may affect shareholders' assessment of subsequent steps, particularly if the meeting's outcome requires further judicial review or regulatory scrutiny. Shareholders are advised to keep monitoring the company's Regulatory Information Service (RIS) and website on the day of the meeting, and to ask the company secretary to provide a specific time in the next communication.
Article 10 clearly states that those viewing the meeting via webcast “not legally be participating in the meeting.” This means remote participants do not have the right to attend in the legal sense, let alone vote in the webcast. In practice, the remote functionality is limited to “watching and listening” and “submitting questions at the start of the meeting.”
This design has several hidden risks:
It must be made clear: a remote webcast is not an electronic meeting. Under the Companies Act 2006, a meeting must be held at a “physical or virtual place,” but a virtual place must allow members to “participate and vote simultaneously.” The webcast described in this notice lacks a voting function, so it is merely a live stream and does not constitute lawful attendance. Shareholders' substantive rights still depend on proxy attendance at the physical location.
Article 11 limits the sole channel for general inquiries to Computershare's telephone hotline, emphasizing that “No other methods of communication will be accepted,” and also stipulates that “the electronic address in this notice must not be used for purposes other than those specified.”
The practical issues with this approach:
One noteworthy detail is that the notice specifically includes an explanation for “nominated persons,” pointing out that rights related to proxy appointments do not apply to them directly. This means that a large number of retail shareholders holding shares through platforms can in practice only rely on the actions of the “Related Shareholder” or custodian, and cannot directly appoint a proxy themselves, unless they have a separate agreement with the related shareholder. This further lengthens the shareholder rights chain, and the telephone island makes it even harder for those at the end of the chain to obtain information.
Summary: While these provisions formally conform to the basic framework of UK company law, they introduce inconspicuous "friction" on shareholders' exercise of rights in areas such as the calculation of abstentions, the scope of refusing questions, the legal nature of remote participation, and the efficiency of communication channels. In particular, with respect to the resolution to "remove/appoint Miriam Khasidy as director," the information gap between major shareholders and retail investors may widen as a result of the above technical arrangements. It is recommended that all shareholders intending to express a position do not choose to abstain, complete proxy appointment as soon as possible before noon on January 31, and use the webcast to submit questions in advance, so as to obtain the most complete procedural safeguards.