Baillie Gifford US Growth urges shareholders to VOTE AGAINST Saba’s “self-serving and destructive changes”

Following the receipt of a requisition request from Saba Capital Management, L.P. (click here to see our original coverage of this) Baillie Gifford US Growth (USA) has published a notice for the requisitioned general meeting alongside a unanimous board recommendation to vote against all of the requisitioned resolutions, which USA describes as being proposals “to make substantial, self-serving and destructive changes to the Company” – by Matthew Read

 
Comments from Tom Burnet, non-executive chair of Baillie Gifford US Growth
“Since IPO in March 2018, the Company has delivered exactly what it promised: an investment trust through which its shareholders can access and benefit from some of the most exciting growth opportunities in both public and private US companies in a low-cost structure that can be held for the long-term.

“Accordingly, shareholders who invested at IPO in 2018 have nearly tripled their initial investment. Further, the growth outlook for our portfolio companies is extremely strong. Baillie Gifford’s global reputation provides it with preferential access to the US growth companies of tomorrow, so the future of this Company is bright.

“Saba wants to subvert all of this.

“Their proposals lack detail and if implemented, could destroy the Board’s independence, radically alter the investment strategy of the Company and prove highly disruptive to shareholder value.

“We urge all shareholders to make their voices heard and to vote against Saba’s self-serving and destructive proposals.”
 

Rationale for the board’s recommendation

 
USA’s board says that it is very concerned about the future of the trust and the potential value destruction for long-term investors if the proposals put forward by US hedge fund manager, Saba, are voted through. Those proposals involve Saba nominees replacing USA’s current independent board with a view to potentially appointing Saba itself as investment manager and changing the investment mandate.

USA’s board highlights that board independence is very important as the directors represent the interests of shareholders as a whole and not any particular shareholder that may have appointed them [QD comment: we fully agree with this – we think that it would be completely nonsensical for shareholders of all of the trusts requisitioned by Saba – including USA – to hand control to one dominant shareholder who can then act entirely in their own interests – we have been urging shareholders to get out and vote against this to protect their interests]. USA’s board therefore unanimously recommends that shareholders VOTE AGAINST ALL of the resolutions that Saba have proposed and urges all shareholders to vote their shares. It highlights that Saba is counting on other shareholders not voting their shares to give them the best chance of taking effective control of the company, adding that it is very important that shareholders vote on the requisitioned resolutions as the future of their investment depends on it.
 

Strong long-term performance

 
USA was launched in March 2018 to give all types of investors access to a long-term and liquid fund investing in the most innovative public and private companies in the US. USA’s board says that the trust is successfully delivering on its investment mandate, with strong long-term performance, and it provides shareholders with access to leading private companies of this generation, such as SpaceX, Databricks and Stripe, at low cost. It says that with a positive outlook, and a strong corporate governance culture provided by the current independent board, it unanimously recommends shareholders VOTE AGAINST ALL the requisitioned resolutions proposed by Saba.

USA’s board has consistently asked shareholders to judge performance over periods of at least five years or more. It highlights that:

Shareholders since the IPO in March 2018 have nearly tripled their initial investment, benefiting from a strong NAV total return of 183.9%, equating to an annualised return of 16.7%, in line with a truly exceptional period of performance by the S&P 500 Index that delivered an annualised total return of 16.9%.

Since the IPO and over the last five years, the company’s performance ranks it among the top 6% of all UK-listed investment companies and the top 14% of all US Equity open-ended funds and ETFs globally (more than 3,000 funds in total).

With a supportive business environment in the US, the company’s shorter-term performance is recovering strongly following the challenging market environment post-pandemic that impacted growth equity investors, and the outlook is positive, both at a macro and a portfolio level.

Over the 12 months to 31 December 2024, the NAV total return was 33.4%, ahead of the S&P 500 Index which returned 27.3% over the same period.

The company offers access to exceptional private US growth companies, like SpaceX, Databricks and Stripe, which are typically inaccessible to most investors.
Baillie Gifford’s preferential access to the US’s largest and most successful private companies makes it very well-placed to continue to find and invest in the next generation of exceptional private US growth companies.

The company maintains low ongoing charges, ranking as the second lowest among the seven investment companies in the AIC North America sector (the lowest does not invest in private companies).
The company has a strong corporate governance culture and its current board is independent, experienced and conflict-free, ensuring decisions are made in the best interests of shareholders as a whole.
 

USAs comments on “Saba’s self-serving requisition”

 
USA comments that Saba is seeking to replace the current independent board with two Saba-connected nominees and subsequently propose a new investment strategy and manager (which may be Saba). However, save for the three-year period that Saba focussed on in its statement, USA has materially outperformed all of Saba’s publicly available funds over recognised measurement periods. The ongoing charges of Saba’s publicly available funds are materially higher (c.2x or more) than the USA’s. The board adds that Saba’s proposals lack detail, with potential material conflicts of interest. We believe Saba’s interests are not aligned with those of long-term shareholders. It says that “EVERY VOTE WILL COUNT AND EACH VOTE IS IMPORTANT – SHAREHOLDERS SHOULD ENSURE THEY VOTE TO HAVE THEIR SAY IN THE FUTURE OF THEIR COMPANY”.
 
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