Once again, investment trust Baillie Gifford US Growth (LON:USA) is squaring up to Boaz Weinstein’s Saba Capital. At the annual general meeting (AGM) on 23 October, the activist hedge fund will attempt to replace the trust’s board for the third time.
Baillie Gifford US Growth is a unique fund which combines the best private and public US growth companies. Managed by Gary Robinson and Kirsty Gibson, the trust invests in exciting names like Nvidia (NASDAQ:NVDA), Anthropic, OpenAI and Databricks.
The fund hit a rough patch in 2021 and 2022 when a sell-off in long-duration growth companies exposed weaknesses in its approach. However, the trust has performed well more recently, delivering a one-year share price total return of 37.6%.
And its unique strategy would be at risk should 29% shareholder Saba wrestle control. Other hedge funds are thought to be supportive of Saba. This means every vote counts and retail investors and wealth managers will need to turn out in force if Saba is to be thwarted.
The AGM is on 23 October at 1pm. However, investors should note that voting deadlines on platforms will be much sooner.
Cast your vote
Richard Stone, CEO of the Association of Investment Companies (AIC), warns investors: ‘Saba Capital and the appointed directors have not explained their plans for the future of this investment trust. Saba has rejected a generous exit offer from the existing board so it’s likely that Saba wants to take control of this investment trust and manage it.’
Stone says: ‘It’s vital that all shareholders make their voices heard at this AGM if they want the investment trust to continue with its current mandate and manager.’
What is Saba proposing?
Saba has proposed three directors. And if elected, it will urge them to offer shareholders a 100% cash exit at or near net asset value (NAV).
Beyond this conditional and non-binding proposal, Saba has provided no road map or clarity for Baillie Gifford US Growth’s future manager, investment strategy or governance.
| AIC North America Sector | Discount/Premium to NAV | 1-yr share price total return (%) | 10-yr share price total return (%) |
| Blackrock American Income | 0.5% | +42.1 | +200.8 |
| Baillie Gifford US Growth | -5.4% | +37.6 | n/a |
| North American Income | -3% | +26.4 | +183.9 |
| Canadian General Investments | -40.6% | +21.1 | +287.4 |
| JPMorgan American | -3.6% | +13.8 | +313 |
| Pershing Square | -36.6% | -22.1 | n/a |
Source: The AIC, Morningstar
Basically, shareholders are being asked to give Saba’s nominees potential control of the board before knowing what would follow. According to Investec, they are effectively being asked to ‘vote first, then find out later what you’ve voted for’.
Support the board, or suffer the consequences
Accordingly, Investec strongly recommends that investors support the incumbent board, manager and strategy.
‘The choice is clear: preserve USA’s distinctive proposition or give Saba influence over its future without knowing what follows,’ argues Investec.
‘The threat is not merely disruption; it is the risk that the strategy underpinning USA’s long-term value creation could be dismantled just as the recovery gathers pace.’
On the road to recovery
In addition, Investec stresses that Baillie Gifford US Growth has delivered ‘outstanding’ long term performance.
In fact, the trust is ranked third out of 124 UK-based open and closed-ended US equity funds from IPO to 21 September 2026. ‘This has been achieved despite the elevated volatility and drawdowns inherent in its exceptional growth strategy’, notes the broker.
Baillie Gifford US Growth’s long-run performance track record is strong, despite a blip in 2021 and 2022. And it would be a real shame to see Saba take control of the trust and unwind a winning growth strategy.
Saba is asking shareholders to give its nominees potential board control on the strength of a conditional, non-binding liquidity proposal. Furthermore, the activist has failed to provide a road map for the future manager, strategy or governance of USA.
Meanwhile Robinson and Gibson are sticking to their tried-and-tested approach focused on exceptional growth companies. At the same time, they are making use of the structural advantages of investment trusts.
These advantages include the ability to take a genuinely long-term view and access less liquid private companies. Baillie Gifford US Growth offers exposure to exciting private holdings ranging from Anthropic and Stripe to Databricks, Zipline and Faire Wholesale.
