Have you ever watched a fund you believed in slowly bleed value for half a decade while the board just… sat there? That gut-wrenching feeling is exactly what some shareholders of a certain tech-focused investment trust are living through right now.
And one very prominent New York hedge fund manager has finally had enough.
The Activist Strike That Shocked the City
On an otherwise quiet Thursday morning just before American Thanksgiving, Boaz Weinstein fired off a letter that landed like a thunderclap across the London investment trust world. The founder of Saba Capital, now holding roughly 30% of Edinburgh Worldwide Investment Trust (EWIT), didn’t ask for one board seat or two. He demanded the complete removal of every single director and their replacement with an entirely new, independent slate.
This isn’t a polite suggestion. It’s a declaration of war.
Five Years of Pain in Cold, Hard Numbers
Let’s not sugar-coat it: the performance has been grim. Over the past five years the trust’s net asset value dropped more than 30%. The share price? Down 35%. Meanwhile the humble FTSE All-Share – hardly a rocket ship itself – climbed over 71% in the same period.
Do the math and you’re looking at a 100 percentage point-plus lag to a basic domestic benchmark. That’s not just underperforming. That’s value destruction on a scale rarely seen in the closed-end fund universe.
“The magnitude of this value destruction is unprecedented among peer U.K. equity investment trusts over this period.”
– Excerpt from the Saba Capital letter
Weinstein didn’t mince words. He called the board’s track record an “objective and categorical failure” and accused them of “prolonged inertia.” Ouch.
What Exactly Is Edinburgh Worldwide?
For those less familiar with the UK trust landscape, Edinburgh Worldwide is run by the famous Scottish manager Baillie Gifford and specializes in smaller, disruptive growth companies – both public and private. Think cutting-edge biotech, frontier tech, anything with explosive potential.
The crown jewel in the portfolio? A hefty 8.4% stake in Elon Musk’s SpaceX – one of the largest unlisted holdings any retail investor can access through a London-listed vehicle. On paper it sounds thrilling. In practice the discount to NAV has ballooned while private valuations have proven sticky downward in a higher-rate environment.
- Total assets under management: around £847 million
- Private company exposure: significant (SpaceX, ByteDance, others)
- Discount to NAV: stubbornly wide for years
- Management fee: 0.75% (not cheap when performance hurts)
This Isn’t Weinstein’s First Rodeo Here
Rewind to last year. Saba already tried to place representatives on the board and push for change. Shareholders narrowly rejected the move. Many probably thought that was the end of it.
Clearly they underestimated Boaz Weinstein.
Instead of walking away, Saba kept buying. From a mid-teens stake they marched straight to 30% – effectively making them the largest shareholder by a country mile. That kind of firepower changes the conversation completely.
Why the UK Investment Trust Sector Is Ripe for Activists Right Now
Here’s the bigger picture that makes this fight so fascinating. British investment trusts have been trading at some of the widest discounts in decades – sometimes 30%, 40%, even 50% below the value of their assets.
In plain English: you can buy £1 of assets for as little as 60p in some cases. For an activist who believes they can force change – whether through board refresh, managed wind-down, share buybacks, or full liquidation – that’s pure arbitrage gold.
Weinstein himself said recently there’s “a storm brewing” in the sector. After successfully campaigning at multiple trusts already, he’s become the name boards fear most.
What Happens Next – The Battle Plan
Saba has formally requisitioned a general meeting. At that meeting shareholders will vote on removing the entire current board and installing a new one composed of “qualified, independent directors committed to delivering long-term value.”
Translation: a board that will finally address the discount, possibly through aggressive buybacks, a strategic review, or even returning capital to shareholders.
In my experience these votes can swing either way. Retail investors scattered across platforms often vote with the board by default. But when an activist owns 30% and the performance numbers are this ugly, institutions start listening.
The SpaceX Conundrum
One of the trickiest parts of the portfolio is that big SpaceX holding. Private stakes are illiquid and hard to value in real time. When interest rates shot higher, growth-sensitive private valuations took a hit across the industry – yet many funds were slow to mark them down aggressively.
Shareholders are left wondering: is the NAV realistic? Could a new board force more transparent, frequent valuations? These are fair questions when your shares trade at a permanent 30-40% discount partly because no one fully trusts the number printed on the page.
Is This Just the Beginning?
Honestly? Probably.
The UK investment trust structure has been around since Victorian times, but the combination of persistent wide discounts and a new generation of US-style activists has created a perfect pressure cooker. We’ve already seen successful campaigns, forced mergers, and trusts moving to liquidate or convert to open-end structures.
When a high-profile name like Weinstein plants his flag so aggressively, other managers take notice. Boards that have grown comfortable for decades suddenly realize the old playbook doesn’t work anymore.
What Should Investors Do?
If you own Edinburgh Worldwide or any wide-discount trust being circled by activists, pay attention. These situations can move fast. A successful campaign can narrow (or eliminate) the discount almost overnight – sometimes delivering 20-40% gains in weeks.
On the flip side, if the activist loses, the shares can gap down hard on disappointment. It’s high-stakes poker.
- Check your holding – do you even know you own it inside a platform?
- Read the upcoming circulars carefully
- Decide if you trust the current board to fix things on their own
- Watch the register for big institutions declaring support
I’ve followed enough of these battles to know one thing for certain: once an activist crosses 25-30%, the probability of meaningful change skyrockets. Boards can fight, but arithmetic eventually wins.
The Edinburgh Worldwide saga is just getting started. And if Weinstein prevails, it could be the precedent that finally forces the entire sector to modernize – whether incumbent directors like it or not.
Sometimes it takes an outsider with fire in his belly to remind an old industry that shareholders are supposed to come first.
Keep your eyes on this one. It matters far beyond a single Scottish trust.
