BREAKING: The Edinburgh Worldwide Investment Trust (LSE:EWI) is facing intense pressure as activist investor Boaz Weinstein, who leads Saba Capital, threatens to replace the trust’s entire board. This dramatic move comes as the trust’s share price has plummeted by 50% since February 2021, creating a turbulent environment for investors.
In a scathing open letter dated 27 November, Weinstein criticized the trust for its poor performance, stating it has underperformed its self-selected benchmark, the FTSE All-Share Index, by over 100 percentage points. This dismal track record has prompted Saba Capital, which owns approximately 30% of the trust’s shares, to demand immediate changes in leadership.
The Edinburgh Worldwide Investment Trust, managed by Baillie Gifford, is currently valued at £715 million. It targets high-risk, high-reward “disruptive growth companies,” aiming to capture transformational opportunities. However, long-term results have been disappointing, with the trust’s performance lagging behind its peers over the past three, five, and ten years.
Why This Matters NOW: The ongoing board conflict could create significant uncertainty for shareholders. Weinstein’s letter highlights the inadequate share buyback activities, which have exacerbated the discount to net asset value (NAV). Currently, shares trade at a 5.6% discount, compared to a peer group average of 10.9%.
In response, Edinburgh Worldwide’s chair, Jonathan Simpson-Dent, defended the trust’s strategy, arguing that the benchmark comparison is flawed and asserting that performance has recently improved. Simpson-Dent stated, “We would strongly reject any proposal to replace the entire Board and the ambiguity that would follow.”
Looking ahead, the trust has made strategic adjustments, appointing two new co-managers and narrowing its portfolio to focus on larger, more stable growth companies. This shift appears to be yielding results, with shares rising by 40% since mid-2024. Notably, top holdings now include SpaceX, Axon Enterprise, and Alnylam Pharmaceuticals.
For investors considering riskier bets, Edinburgh Worldwide is currently priced at 206p, providing an opportunity for those eager to capitalize on potential growth in sectors like space and biotech. However, the looming threat of board changes adds a layer of complexity to the investment landscape.
Shareholders and interested investors are urged to monitor these developments closely as the situation unfolds. Will the trust’s management team withstand this activist challenge, or will major changes reshape the trust’s future?
Stay tuned for updates on this evolving story, which could have significant implications for both the trust’s performance and investor sentiment in the UK equity market.
