New York hedge fund Sessa Capital has increased its stake in Baillie Gifford US Growth Trust to 7.7% ahead of the a pivotal leadership vote later this month.
Sessa is believed to have teamed up with activist investor Saba Capital Management, which is making its third attempt to replace the board with its own directors on 23 October.
Saba has also increased its stake in the £1.1bn trust to 29.9%, just under the 30% threshold at which it would be required to make a mandatory takeover bid under the UK Takeover Code.
Chair Tom Burnet said that outvoting Saba’s significant stake may now be more difficult given Sessa’s recent appearance on the share register.
The hedge fund increased its holding from the 5.1% disclosed in September. If it votes with Saba, their combined holding would reach 37.6%, but Sessa has not yet stated its voting intentions.
Emma Bird, head of investment trusts research at Winterflood, said: “Saba and Sessa own a combined 37.6% of Baillie Gifford US Growth’s voting rights.
“As the resolutions requisitioned by Saba to appoint its three nominated directors to the Board are constructed as ordinary resolutions, they require just 50% of shares voted at the AGM to be in favour in order to pass.
“Therefore, assuming Saba and Sessa exercise all of their voting rights entirely in favour of Saba’s proposals, the AGM would need to see at least 37.6% of other shareholders vote their shares entirely against the resolutions, in order to offset the votes of the US hedge funds.”
Burnet recently told Citwire: “The tail is wagging the dog at the moment. We have a minority shareholder who is basically driving a pace which is against the interests of the rest of our shareholders in what is a top-decile performing trust with a fantastic future ahead of it. I find that really sad and frustrating.”
Bank of America sold its 6.2% stake in the trust over the past week.
Baillie Gifford US Growth Trust is preparing to fight a requisition notice filed by Saba in August, which calls for shareholders to appoint three Saba-nominated directors, Jason Chen, Thomas H McGlade and James Waterlow, to the board. The AGM will be held at the offices of Stephenson Harwood on 23 October.
The trust issued a circular setting out what is at stake if shareholders fail to vote and Saba’s requisition passes, resulting in the election of three individuals “linked with or employed by Saba“. It said this would “severely compromise” the board’s independence.
During the financial year to 31 May 2026, the trust’s share price and net asset value (NAV, after deducting borrowings at fair value) returned 44.5% and 31% respectively, exceeding the 29.8% total return of its benchmark, the S&P 500 Index.
#Sessa #holds #balance #Baillie #Gifford #power #struggle #Daily #Business