Latest news with #EdinburghWorldwide
The Herald Scotland
13 hours ago
- Business
- The Herald Scotland
Edinburgh investment trust 'significant costs' from bid to oust board
Edinburgh Worldwide revealed on February 14 that it had become the seventh investment trust in the UK, and the third in Scotland, to defeat a campaign by Saba to oust its board. The investment trust, which is run from Edinburgh by fund management house Baillie Gifford, said then that investors holding 63.8% of the shares that were voted opposed all of Saba's resolutions. Announcing results for the six months to April 30 today, Edinburgh Worldwide said: 'Shareholders will…be aware that during the period on which we are reporting, the company was requisitioned and was required, under the terms of the requisition, to hold a general meeting at which various resolutions were put to shareholders. 'Shareholders voted to support the existing mandate and the board at the requisitioned general meeting but it should be noted that significant costs were incurred as a consequence of this requisition. This is reported in our income statement alongside the costs associated with other shareholder circulars that have been approved during this period.' The results show Edinburgh Worldwide incurred 'other administrative expenses' of £2.615 million in the six months to April 30, up from £601,000 in its previous first half. Read more Edinburgh Worldwide states: 'The other administrative expenses have increased due to increased professional fees incurred in the reduction of the share premium account, the change in investment policy and the requisitioning of a general meeting by Saba Capital.' The investment trust reported that, over the six-month period on a total return basis, its net asset value per share fell by 2.9% while the comparative index, the S&P Global Small Cap Index, was down 7.2%. It said: 'After a strong second half to the financial year [to] 31 October 2024 where the net asset value per share total return was +6.0% and the share price total return was +11.0%, performance over this reporting period has been impacted by heightened volatility in global markets following a significant sell-off in April 2025, the result of President Trump's 'Liberation Day' announcement of US tariffs and China's retaliatory measures.' Edinburgh Worldwide added: 'In November 2024, the board and investment manager collaborated to introduce meaningful improvements to portfolio construction and execution, focusing on fewer holdings and stricter measures to address underperforming investments. 'The portfolio has been reshaped to include more profitable, cash-generating companies and greater sectoral diversification. This has resulted in a more focused and better-balanced portfolio with stronger sales and earnings growth prospects to position the company for improved future performance.' The trust noted that, following the announcement in November 2024 of the board's commitment to return up to £130m of capital, it had 'made the necessary practical changes to the company's distributable reserves, including the reduction of the company's share premium account, to permit this'. It added: 'In addition, the board progressed plans to offer all shareholders a meaningful capital return through a tender offer, on a basis that would not unduly affect the resultant balance of the company's portfolio. However, following discussions with significant shareholders, it is unlikely that the desired level of support will be received and so the board has decided to pause the process, for the present, to avoid incurring unnecessary costs. Edinburgh Worldwide noted its board 'continues to prioritise share buybacks as the primary capital return mechanism.' It said: 'Additionally, the board has been considering an evolved approach to capital allocation in the future. The board recognises that, notwithstanding the company's long-term investment horizon, shareholders should benefit tangibly when material realisations are achieved from the company's private investments. We are therefore developing a model of making partial returns of capital from the proceeds from such events and will share further details in due course.' Edinburgh Worldwide said it continued to 'act on feedback from…shareholders'. It added: 'Recent engagement has reaffirmed broad support for the company's mandate and investment strategy and the board will continue to work diligently with the investment manager to advance our plan to ensure that the company delivers returns commensurate with shareholder expectations and reflective of the underlying potential of the portfolio companies which are looking to shape the future through innovation.'
Telegraph
28-02-2025
- Business
- Telegraph
‘I don't care if you love or hate Elon Musk – he's the entrepreneur of our generation'
Fund Of The Week quizzes fund managers about how they're investing your money. If you'd like to suggest which funds you want to hear about and pitch your questions to the managers, sign up to the Investor Newsletter here for more details. Britain's sleepy and discounted investment trust industry received an unwelcome wake-up call in December when Saba Capital Management, the American hedge fund, forced general meetings at seven investment trusts after building significant stakes. Their intention was to take over the trusts after ousting the boards and managers. Edinburgh Worldwide, which invests in public and private growth companies, featured among Saba's initial seven targets. On Valentine's Day, close to 64pc of votes cast by its shareholders rejected Saba's proposals, an outcome that marked the hedge fund's seventh straight defeat. Douglas Brodie, Edinburgh Worldwide's manager describes these votes as a 'test of shareholder democracy'. Nevertheless, he acknowledges the challenges associated with having a large shareholder who is actively disengaged with the investment strategy and not aligned with other shareholders. Mr Brodie, a backer of SpaceX, also tells Telegraph Money why Elon Musk's new role in the administration of Donald Trump, the American president, is not a source of concern. Shares in Edinburgh Worldwide are up by 22pc over the past 12 months, which compares to the average 11pc gain achieved by rival global smaller companies trusts. However, over five years, the trust's share price has fallen 12pc, while its competitors have risen by 25pc. Edinburgh Worldwide, which is also managed by Svetlana Viteva and Luke Ward, trades at a 5pc discount to its assets. How do you invest? We have long been intrigued by the role of technology and the scientific drivers of change. With this in mind, we seek to find entrepreneurial, innovative companies when they are young, investing when they are below the radar of mainstream global investors. We try to identify these special businesses and hold them as they grow and thrive. How are you feeling after the recent shareholder vote to fend off Saba? I think the whole process for us and the other trusts was a real test of shareholder democracy. It was pleasing to see the results and engagement among the shareholder base. We thought it was a hugely important topic for shareholders to engage with because the proposition that Saba put before them was a radical change in the investment proposition that came with a lot of conflicts and challenges, and a clear change of remit. At Edinburgh Worldwide, we try to find the most interesting, relevant, long-term businesses that are trying to drive change and innovate. By comparison, the tentative narrative Saba put out was about building a strategy around arbitrage by trading investment trust discounts. It is the classic contradiction of long-term investment versus trading. Ordinarily, those worlds don't meet that often, but they did in this case. It is encouraging to see shareholders who bought into our long-term investment strategy backing that strategy. Do you suspect there could be further proposals from Saba? If so, what shape could they take? I have no insight on that. However, I think it is odd that the largest shareholder in Edinburgh Worldwide is actively disengaged with the strategy. We have offered to meet Saba but they show no interest in meeting. I don't know what their strategy is – to some extent I don't think they know. I'm not being overly critical here, but they seem to be building it as they go. Given Saba has a 25pc stake in the trust, are you and the board thinking about how they will offload that? That is more of a question for the board than for me. The board is willing to return up to £130m to shareholders during the course of the year, I think it is front and centre for them. We have a shareholder who is not aligned with the strategy or the other shareholders. The vote in favour of Edinburgh Worldwide's strategy, as was the case for the other trusts, is telling in that regard. Why did Edinburgh Worldwide's performance struggle between 2021 and 2024? We have come through a difficult period for a lot of growth and smaller company investors. If you consider our particular slant on smaller company investing, where in some cases we back high-potential but unproven businesses, it has been very challenging. These are businesses that are all about the future, and all of a sudden, the stock market's lens condensed to the here and now. Market volatility was also a lot higher than we would have liked or expected. Performance clearly disappointed over that period. It gave us an opportunity to pause and think about the long-term positioning of the fund. We have a spectrum of company maturities in the portfolio – some are very early high potential businesses which have a lot to prove, some are proving themselves and delivering, while others are performing at scale and beginning to dominate their markets. We are now more conscious about the spread of companies in the portfolio. Also, we have better rules and discipline to avoid country or industry skews that may have crept in. We have been through a process of kicking the tyres and have deployed new processes. How do you view Mr Musk's role in President Trump's administration? We have invested in Elon-backed companies since 2013. I believe he is the entrepreneur of his generation. Throughout that time, he has worn multiple hats and has a phenomenal bandwidth for doing that. So the political aspect to Mr Musk's new role isn't a concern? I don't ask the management teams of the companies I invest in to fill out a political questionnaire so I can form views around their political opinions. I am backing them to build businesses. Elon has a track record that is second to none of doing that. What is your typical success rate picking stocks? If you look at our long-term returns, about 20pc of our names deliver the bulk. Typically, you also have a pool of companies that wash their face and do okay and a pool of companies that underperform relative to your hypothesis. Some of the successful companies can become quite big in the context of the fund, so it is a strategy that benefits from 'investment asymmetry'. We get into these businesses on the ground floor, when they have huge runways for growth, but they then have to execute their plans well. Axon Enterprises, which makes taser devices and body-worn cameras, is a good example. It has been a phenomenal investment for us. The management team has executed brilliantly and it continues to redefine its end-markets. What has been your best investment? SpaceX is up in the order of more than 600pc over the past five years. It is rare you come across a company that has redefined what is possible in its industry – the opportunities are exploding in front of them. If you think about how the world has evolved over the last few years, people put extra importance on geopolitical tension points. You probably have to view SpaceX and Starlink (SpaceX's satellite network and telecommunications business) as the most geopolitically important assets out there if they have the advantage we think they do, versus others for getting objects into orbit and controlling low earth orbit geostationary satellites. When do you think SpaceX will go public? Elon and SpaceX have said Starlink is cashflow positive. Most companies list when they need access to capital, but it isn't obvious that SpaceX needs capital. Elon and the board will list the business when they believe it is a natural point to do that. What has been your worst investment? Online supermarket, Ocado, is down roughly 70pc over five years. If you go back to the start of that five-year period, the industry was beginning to properly embrace e-commerce and scalable ways of doing that. Ocado did very well in that initial period and was a Covid beneficiary, signing multiple partnership deals around the world. Demand is still very much there at the consumer level, but from Ocado's perspective, it is about tailoring their offering for individual partners whose starting points and requirements are different. The lesson we learned is that Ocado isn't a 'plug and play' solution for everyone. The UK is a very interesting test case because we think the returns are there, but you have to build to fit the opportunity. And the opportunity is different in every territory you go to.
Telegraph
14-02-2025
- Business
- Telegraph
Finally, Britain has stood up for its stock market
Against all the odds, Boaz Weinstein is likely to lose all seven of the votes he demanded from the investment trust world. He has already lost six, and the board of Edinburgh Worldwide will probably confirm a clean sweep this afternoon. The man himself is even less optimistic, declaring 'we are going to lose for sure' earlier this week at what has to be one of the most impressive student-organised conferences out there (props to the London School of Economics Alternative Investments Conference for quite the line-up). Not a single person I spoke to in the run-up to these votes believed a 7-0 record was possible – even the most hopeful investment trust stalwarts thought four wins would be a turn up for the books. Despite retail shareholders' track record for not showing up (less than a fifth cast their ballot in a vote on the infamous Woodford compensation scheme), an average 74.9pc of voting rights were executed. Of course, this includes Mr Weinstein's hedge fund Saba's average 25.1pc holding and other institutional votes, but the turnout is to be applauded.
