Saba suffers double blow against Henderson & CQS trusts 

Shareholders in Henderson Opportunities and CQS Natural Resources Growth & Income have voted against activist investor Boaz Weinstein's bids to oust their boards.

(Update) Investors in Henderson Opportunities Trust (HOT ) and CQS Natural Resources Growth and Income (CYN ) have voted against US activist Saba Capital’s proposals to oust both boards and take control of the trusts. 

Following a general meeting this morning, CYN announced that shareholders voted around 59% to 41% against Saba’s proposals.  

These included removing five board members, including CYN’s chair Christopher Casey, and installing Saba portfolio manager Paul Kazarian and ETF specialist Marc Loughlin as directors instead. 

Following the vote result, Casey commented: ‘I am truly pleased to see such a good turnout from shareholders so that their views on the future of their investment have been heard.

‘The strong vote against Saba’s proposals speaks loud and clear – the majority of our shareholders have shown the confidence in the existing board and have voted to have them steer the company in the future.’

CYN’s board was keen to point out that 98.6% of votes cast by non-Saba shareholders were against the requisitioned resolutions.

Managed by Ian Francis, Keith Watson and Robert Crayfourd, CYN invests in miners, natural resources stocks, industrials and bonds.

Its shares are up 21.6% over the past 12 months, which compares to a gain of only 1.1% by the average trust in the AIC’s commodities and natural resources sector. Over three years, CYN’s shareholder total return is 27.6% versus the 5.7% sector average. It currently trades on a 10% discount to net asset value (NAV).

HOT rejects Saba

It follows a similar result at Henderson Opportunities’ general meeting shortly after noon, where a higher proportion of 65.4% of votes were against Saba’s proposals.  

Among those casting a vote, shareholders voted around 65% to 35% against a plan to ditch current chair Wendy Colquhoun and three other directors.

Meanwhile, the hedge fund’s proposals to install Saba portfolio manager Paul Kazarian and Simon Reeve, a US wealth management industry veteran, as directors were rejected by a similarly wide margin.

Around 10m votes, or 34%, of the votes cast, were in Saba’s favour. The vast majority of these came from the US hedge fund.

The board said Saba had accounted for 9.8m votes, representing 33.6% of the votes cast, which equates to 24.7% of the total voting rights. This is lower than Saba’s latest publicly disclosed stake of 29.1%. Citywire has approached Saba to explain the difference. 

Stripping out Saba, the board said only a further 284,248 votes, representing just under 1% of the votes cast, had voted in favour of the requisitioned resolutions.

Five down, two to go

These votes mark the fourth and fifth that Saba has lost so far, as part of its campaign against seven targets in the sector. European Smaller Companies’ (ESCT ) requisitioned general meeting will take place tomorrow while the ballot at Edinburgh Worldwide (EWI ) is scheduled for 14 February.

Shareholders have so far voted against Saba’s proposals to oust the boards of Herald (HRI ), Baillie Gifford US Growth (USA ) and Keystone Positive Change (KPC ).

That Saba lost both today’s votes too may be significant. Analysts had wondered whether HOT and CYN, as small trusts with significant retail shareholder bases, might be vulnerable.

However, Saba is widely expected to continue its campaign in some form.

Henderson Opportunities, which invests in UK equities, is managed by Janus Henderson’s James Henderson and Laura Foll. The trust’s shares are up 15.9% over the past 12 months, which compares to a 16.9% gain by the average manager in the AIC’s UK all companies sector.

Over the past three years it has disappointed with a 10.9% loss for shareholders, which compares to a 9.7% return for the sector average. It currently trades on a 2.8% discount to net asset value (NAV).

HOT’s alternative plan

News of Saba’s defeat comes after Henderson Opportunities put forward a ‘scheme of reconstruction’ on Monday. This gives shareholders the option to either roll over their investment at NAV into the open-ended Janus Henderson UK Equity Income & Growth fund, which is run by the same team, or to receive a full or partial cash exit at NAV.

The board was keen to point out that rolling over the investment into the open-ended fund would shield shareholders from triggering a potential taxable capital gain. Henderson Opportunities also noted that shareholders will not take a hit from the dealing costs that would be incurred if the entire portfolio is wound up.

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