Herald Investment Trust (LSE:HRI) has received a boost in its defence against an audacious corporate raid by US hedge fund Saba Capital after it got the backing of institutional voting agency ISS.
“ISS states that Saba Capital has not presented a compelling case for change, let alone a case for a majority position on the Board and a strategy overhaul,” it said.
Tech specialist Herald is the first of seven UK investment trusts facing a general meeting called by Saba to replace the board with its own supporters.
Herald added that between August 2009 and June 2004, Herald had produced an annual return of 14.1% compared to Saba’s 4.8% and again urged its shareholders to reject the proposals.
Saba’s plans meanwhile have created uproar among the investment trust community with calls for financial regulator the FCA to intervene and block the proposals for the seven trusts.
Saba has already built up stakes between 19% and 29% in the trusts and is the largest shareholder in each.
Only a majority of votes cast in favour are required for the hedge fund would take over management of the trusts.
Former pensions minister Baroness Altman said the FCA “absolutely” should intervene
“The regulator should be insisting that all retail investors have proper time and information to recognise the massive risks to their capital.”
Herald Investment Trust (LSE:HRI)’s Meeting is scheduled for 22 January with others in February.
As well as Herald, the trusts involved are Keystone Positive, CQS Natural Resources, Henderson Opportunities, Edinburgh Worldwide, Baillie Gifford US Growth and European Smaller Cos.