Saba defeated for third time at Baillie Gifford US Growth
Saba Capital suffered a third defeat in its campaign to overhaul Baillie Gifford US Growth Trust (USA), with shareholders rejecting all three of its board nominees at the trust’s AGM on 23 October. Despite Saba and fellow hedge fund Sessa Capital together holding approximately 37.6% of the trust’s voting rights, the resolutions were defeated by 52.8% to 47.2% on a turnout of more than 82%, with 99.2% of votes cast by independent shareholders supporting the incumbent board. The result represents another significant endorsement of Baillie Gifford’s public and private growth investment strategy, although the dispute is not necessarily over. Saba and Sessa successfully blocked special resolutions authorising share buybacks and the disapplication of pre-emption rights, potentially constraining the board’s capital management flexibility. The board intends to engage with both shareholders to seek a longer-term solution, highlighting the continuing tensions between activist demands for liquidity and the interests of long-term investors.
AI valuations under pressure as Anthropic prepares for landmark IPO
October brought a sharp correction in parts of the AI sector, as concerns over the scale of infrastructure spending, elevated valuations and the returns on substantial capital investment weighed on sentiment. Semiconductor stocks were particularly affected, while investors increasingly favoured less technology-dependent and more defensive sectors. The sell-off reinforced a broader shift in US equity-market leadership, with value stocks substantially outperforming growth stocks year-to-date, although this divergence partly reflects changes in index composition rather than a wholesale move away from AI-related investments. For technology-focused investment trusts, the changing market environment presents both challenges and opportunities, with active management and stock selection potentially playing an increasingly important role in assessing the sustainability of AI-driven growth and whether valuations adequately reflect the associated opportunities and risks.
Against this backdrop, Anthropic announced on 26 October that it had filed for a Nasdaq IPO under the ticker ANT. The proposed flotation is particularly significant for Baillie Gifford-managed investment trusts (following September’s upward revaluation of their Anthropic holdings), as well as RIT Capital Partners. At end-September, Anthropic represented 9.1% of Baillie Gifford US Growth’s (USA) assets, 8.7% of The Schiehallion Fund’s (MNTN) assets and 4.0% of Scottish Mortgage’s (SMT) assets. A successful listing could improve portfolio liquidity and provide a public-market valuation benchmark. However, mixed reactions to the latest technology company results underline investors’ increasing focus on AI monetisation and capital discipline, with the IPO’s eventual reception likely to provide an important test of sentiment towards the sector.
Corporate activity: Partners Group Private Equity winds down as consolidation continues
Corporate restructuring continues across the sector, with Partners Group Private Equity (PEY) becoming the latest trust to approve a managed wind-down. At its 7 October EGM, shareholders voted 99.89% in favour of realising the entire portfolio, following elections in which holders of 74.1% of shares opted for realisation rather than continued investment. The company expects to begin returning realisation proceeds semi-annually from March 2027. On 28 October, it also declared a second interim dividend of €0.325 per share, payable in December, and confirmed the termination of its dividend reinvestment plan.
Meanwhile, consolidation among UK smaller-company trusts remains firmly on the agenda. On 29 October, JPMorgan UK Small Cap Growth & Income (JUGI) and Aberdeen UK Smaller Companies Growth (AUSC) published shareholder circulars detailing their proposed merger, following the agreement of heads of terms in September. JUGI, which reported a 7.2% NAV total return for FY26, would be the continuing vehicle, offering greater scale, potentially improved liquidity and lower management fees. AUSC shareholders can elect to roll over into JUGI or receive cash, subject to an aggregate cap of 35% of AUSC’s shares. Shareholder votes are scheduled for November and December, with completion expected on 8 December, subject to approvals. Alongside PEY’s wind-down, the transaction highlights two increasingly common responses to persistent challenges in the investment trust sector: consolidation to preserve scale and competitiveness, or capital returns where shareholders favour an exit.
