Activist vs. Innovator: Saba Reignites War on Tech Trust Board

LONDON – November 27, 2025 – The often-staid world of UK investment trusts has been jolted once again as activist investor Saba Capital Management has formally declared its intent to oust the entire board of Edinburgh Worldwide Investment Trust PLC (EWI). In a sharply worded letter, Saba, which holds a commanding 30% stake in the trust, announced its plan to requisition a general meeting to replace the incumbent directors with its own slate of independent candidates, citing “profoundly disappointing” performance and an “unprecedented” destruction of shareholder value.

This move marks a dramatic escalation in a long-simmering conflict, reigniting a battle that pits the short-term, value-extraction demands of an activist against the long-term, patient-capital strategy of a trust focused on the frontiers of technology and science. For shareholders and the wider market, it poses a critical question: in an era of digital disruption, how should the market value and govern the volatile, long-horizon investments necessary to fund tomorrow’s innovations?

A Déjà Vu Battle with Higher Stakes

At the heart of Saba’s renewed assault is EWI’s stark underperformance. The letter, signed by Saba founder Boaz Weinstein, lays out a damning case. Over the past five years, the trust’s share price delivered a negative return of -35.0%, while its self-selected benchmark, the FTSE All-Share Index, surged by +71.4%. Saba labels this 100-plus percentage point gulf as a failure of undeniable magnitude.

“The Board has since objectively and categorically failed to execute that job,” the letter states, referencing a promise made by EWI’s Chair following a previous activist challenge by Saba nearly a year ago. “Shareholders deserve a Board that champions and fights for their interests every single day.”

This is not the first time EWI’s board has found itself in Saba’s crosshairs. A similar campaign a year ago saw Saba attempt to unseat the board, only to be met with a resounding defeat. At that time, shareholders—excluding Saba’s own significant block—voted overwhelmingly (98.4%) to support the incumbent board, a move framed by the trust as a defense of its unique mandate against a “discount surfer.” Now, Saba is betting that another year of punishing returns has eroded that loyalty and that frustrated investors are ready for a change.

The Innovator’s Dilemma: Valuing Deep Tech

The conflict goes far beyond simple performance metrics; it strikes at the strategic core of EWI's identity. Managed by Baillie Gifford, the trust is specifically designed to invest in smaller, high-growth global companies and has a mandate to allocate up to 25% of its portfolio to private, unlisted enterprises. Its holdings read like a who's who of ambitious, high-risk tech, including significant positions in Elon Musk’s Space Exploration Technologies Corp (SpaceX) and the quantum computing pioneer PsiQuantum.

This strategy requires immense patience. Such ventures often burn through capital for years before achieving commercial viability, making them susceptible to market volatility and sentiment shifts. The board’s defense has consistently been that judging such a portfolio on short-term metrics is fundamentally misguided. They argue that Saba's approach—forcing actions to close the discount between the share price and the Net Asset Value (NAV) of its holdings—is antithetical to fostering deep-tech innovation and would ultimately liquidate the very potential that long-term shareholders bought into.

This clash represents a classic innovator's dilemma in a financial wrapper. Can a publicly listed vehicle effectively provide the patient capital needed for foundational technologies like AI, quantum computing, and commercial spaceflight when it is subject to the pressures of quarterly reporting and activist campaigns focused on immediate returns? Saba’s position is that persistent underperformance and a chronic discount to NAV are not signs of patience, but of a failed strategy and poor governance that requires drastic intervention.

A Sector on Edge: The Ripple Effect of Activism

While Saba’s initial, multi-front assault on seven UK investment trusts last year failed to achieve its primary goal of seizing board control, it sent shockwaves through the sector. The aggressive campaign served as a wake-up call for boards that had allowed discounts to NAV to widen without sufficient action. In the wake of the campaign, a number of trusts, including EWI, initiated reforms.

EWI itself announced enhancements to its investment approach, made changes to its management team, and committed to a substantial capital return of up to £130 million to shareholders. These moves were widely seen as a direct response to the pressure exerted by Saba and a tacit acknowledgment that shareholder dissatisfaction could not be ignored. This demonstrates a key strategic reality in today's market: even unsuccessful activism can be a powerful catalyst for change, forcing boards to become more accountable and proactive in managing shareholder returns.

The renewed offensive against EWI will be watched closely across the City of London. A successful ousting of the board would set a powerful precedent, potentially emboldening activists to target other specialized trusts with long-term, esoteric strategies. Conversely, another decisive rejection by shareholders would reinforce the UK investment trust structure’s ability to withstand short-term pressures in pursuit of long-horizon goals.

For the average EWI investor, the choice is stark. Siding with the board means continuing to underwrite a high-risk, high-reward bet on transformative technology, enduring the current paper losses in the hope of a significant future payoff. Siding with Saba offers the prospect of unlocking more immediate value by closing the discount, but likely at the cost of the trust’s unique, innovation-focused mandate. The upcoming general meeting will be more than a vote on directors; it will be a referendum on the future of patient, risk-oriented capital in the public markets.