A major investor is demanding explanations from the board of a London investment fund about decisions made regarding its SpaceX holdings. The threat? Legal action if satisfactory responses aren’t provided.
Boaz Weinstein’s firm, Saba Capital Management, put out a public letter Wednesday with pointed questions about why Edinburgh Worldwide Investment Trust didn’t tell the market about reducing its position in the space company.
The letter also asks whether plans to merge EWIT with another fund played into the timing of the sale.
Here’s what Saba says happened: Investment manager Baillie Gifford sold off a big chunk of both EWIT’s and US Growth Trust’s SpaceX shares back in October. The sale price looks way lower than values established two months later in December, when reports came out that Elon Musk’s company was aiming for a $1.5 trillion price tag for its planned public stock offering.
Legal action on the table
The hedge fund manages about $6 billion in assets. It’s set a deadline of January 9 for EWIT’s board to address concerns about the transaction. “Unless and until we receive satisfactory responses to these questions and concerns, we reserve all of our rights, including to issue proceedings on behalf of” EWIT, Saba said in its letter.
Saba’s done the math and says shareholders already lost out on £37 million—that’s $49.9 million—because of how the sale was handled.
This isn’t the first fight between these two. Weinstein is trying to replace EWIT’s entire board with his own picks. A shareholder vote on this is scheduled for January 20. The hedge fund tried something similar less than a year ago but didn’t succeed.
Legal & General Group, a major UK asset manager, said Tuesday it would vote against Saba’s proposal. The plan “lacks sufficient detail regarding its future strategy” for managing the fund, they said.
Weinstein ran a big campaign in late 2024 to take control of seven different UK investment funds trading below their actual asset values. Those attempts failed, but some of the targeted funds ended up making the structural changes Saba wanted anyway.
The current fight is about the proposed merger of Edinburgh Worldwide Investment Trust with Baillie Gifford US Growth Trust. Saba’s argument is simple: the SpaceX share sale was mishandled and happened at bad prices.
Board defends its position
Jonathan Simpson-Dent chairs Edinburgh Worldwide’s board. He’s pushed back on Saba’s latest campaign by bringing up the failed attempt earlier this year. “Less than a year ago, you launched a similar campaign seeking to remove the board and replace it with your own nominees,” Simpson-Dent said. “That proposal was overwhelmingly rejected by shareholders who recognized your objectives for what they were, an attempt to take control of the board in order to pursue your own agenda.”
Weinstein built his reputation as a derivatives specialist. He’s famous for his role in the London Whale trading incident. He’s already spent years and billions buying up stakes in US closed-end funds run by BlackRock and other big asset managers.
Now he’s focused on Britain’s investment trust sector. The sector has had a rough time lately, high interest rates, limited size and trading activity, plus new regulations around cost disclosure haven’t helped. Investment trusts still make up about a third of the FTSE 250 index. A bunch of mergers that started in 2023 have shrunk the sector.
SpaceX is moving ahead with plans for what could be the largest initial public offering in history along with OpenAI and Anthropic. People familiar with the plans say the company wants to raise more than $30 billion.
The offering could happen anywhere from mid-2026 to late 2026. The exact timing depends on market conditions and other factors. Some sources say it might even slip into 2027.
SpaceX plans to use money from the public offering to build space-based data centers. That includes buying the computer chips needed to run them. Musk talked about this idea recently at a Baron Capital event. The company’s Starlink satellite internet service and its Starship rocket program are pushing the timeline for going public.
For investors in Edinburgh Worldwide Investment Trust, the January 20 vote will decide whether they trust the current board’s handling of their investments or want new management under Saba’s direction. The outcome could shape how other UK investment trusts deal with similar situations down the road.
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Source: https://www.cryptopolitan.com/activist-investor-threatens-spacex-sale/