I have said it here before, but it bears repeating, that one of the great strengths of the investment companies industry is the power that it puts in your hands as investors. The days when private investors were dismissed as an irrelevance or worse a nuisance are long gone. Now, boards are putting time, money, and effort into communicating with you and canvassing your opinion. Not just because of predators such as Saba, but also because private investors are increasingly the dominant force on share registers.

I am very pleased with last week’s resounding defeat of the proposals for Herald (HRI ), but there are six more votes to come, and for the sake of the sector, we need to ensure that Saba wins as few as possible. I would even go so far as to say that, if you were considering voting with Saba because you are fed up with performance or the manager of the trust you hold, think again. Maybe even just sell while discounts are tight or petition the existing board for action. The lack of clarity with Saba’s proposals means that you could end up in a worse situation than you are in now.

However, whichever way you are leaning, please do vote and do it now before it is too late. The 80% turnout for the Herald meeting was good news, but I still wonder what happened to the other 20% on what was an existential vote for the trust. Are holders of 20% of HRI really that apathetic, or was it just too hard for them to make their voices heard?

I have voted my shares in Edinburgh Worldwide (EWI ) against the Saba proposals. I have to tell you that it was not straightforward. My platform provider says you can vote via a chatbot on its site but that was not available, so I was forced to call them instead. The person in the call centre was friendly and efficient, but before I said which trust I wanted to vote on, they had already asked if this was ‘one of those Saba votes’, so I guess the call centre is experiencing more activity than usual.

Obviously, this was not the first time that I had gone through this rigmarole, but I have to confess that I do not bother for most AGMs. However, if I could just go online once a month, say, and vote on all upcoming meetings, or even just leave standing instructions to vote with the board’s recommendation unless I advise otherwise, I would be a lot happier. One of the many lessons to learn from Saba is that platforms need to make it much easier for shareholders to vote.

Platforms also need to make it much easier for companies to communicate with shareholders directly. One of the two platforms I use (a legacy of trying to switch my Sipp provider, then finding out that this would take months to complete) does not even offer access to annual reports and factsheets. However, both still offer up a KID (Key Information Document) at the point of purchase even though the rules on this changed almost four months ago.

I have plenty of issues with the way that Saba has gone about its attack on this industry, but one that particularly annoyed me about the Herald meeting was that its two nominees did not even show up. However, plenty of other shareholders did make the effort and made their voices heard.

If you can spare the time, attending the odd AGM is a great way to stay up to speed with your investment. In my job, I talk to managers all the time, but I still enjoy meeting directors and gauging the mood of shareholders. This week, I have been invited to the AGM of Finsbury Growth and Income (FGT ) at the Guildhall in London. It is reasonable to expect that I will be talking about it here next week, if nothing else comes up.

You may think that AGMs are dull affairs, but you do tend to get a presentation from the manager and a chance to quiz them. However, when a vulture investor such as Saba is floating around, danger lurks even in the ordinary business of the meeting.

For example, HRI will be publishing results for 2024 in about a month, followed by an AGM, probably in April. It is usual practice to offer each of the directors up for re-election – that presents a clear danger if shareholders do not turn out in force once again to support the board. The three-yearly continuation vote also falls due in April – Saba could seek to block that. Shareholders must be vigilant even when the immediate danger has passed.

Of course it may be that Saba has sold its shares and moved on by then. I reckon that, over the course of about a month, it spent around £130m of its clients’ money, taking its stake in HRI from just over 18% up to 29.1%. On average, I estimate the prices paid were so close to asset value that, even if it had seized control and liquidated the portfolio, it was likely guaranteeing a loss on that part of its investment.*

Now, with a short-seller at work on HRI’s register – a company called Brookdale and an associated hedge fund declared a short position on 14 January – the discount is widening again. At some point, the loss may become too much for Saba to bear. This does not suggest to me that Saba would do an amazing job of running an investment company with this strategy.

*This analysis was disputed by a source close to Saba, who said that Herald only traded above NAV for three trading days during the relevant period, with the firm purchasing most shares at a discount. The same source said that only considering the theoretical liquidation value of shares purchased closer to NAV also ignored the larger profit that could be made on shares purchased at a wider discount. 

James Carthew is head of investment company research at QuotedData.

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