Janus Henderson has bought nearly 5% of the European Smaller Companies Trust (ESCT ) that it manages ahead of a crunch vote on the fund’s future next week. 

The £696m investment trust is one of seven being targeted by US activist Saba Capital. 

The European small-caps portfolio, managed by Janus Henderson’s Ollie Beckett, faces a vote next Wednesday over Saba’s plans to oust its board before taking control of the vehicle. 

According to a stock exchange filing yesterday, Janus Henderson had hurriedly built a 4.9% position in ESCT as of Monday this week. 

This is presumably a defensive measure against Saba, which will vote the 29% of shares it owns to try to replace the trust’s existing board on 5 February. Saba proposes to install instead Paul Kazarian, one of its own fund managers, and another nominee. 

Janus Henderson did not previously own a significant stake, suggesting that its current investment has been built in relatively short order. 

The asset manager declined to comment. 

Other big shareholders include discount hunters City of London Investment Management and Lazard at 5% and 7.4%, respectively, according to Refinitiv data. 

Ali Dibadj, chief executive of Janus Henderson, has vocally criticised Saba, which is based in New York and run by Boaz Weinstein, and its ‘very aggressive’ actions. At a Janus Henderson investment conference two weeks ago, he said an ‘unscrupulous hedge fund has come in and decided to bet on you and your clients not voting’, in a bid to take over the trusts and ‘increase the management fee’.

ESCT’s lead manager Beckett defended his record of long-term outperformance in a recent interview with Citywire. ‘Performance is good and Saba has admitted that,’ said the European small-caps specialist. 

Also run by Janus Henderson, Henderson Opportunities Trust (HOT ) is another of Saba’s seven targets and faces a similar vote next week, as do two Baillie Gifford trusts and CQS Natural Resources Growth and Income (CYN ).

However, HOT’s existing board has already announced plans to effectively wind up. 

Saba, which has disclosed stakes in about 25 trusts in total, requisitioned general meetings at its seven current targets shortly before Christmas, accusing them of underperformance and trading at chronically wide discounts. It is proposing to replace the boards before offering some kind of cash-out to investors, ultimately appointing itself as manager, and turning the trusts into vehicles to attack other discounted trusts. 

Herald (HRI ) became the first trust to face its vote on Saba’s plans last week, but the US activist was decisively defeated on an 80% turnout, indicating retail investors had come out in force to vote against.

ESCT shares continue to trade at an 8.4% discount to net asset value (NAV). In response to Saba, its board has proposed a conditional tender offer and to increase buybacks to maintain a single-digit discount.

For private investors on platforms such as Hargreaves Lansdown, the deadline to vote online is typically several days before the shareholder meeting.

The writer invests in the European Smaller Companies Trust in his ISA.