Unlock the Editor’s Digest for free
Roula Khalaf, Editor of the FT, selects her favourite stories in this weekly newsletter.
This is not a happy new year for Jonathan Simpson-Dent, chair of Edinburgh Worldwide Investment Trust (EWIT), which offers exposure to technology companies including Elon Musk’s SpaceX. He is the latest target of Boaz Weinstein, a US activist investor who has accused him of tolerating “years of dire underperformance” at the FTSE 250 trust.
Weinstein’s Saba Capital is nothing if not persistent. It was overwhelmingly defeated by other shareholders last year in its effort to restructure the trust’s board, but it has increased its stake to 30 per cent and is trying again. There is an unspoken message: if you alienate him, he will not go away.
Weinstein is the fiercest face of US activism in his rolling campaign against sleepy trusts. But he is far from alone these days: hedge funds have been agitating for change at many UK companies, from BP to Smith & Nephew, and are increasingly powerful. They don’t always get what they want, but they are difficult to ignore.
There is more to come. The UK was the top market in Europe for activists last year, including break-up campaigns at M&C Saatchi and Smiths Group. Alvarez & Marsal, a consulting firm that works on corporate defences, estimates that more than 50 UK companies are at risk of becoming targets in 2026.
Activism is now part of UK corporate life and it is not enough for companies to complain about hedge fund opportunism and refuse to engage. Some activists set their sights on a quick buck — often a return of cash to investors — but more professional ones suggest ideas that are worth considering.
Activists cannot simply turn up and shout. They need to persuade not only boards but other investors, since they usually have only a small stake themselves. UK companies are now used to defending themselves and will summon an array of expensive advisers and bankers to get other investors in line.
Weinstein has a strategic advantage here, since trusts have thousands of small investors who mostly left boards in peace before he came along, selling shares if they were unhappy. EWIT cannot have a quiet word with a few influential institutions to win the day: it needs to campaign for a high turnout in a shareholder vote this month to defeat Saba’s 30 per cent.
But so be it. Saba lost all of its attempts last year to place its nominees on boards, yet its argument that trusts were short-changing investors had an effect. Several of them took steps to reduce the discounts at which they traded and Terry Smith, the Mauritius-based fund manager who likes a fight himself, conceded that Weinstein was right about his Smithson trust.
Weinstein’s mere presence now helps: the expectation that his targets will take steps to fix their valuations has become self-fulfilling. That is double-edged in EWIT’s case, since the trust has performed quite well since last year’s vote, and heavily reduced its discount. He remains unhappy but he has less to be dissatisfied about.
He has responded by getting personal, accusing Simpson-Dent of being “a pawn of Baillie Gifford”, the trust’s investment manager, and criticising the sale of part of its SpaceX stake. Simpson-Dent says he acted to improve performance after becoming chair in 2024. He thinks Saba wants to seize control, while Weinstein insists his three board nominees are independent.
This is free entertainment for those not involved, and illustrates activism’s impact. Everyone has their say in public, often rudely, and the shareholders then decide. Weinstein is acting for his own benefit and that of investors in Saba funds, but EWIT’s 24,000 investors can also gain. You could almost call him public-spirited.
An open brawl is not always needed. Activist funds such as Cevian Capital prefer to wield influence privately and avoid hostility (although it called publicly last year for UBS to leave Switzerland). Paul Kinrade, a senior adviser at Alvarez & Marsal, says that “many more” funds are now choosing to work behind the scenes.
The demands of activists should be scrutinised for short-termism and dismissed if they will damage the interests of long-term investors and the company itself. But these US funds tend to be sophisticated as well as financially driven, and can shine a light on weaknesses that boards know about but have allowed to linger.
The fact that UK trusts can hear Weinstein’s winged chariot hurrying near is no bad thing. My advice to EWIT’s shareholders is to ignore all the noise and focus on whether he offers an advantage. Democracy won last time and will hopefully win again.