'None Shall Pass': Saba versus the UK Investment Trust Establishment (Part 2)

A DDL Briefing by JB Beckett

Blood was shed over the summer. Following up on our earlier Saba blog FSLA Analysis of SABA Capitals Open Letter to the Shareholders of Edinburgh Worldwide Investment Trust (10 Feb 2026), JB picks through the bodies on the Investment Trust battlefield.

When King Arthur approaches the bridge in Monty Python and the Holy Grail, he meets the Black Knight; immovable, unyielding, and utterly convinced of his own invincibility. Limbs fly, blood spurts, and yet the Knight insists: 'Tis but a scratch'. It is a scene of absurd resilience, misplaced confidence, and denial in the face of overwhelming evidence.

Surveying the UK investment trust landscape in 2024–26, one cannot help but see the same tableau playing out; except this time the sword belongs to Saba Capital, and the Black Knight is the UK investment trust establishment. This Holy Grail framing sharpens the absurdity: boards insisting they are 'fine' even as arms, legs, and entire governance structures are severed.

Act I: The First Limb — Impax Environmental Markets (IEM)

The arm comes off cleanly. Shareholders voted out all five incumbent directors and installed Saba’s nominees, rejecting remuneration, share issuance, pre-emption disapplication, and buyback authorities. At the requisitioned meeting, 71% of votes backed Saba’s slate, following an earlier tender offer where 80.5% of non-Saba shareholders exited, a mass desertion. The outgoing board insisted this was merely structural weakness in the UK trust framework; the Black Knight insisting his missing arm is 'just a flesh wound.'

FSLA angle:

· Saba’s language is directive, corrective, and prosecutorial ('the underperformance cannot go on')

· Incumbent boards use minimising language, reframing defeat as structural misfortune rather than accountability failure.

· Allocators should flag minimisation, deflection, and appeals to 'tradition' as linguistic tells of governance denial or resignation of impending defeat.

Act II: The Second Limb — Edinburgh Worldwide (EWI)

After two failed attempts, Saba finally severed the second limb: the chair and five directors removed, three Saba nominees installed. The AIC lamented that 'thousands of shareholders will be disappointed,' but the vote was decisive.

The board’s FSLA tell: catastrophising ('a disappointing day', 'retail shareholders ground down'), signalling emotional framing rather than factual defence. Saba’s tell: persistence with repeated requisitions until the limb comes off.

Act III: The Leg — Herald Investment Trust (HRI)

Herald did not lose a limb in battle; instead, it voluntarily amputated via a tender offer for up to 66% of capital and a shift to Aberdeen management, a negotiated surrender. Saba calls this its sixth successful outcome out of seven campaigns (inference based on Saba’s public tallying across cases).

FSLA angle:

· Herald’s language is conciliatory, emphasising compromise and shareholder choice.

· Saba’s language is transactional, focusing on liquidity and structural reset.

Act IV: The Black Knight Stands His Ground — Baillie Gifford US Growth Trust (BGUSG)

Here the metaphor becomes literal. The board warns that Saba’s nominees would 'severely compromise independence' and 'spell the end' of the strategy. They offer a near-NAV exit at 99.75%, which Saba rejects. The board insists: 'None shall pass.'

FSLA angle:

· The board uses fear-based framing ('end the strategy', 'compromise independence')

· Saba uses ambiguity ('liquidity event' without long-term intentions), a strategic linguistic opacity that allocators should scrutinise.

This is a limb Saba has not yet severed, the Black Knight still hopping defiantly.

Act V: The Leg That Would Not Come Off — Workspace Group PLC

Despite Saba’s 28% stake, all resolutions failed. The fortress held. The Black Knight blocks the bridge, sword raised, uninjured.

FSLA angle:

· Workspace’s communications emphasise continuity and stability, a linguistic shield that signals strong shareholder alignment.

Act VI: The Standstill Forest — Aberdeen’s Nine Trusts

Seven Aberdeen-managed trusts (plus related vehicles) entered three-year standstill agreements, preventing Saba from requisitioning meetings or voting against board recommendations. This is the scene where Arthur simply walks away, leaving the Knight shouting threats from behind a tree stump.

FSLA angle:

· Standstill language is legalistic, signalling negotiated stalemate rather than ideological victory.

· Allocators should treat standstills as temporary ceasefires, not peace treaties.

Act VII: The FCA Arrives — The Referee Enters the Scene

Saba ultimately provoked a regulatory response. The FCA proposes rule changes to protect board independence and prevent substantial shareholders (like Saba) from installing directors who then appoint them as managers. This is the moment in the film when the enchanter/historian steps in to explain the rules of engagement (only to be abruptly killed) But here, the FCA survives, and the rules will likely change.

FSLA angle:

· Regulator language is neutral-technical, emphasising 'targeted and proportionate amendments'.

· Allocators should note that regulatory tone is intentionally non-emotive, a contrast to the emotive rhetoric of boards and activists.

How Allocators Can Decode Saba’s Strategy through FSLA

1. Look for Directive vs. Defensive Language: Saba uses imperatives ('must', 'cannot go on', 'urge the board to act'). Boards use defensive minimisation ('structural weaknesses', 'disappointing day', 'compromise independence')

2. Identify Linguistic Asymmetry: Saba frames issues as performance failures with quantified evidence. Boards frame issues as existential threats or procedural irregularities.

3. Watch for Ambiguity in Long-Term Intent: Saba often leaves future strategy unstated ('liquidity event' without detail). This is a deliberate FSLA tell: strategic vagueness to maintain optionality.

4. Detect Emotional Leakage: Boards under pressure exhibit:

· Catastrophising

· Appeals to tradition

· Moralising ('protect independence')

These are FSLA indicators of loss of narrative control.

5. Note Repetition as a Weapon

Saba’s repeated requisitions (EWI, BGUSG) show a linguistic strategy of attrition — repeating the same narrative until shareholders internalise it.

What This Means for Allocators

Allocators should treat FSLA like a governance Seare:

· Minimisation = board denial

· Catastrophising = board fear

· Ambiguity = activist optionality

· Directive language = activist confidence

· Legalistic tone = negotiated ceasefire

· Emotive appeals = loss of strategic footing

In other words: When the Black Knight says 'I’ve had worse' while his limbs lie scattered, FSLA tells you he is not fine, he is losing (badly).

Closing: The Grail Is Governance

The Holy Grail in this saga is not victory for either side. It is functional governance, credible discount control, and alignment with shareholders. Saba’s sword has exposed weaknesses long ignored. Boards’ reactions, from denial to fear to negotiated surrender, reveal their true condition. To grow and thrive the Investment Trust sector needs to address its shortcomings and cut through its own hubris.

As the smoke clears, and the absurdity of the war of words becomes visible, allocators must ask: is Saba more than just a flesh wound?