Saba Capital’s resolutions for the Gore Street Energy Storage trust to cease functioning as an investment company, and a proposal for reorganisation, were blocked by shareholders at today’s (16 August) AGM.
That said, it was hardly an overwhelming victory for the trust. In total, roughly 44% of the votes were cast in favour of Saba’s resolutions, while 56% were cast against them, a gap of just 12%.
The trust has been in battle with its largest shareholder since August, when the US hedge fund proposed the resolutions and condemned the lack of transparency and poor performance.
See also: ‘Saba’s proposals are value-destructive’: Gore Street Energy Storage defends itself from US activist
They were not alone in this criticism, with alternative asset manager and fellow shareholder RM Funds releasing an open letter in August that also criticised the lack of transparency and declining performance.
Over the past three years, the trust is down 17.2% and over the past five years it has slid 33.1%, third quartile performances in an already difficult period for renewable energy assets, according to FE fundinfo data.
Richard Stone, chief executive of the Association of Investment Companies (AIC), said: “It’s positive to see so many shareholders come out and express their views on the future of their trust.
“Gore Street Energy Storage fund represents one of the few opportunities for retail investors to invest in energy storage assets.”
That said, it has returned to growth over the past 12 months, rising 2.1%, according to FE fundinfo data, as the board has refreshed itself.
QuotedData’s head of investment companies James Carthew said: “As a shareholder, I am very pleased to see that Saba’s attempt to force a potentially value-destructive wind up on Gore Street Energy Storage has failed.”
While he said this gives the trust some room to progress plans to generate better returns for investors, he noted the board “must remember our patience is not inexhaustible”.
Ben Yearsley, director at Fairview Investing, added: “This was always going to be a close one, but I thought they [Saba] might actually win this one, because the board in my opinion just hasn’t got it right.”
The biggest example of a mis-step from the board, he said, was the decision to sell assets to another fund run by the same asset manager, without disclosing the price.
“I have no issue inherently with them selling the assets to another of their funds,” he clarified. “But if it’s a related-party transaction, how can you not tell the market what the prices were?”
“I think that’s what tipped this over the edge; it just wasn’t right,” Yearsley added. If nothing else, he said, 44% of shareholders being unsatisfied with the trust should be a wake-up call for the trust to engage more transparently with shareholders.
Commenting on the results of the AGM, Gore Street’s board said: “The board is therefore cognisant of the range of views expressed, particularly from the company’s largest shareholder, and will seek to engage to establish a productive way forward for the company and all shareholders so that ongoing disruption can be avoided in the interest of best delivering enhanced value.”
See also: ‘The real risk is the status quo’: Saba and Gore Street battle heats up as AGM looms