US Growth versus Saba: exit near NAV, but exit from what?

Receiving cash near portfolio value sounds simple. At Baillie Gifford US Growth Trust, it is not. The portfolio contains listed shares that can be sold on an exchange, but also SpaceX, Stripe, Anthropic and other private companies whose liquidity, price and exit timetable cannot be ordered on demand.

Saba Capital wants three directors appointed at the next annual meeting. It recommends that, if elected, they offer every shareholder a full cash exit at or near net asset value. The current board asks shareholders to take no action pending its detailed response.

Opulion flagged the requisition on 26 August. The issue is now deeper than a contest for board seats: who should decide how much time private assets receive, and how can cash be returned without destroying the structure that provides access to them?

First, what does the shareholder own?

Baillie Gifford US Growth Trust is an investment company listed in London. A shareholder does not directly buy a slice of SpaceX or Anthropic. The shareholder buys a trust share; the trust owns a portfolio managed by Baillie Gifford under the oversight of an independent board.

This architecture creates two prices. The first is the trust's market price, set each day by buyers and sellers. The second is net asset value per share, the estimated value of the portfolio after debt and other balance-sheet items, divided by the number of shares.

When the market price is below NAV, the trust trades at a discount. At 10 September, 349p was 2.8% below fair-value NAV of 358.91p. The door Saba promises to open is precisely that gap: allowing investors to leave much closer to estimated portfolio value.

Why the private portfolio changes everything

The trust may invest up to 50% of its assets in private companies. At 31 July, SpaceX represented £130.8 million, Stripe £72.8 million and Anthropic £63.5 million. Together, these three holdings represented approximately £267.0 million, or 27.8% of the reported £960.2 million of gross assets.

These companies are part of the vehicle's purpose: providing listed investors with access to growth businesses normally reserved for private markets. Our article on what an Anthropic listing could change for US Growth and Scottish Mortgage already showed that future liquidity can matter as much as the next valuation.

That promise becomes a constraint when many shareholders want to leave at once. Listed shares can be sold quickly. A private stake requires a buyer, an organised transaction, a transfer into another vehicle or patience until an initial public offering. The number in NAV is a fair-value estimate; it does not guarantee that an entire block can be converted into cash tomorrow at that price.

What Saba is actually proposing

Saba says it is the trust's largest shareholder. It has requisitioned three board candidates: Jason Chen, Thomas H. McGlade and Sir James Waterlow. Saba recommends that, if elected, they offer all shareholders a 100% cash exit at or near NAV.

For someone who wants to leave, the appeal is clear: exchange a listed share carrying a variable discount for cash close to estimated portfolio value. Saba also argues that historic performance and governance justify the change. Those performance claims use Saba's selected period and methodology and must remain attributed to the activist.

The decisive word is recommends. Saba cannot currently guarantee that its nominees will be elected, that they will adopt its proposal exactly, that the board will approve a feasible structure, or that every shareholder will receive the same payment timetable.

The trust's current defence remains incomplete

Two actors must be separated. Baillie Gifford is the investment manager, responsible for selecting and monitoring investments. The trust's board legally represents all shareholders and decides on matters including manager retention, buybacks and responses to resolutions.

For now, the trust's primary response is limited: it acknowledges receipt of the requisition and recommends taking no action before a detailed response is published. That is not yet enough to assess its substantive defence.

The strongest case for continuity would demonstrate that the listed structure and patient capital allow SpaceX, Stripe, Anthropic and other companies to be held until economic value is realised, without forced sales. The strongest case for liquidity would show that investors should not remain trapped behind a persistent discount or governance they no longer support.

Neither argument wins by default. The question becomes measurable: how much liquidity, at what net price, for what proportion of capital, and with what portfolio left behind?

Sessa adds 5.07% of exposure, not 5.07% of certain votes

On 10 September, Sessa Capital disclosed economic exposure equivalent to 5.067% of voting rights. Its composition is unusual: only 485,009 shares, or 0.175%, are held directly. The equivalent of 13,537,573 shares, or 4.892%, comes from cash-settled total return swaps.

A total return swap gives its holder the economic performance of a share without necessarily transferring the share itself. Voting rights generally remain with the legal holder, subject to the relevant documentation and arrangements.

Sessa and Saba are separate investors. The filing proves neither coordination, support for Saba's nominees nor a shared voting block. It only shows that another significant financial investor has built economic exposure to the same trust.

So, should shareholders listen to Saba?

Analysis is not about choosing a side for shareholders. It identifies what each side must prove.

Saba raises a legitimate question: why permanently accept a price below estimated portfolio value if an exit closer to that value is feasible? Its proposal becomes persuasive if it specifies a funded, equitable mechanism compatible with the private assets.

The board can defend continuity if it demonstrates that patient capital produces value that an immediate liquidation would compromise, that private valuations are robust, and that buybacks or other measures can address the discount without sacrificing the portfolio. Simply invoking the long term will not be enough.

The shareholder's decision will therefore depend on documents still missing: the board's detailed response, final resolutions, the meeting date and, most importantly, the mechanics of any exit. Until then, cash near NAV remains a scenario, not an acquired right.