Herald Corporate Action - Tender Offer

homestraight

Hi all

Couldn't find an existing thread. I currently hold Herald Investment trust and received notification of this. 

I didn't know about the background to it but have done some reading. Sounds interesting and it's a defence against Saba Capital Management.

Would appreciate any thoughts and what one might do in terms of taking up the offer or not. 

Thanks
HS

masonic

Explained here: https://www.theaic.co.uk/aic/news/industry-news/herald-launches-100-tender-to-see-off-saba

It doesn't look like there is much point in participating in this stage if it is contingent on Saba taking it up and they've indicated they won't. The next tender will give you an exit opportunity should Saba not be flushed in the first.

Rollinghome

I've never owned Herald, but only because I've always had enough tech, and Katie Potts has been an excellent and admired manager. 

Nor have I looked at the tender details as yet, but I would probably go for it.  The discount is currently 7.3% but has been as wide as 20% not long ago, the formidable Ms Potts isn't getting any younger, and I wouldn't want to invest in anything run by the SABA vulture.  Weinstein will have already done enough damage.  But obviously need to read all the details available.

homestraight

Herald has done well for me to date and I'd want to continue to hold it longer term. Could do without the shenanigans but it's the nature of the beast. Will do some more reading. 
Thanks for the link masonic

the_seer

Normally, investment trust tenders at or close to NAV are a no brainer, but the main issue with this one is that there is a 3.5 month gap between tendering shares and getting the cash. 

A lot could happen to the SP (and NAV) in that time, and there's no backing out once committed.

TheTelltaleChart

masonic said:

It doesn't look like there is much point in participating in this stage if it is contingent on Saba taking it up and they've indicated they won't. The next tender will give you an exit opportunity should Saba not be flushed in the first.

If you wanted to sell part or all of your holding anyway, it would make sense to apply to sell (however many shares you want to sell) in this tender offer, because if Saba do agree to be bought out in this offer, there probably won't be a second tender offer, so you may not get another chance to get out at close to NAV.

If Saba don't agree to be bought out now, the first tender won't be carried through, and (assuming the Board don't blink first) it will then be a choice of either apply to sell all your shares in the second tender offer, or almost certainly end up as a minority shareholder in a Saba-run trust. I see no case for not selling out if it comes to that.

homestraight

masonic said:

Explained here: https://www.theaic.co.uk/aic/news/industry-news/herald-launches-100-tender-to-see-off-saba

It doesn't look like there is much point in participating in this stage if it is contingent on Saba taking it up and they've indicated they won't. The next tender will give you an exit opportunity should Saba not be flushed in the first.

Does anyone have any recommendations of trusts or funds to research in the global smaller companies sector which are mentioned in this article as performing better than Herald. I'm interested to do some reading. 

Thanks

green_man

Yeh a bit disappointing to me this.  Herald fulfils a particular balance in my portfolio and I have done ok with it, so ideally I’d like to keep hold of it.  However even if it fends off the unwanted Saba involvement (and Saba sells out) then the fund size will be much reduced. Does anyone have a view on how this might affect strategy/performance should this occur.

similarly to above, what other trusts should we be looking at as a replacement.

homestraight

Looks like Herald have stopped this corporate action

TheTelltaleChart

https://forums.moneysavingexpert.com/discussion/comment/81873321#Comment_81873321

Yes, the Board cancelled it because Saba voted against the Special Resolution (so it can't reach the 75% majority required to pass), but they say they are now engaged in constructive negotiations with Saba.

EIther those negotiations will end with Saba agreeing to a new tender offer, in which Saba agree to sell all their shares in Herald (and other shareholders who want to sell up to 100% of their shares can optionally do so, too), or the Board will instead propose a tender offer as an Ordinary Resolution (so only requiring a 50% majority to pass) to enable all shareholders who want to get out before Saba gain control to do so at close to NAV.

So the Board are sticking with their nuclear standoff approach. As they have stated the options, any agreement with Saba would have to be for a tender offer that would be very similar to the one Saba have just rejected. This might be realistic, because Saba might prefer to exit via negotiations, rather than simply backing down, to maintain their "credibility" when they engage in future piratical investment endeavours. Interesting times.