Edinburgh Worldwide Investment Trust has generated a return of nearly 950% from Elon Musk’s position in space exploration technology, also known as SpaceX. Managed by Baillie Gifford, this closed-end mutual fund invests in public and private technology companies focused on innovation and disruption around the world. Edinburgh Worldwide first invested in SpaceX in 2018. The aerospace company, which specializes in rockets, satellites, space vehicles and reusable launch vehicles, is currently EWIT’s largest holding, accounting for approximately 16% of the trust’s overall portfolio. EWIT, which has total assets of around £847.15 million ($1.14 billion), announced in a recent update that the position generated an absolute return of 947%. EWIT chairman Jonathan Simpson-Dent explained that the original investment was an early-stage “speculative” bet and that many of the assumptions behind the investment were driven by EWIT’s portfolio management team, supported by a “very supportive” board. EWI-GB YTD Mountain Edinburgh Worldwide Investment Trust. “We were very excited when fund managers came to us and said that space exploration and space commercialization was a great hunting ground for them,” Simpson-Dent said in an interview with CNBC. The portfolio management team was familiar with Musk’s track record, particularly with Tesla, which helped strengthen their belief in SpaceX’s early potential. “We know Mr. Musk well from his time at Tesla, we were early investors, and we know what he did with that company,” Simpson-Dent said, adding that the electric car giant had generated “disproportionate returns” for Edinburgh Worldwide’s shareholders over a 10-year period. The EWIT team also sees SpaceX as a young company with the potential to be similarly “transformative,” Simpson-Dent explained. “As the technology grew and we saw Starlink really start to gain traction and become the go-to satellite network for many end markets, when the opportunity came to follow our investment and then continue to invest in SpaceX for three, four, five years, we continued to invest in this business and watched it reach all of its milestones,” he said. ‘Continued excitement’ Although EWIT recently downsized its position in SpaceX, it remains the largest investment, more than twice the size of EWIT’s next-largest holding. In doing so, EWIT ultimately aims to balance investment discipline with “continued excitement,” Simpson Dent said, adding that EWIT’s investment guidelines stipulate that around 25% of the portfolio can be in unlisted assets. “If a company’s valuation is raised and it naturally goes up to 25%, that’s fine. But if it goes to 30%, it limits the headroom to invest in other private businesses. So that takes away the dry powder to go after other companies. We want to keep the dry powder, which is an important part of the equation,” he said. “A smart investment manager will tell you about portfolio risk and concentration risk,” he said. “We don’t want to be a one-hit wonder. So when one particular investment becomes more than 20% of our holdings, it just makes us look biased toward that asset. As a result of the cuts, about 30% of our company is now private.” The SpaceX investment is also a major flashpoint in a long-running dispute between EWIT and its largest shareholder, activist hedge fund Saba Capital. EWIT recently sold about a third of its holdings in SpaceX, angering Saba Capital founder Boaz Weinstein, who criticized the sale with strongly worded posts about X. “It’s time to finally answer the question on the minds of EWI and US investors: How much did they sell their chunks for?” Weinstein said in a post to Baillie Gifford, referring to “talk about SpaceX’s potential valuation of $1.5 trillion.” What are our treasures for? ”Simpson Dent explained that SpaceX regularly holds employee bids, giving EWIT the opportunity to sell some of its positions while retaining significant ownership of its assets. New York-based Saba, which owns a 30% stake in EWIT, is proposing to fire the current board and replace it with three of its own candidates in order to secure an investor meeting and prevent what the company describes as “unprecedented value destruction.” EWIT recommends that shareholders vote against the plan. The meeting is scheduled for January 26th.
