Investment firms, Saba Capital and Boaz Weinstein, issue statements regarding their investment trusts.
Title: Saba Capital Hits Back Against Critics in UK Investment Trust Takeover Bid
In a divisive move, New York-based hedge fund Saba Capital is challenging critics in its bid to take over seven UK investment trusts. The fund has called for general meetings at the trusts, where it holds substantial stakes, to address trading discounts compared to net asset value (NAV).
The current management of the trusts has labeled Saba's moves as "self-interested and misleading," with investment banks and industry bodies joining forces to oppose the proposals. Former investment trust manager Max King wrote in our online publication that shareholders should stand against Saba's proposals.
Laith Khalaf, head of investment analysis at AJ Bell, notes that a power struggle has erupted in the UK investment trust sector. "Saba is trying to convince shareholders in seven investment trusts that the boards aren't doing enough to hold investment managers accountable and close discounts," Khalaf said.
However, things got heated on January 13, when Saba issued a statement directly addressing these allegations. The statement preceded a webinar with Saba's founder and chief investment officer Boaz Weinstein, which took place at 1 pm on January 14. During the meeting, Weinstein reportedly stated that Saba has already made UK investors hundreds of millions of pounds, according to Reuters.
In response to the mounting criticism, Saba issued a statement addressing the general claims and countering them point by point. Their main points include rubbishing accusations of self-interest, emphasizing their proven track record of returning discounted funds to their full NAV, and committing to adding more independent board members once their proposals are passed.
Saba also responded to specific allegations made by the likes of Herald, Baillie Gifford, Janus Henderson, and Manulife | CQS. Notably, Saba disputed claims that the new board would not meet the UK Corporate Governance Code and AIC Code of Corporate Governance standards and argued against fears of inflated fees being introduced as a result of their plans.
JPMorgan Cazenove issued an analysis of Saba's response, assessing the validity of Saba's claims and offering overall criticism, but noting some exceptions, such as agreeing that Saba's involvement is driving results for shareholders.
The situation remains tense, with Saba's takeover proposals facing resistance from trust boards, management teams, and industry bodies, but also gaining support from some shareholders. Saba has begun reducing stakes in some trusts, indicating a possible shift in strategy as a response to the resistance they have faced. This episode represents an unusual and intricate challenge to UK investment trusts' governance, with all involved parties active in the engagement.
- Saba Capital defended its investment proposals in a statement, refuting allegations of self-interest and emphasizing its track record of improving discounted funds to their net asset value (NAV).
- The ongoing power struggle in the UK investment trust sector continues, with Saba Capital countering specific allegations made by Herald, Baillie Gifford, Janus Henderson, Manulife | CQS, and addressing concerns about meeting UK Corporate Governance Code and AIC Code of Corporate Governance standards, while committing to adding more independent board members once their proposals are passed.
