US activist investor Boaz Weinstein has urged British critics to cease spreading misleading claims about his efforts to replace managers at seven underperforming UK investment trusts, which he says have caused significant losses for investors, according to a report by Reuters.
Weinstein has labelled the criticism as “jingoistic.”
Saba Capital Management, Weinstein’s hedge fund, announced last month its intention to overhaul the boards of seven closed-ended investment trusts due to what it described as “underwhelming” to “disastrous” performance.
The targeted trusts include Henderson Opportunities Trust, Baillie Gifford US Growth Trust, CQS Natural Resources Growth & Income, Edinburgh Worldwide Investment Trust, Herald Investment Trust, Keystone Positive Change, and European Smaller Companies Trust.
Managers of these trusts have urged investors to reject Saba’s proposals, emphasising their portfolios’ mix of UK assets for retail and institutional investors.
Weinstein’s campaign comes during a challenging time for UK assets. The British stock market has been losing companies to overseas exchanges, and UK government bond yields have reached multi-year highs amid inflation fears and weaker economic growth compared to other major economies.
These factors have reportedly heightened concerns that UK assets might be sold cheaply to international investors capitalising on market volatility.
Dismissing these fears, Weinstein highlighted that his proposals have already delivered millions of pounds in value to investors through narrower discounts in market valuations.
“These discounts are not some ephemeral thing. These are costing Mom and Pop – the main investors in these funds – enormous amounts of money year in and year out”, Weinstein said. “We are on the same side as you.”
Despite this, Saba’s plans, which include nominating Weinstein to one board and Paul Kazarian, a lead portfolio manager at Saba, to the boards of the other six trusts, have met with resistance. Managers at Herald Investment Trust expressed concerns on Tuesday that Weinstein’s proposals could ultimately erode shareholder value.
Weinstein’s firm, which manages approximately $5bn in assets and owns between 23% and 30% of each targeted trust, has expressed interest in acquiring more British assets. Saba’s activist vehicle, the Saba CEF Opportunities Fund, delivered a return of over 24% in 2024, according to a December research note from HSBC seen by Reuters.
Weinstein also revealed plans to expand Saba’s presence in London by hiring more staff, provided his proposals receive investor backing.
