Boaz Weinstein, the head of US hedge fund Saba Capital, has expressed his ambition to act as a “white knight” for UK investors and the London Stock Exchange by investing in the £266bn UK investment trust sector, according to the Financial Times.
Weinstein’s New York-based firm is seeking to take control of seven UK investment trusts. He reportedly stated that if successful, his plan involves consolidating their assets and reallocating funds from high-priced US stocks to UK companies and other UK investment trusts.
“We’re the white knight,” Weinstein said. “We’re not the American taking assets to the US, we’re coming to help small UK investors.
“If we’re successful and become the fund manager, then US equities like Tesla could be sold and equities of UK investment trusts will be bought.”
Shares in UK investment trusts have been under pressure due to overall pessimism about the London market. A number of companies have exited or shifted their primary listings to the US, and initial public offerings have been scarce. According to the Association of Investment Companies, the average discount to net asset value for UK investment trusts currently stands at 15.4%, near the widest levels since the 2008 financial crisis.
Weinstein described Saba Capital’s proposal as a “new product,” which would largely focus on consolidating UK investment trusts. He said the initiative could generate billions of pounds in demand. The plan involves merging the targeted trusts into a single entity and using the combined resources to invest in other UK trusts, pending shareholder approval.
The trusts targeted by Saba are presently managed by Baillie Gifford, Janus Henderson, Manulife, and Herald Investment Management. Weinstein specifically addressed the Baillie Gifford US Growth trust, remarking, “It means there will be one less Baillie Gifford fund on the London Stock Exchange — it’s not like M&S has delisted, the [current] trust is a shell of Tesla and Nvidia. Instead, you’ll end up with ours on the LSE.”
However, James Budden, a director at Baillie Gifford, criticised the move, calling it “twisted logic.” He argued that consolidating trusts into a single fund would reduce the number of companies, assets, and choices available to investors.
Saba’s strategy hinges on gaining shareholder support to replace the trusts’ current boards with Saba’s nominees, including Weinstein himself. However, some industry players have labeled the approach as “opportunistic.” Critics have raised concerns that retail shareholders might not actively vote and could find themselves holding investments vastly different from their original intent.
Weinstein countered, saying, “If shareholders seem indifferent, perhaps the trusts could have engaged with them more effectively.”
