The head of an investment trust under siege from a US hedge fund said there is ‘no evidence’ it would be better run if the activist succeeded.
Jonathan Simpson-Dent, chairman of the FTSE 250 Edinburgh Worldwide Investment Trust (EWIT), questioned whether Saba Capital had any ‘experience’ in early-stage investments or approval from regulators to run the UK-listed entity.
Analysts also warned as many as 17 other trusts on the London market could be targeted if Saba took control of seven firms in the coming weeks.
Saba, run by Wall Street financier Boaz Weinstein, has proposed to replace directors at the seven trusts with its own nominees, saying leaders have ‘failed shareholders’ and made poor decisions.
He will lay out his plans in an online meeting today.
But in a letter to Weinstein, Simpson-Dent queried the credentials of Jonathan Zucker, an ex-lawyer and investment manager who has been nominated to run EWIT with Saba portfolio manager Paul Kazarian.
Activist: Saba, run by Wall Street financier Boaz Weinstein (pictured), has proposed to replace directors at the seven trusts with its own nominees
He also raised questions about how much Saba would charge in fees if they took over the trust, saying it appeared the costs could be ‘as much as eight times higher’ than EWIT’s current fee.
Simpson-Dent told Weinstein ‘we have seen no evidence that supports’ the claims that Saba ‘would be better placed to run Edinburgh Worldwide’.
Opposition to Saba’s plans is growing as Weinstein prepares to outline his strategy for the seven trusts should his campaign succeed.
Analysts at broker Peel Hunt warned that the impact of Saba’s campaign on the UK’s investment trust sector ‘should not be underestimated’.
‘If Saba is successful in one or more of its current activist strategies, this is likely to provide further firepower for it to build dominant shareholdings in other trusts for similar activist campaigns,’ they said.
The broker also pointed out that aside from the seven trusts being targeted, Saba also had ‘material’ stakes in 17 other trusts.
Analysts at investment bank JP Morgan also weighed in on Saba Capital’s arguments yesterday saying that almost all of the directors the firm had proposed to run the target companies had ‘little to no experience of UK-listed investment trusts and the regulatory regime’.
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