The boss of the US hedge fund battling to win control of seven London-listed investment trusts has branded the sector a ‘disaster’ – and claims he is the ‘white knight’ needed to save it.
Saba Capital boss Boaz Weinstein said shareholders have lost out due to an ‘ecosystem of greed’ that has damaged the performance of UK trusts. He hit back at the mounting opposition to his plans to overhaul the trusts and replace their directors with his allies.
‘It’s been described in this jingoistic way as I am some American who is coming in and is going to do something to take your precious fund away,’ the Wall Street financier said in a fiery presentation to shareholders. ‘We want what you want, which is a higher price.’
But writing in today’s Mail, former pensions minister Baroness Altmann warns the attack on the seven trusts is ‘a flashing red warning sign’ for UK investors that has left the industry under ‘serious threat’.
‘If Saba’s predatory move succeeds, there are significant risks for ordinary investors,’ she says.
‘I urge all shareholders in these seven investment trusts to look carefully at the proposals and vote on them.’
On the attack: Saba Capital boss Boaz Weinstein (pictured) said shareholders have lost out due to an ‘ecosystem of greed’ that has damaged the performance of UK trusts
Saba has called meetings at seven firms – Herald Investment Trust, Baillie Gifford US Growth, Edinburgh Worldwide, European Smaller Companies, Keystone Positive Change, CQS Natural Resources and Henderson Opportunities – to ask shareholders to back its plans to oust their boards and replace them with its own nominees.
Setting out his case for the takeover of the trusts, Weinstein argued the managers had ‘no stake’ in improving the share price and just wanted to keep extracting fees.
By contrast, Saba has large stakes in each trust ranging from 19 per cent to 29 per cent, he said.
Weinstein said: ‘The sector is in decline. It’s really been a disaster. The manager is collecting fees but they have no skin in the game.
You have this boys’ club, which thinks they are protecting the marketplace. It’s really protecting their own interests.’
He said that if Saba succeeded in its plans to take control of the trusts it would merge all or some of the seven funds into a new London-listed vehicle.
The fund would buy stakes in other investment trusts sitting on hefty discounts to net asset value.
Should the merged vehicle encompass all seven trusts, its assets will have an estimated value of £3.9billion, with just 16.5 per cent invested in UK assets. Weinstein said Saba planned to grow this share to 100 per cent.
The fund manager added that if the firm was victorious, it would hire more staff in London and seek to expand its office in Britain.
‘We are the white knight of the UK market,’ Weinstein said.
The trusts’ boards have urged investors to reject Saba’s approach, which they have described as ‘opportunistic’.
Some analysts have also questioned the performance of Saba’s existing trusts and whether it would be able to run them more effectively than the existing managers.
DIY INVESTING PLATFORMS
AJ Bell
AJ Bell
Easy investing and ready-made portfolios
Hargreaves Lansdown
Hargreaves Lansdown
Free fund dealing and investment ideas
interactive investor
interactive investor
Flat-fee investing from £4.99 per month
Saxo
Saxo
Get £200 back in trading fees
Trading 212
Trading 212
Free dealing and no account fee
Affiliate links: If you take out a product This is Money may earn a commission. These deals are chosen by our editorial team, as we think they are worth highlighting. This does not affect our editorial independence.
Compare the best investing account for you
