Wall Street raider Boaz Weinstein has launched another assault on four UK investment trusts after failing to take over six others.
Weinstein’s firm Saba Capital announced yesterday that it will call meetings at the trusts to vote on whether to change their structure.
The trusts in Saba’s crosshairs are CQS Natural Resources Growth and Income, European Smaller Companies Trust (ESCT), Middlefield Canadian Income and Schroder UK Mid Cap Fund.
It marks a change in tactics from Saba’s recent campaign when it proposed ousting the boards of seven London-listed trusts and replacing them with its own allies.
Six of these trusts have decisively rejected Weinstein’s proposals. The seventh, Edinburgh Worldwide, is voting on Friday.
Of the four new targets, two – CQS and ESCT – defeated Saba’s attempts to unseat their boards at meetings last week.
New targets: Boaz Weinstein’s firm Saba Capital announced that it will call meetings at four UK investment trusts to vote on whether to change their structure
Despite the drubbing, Saba is now asking shareholders in the four trusts to approve plans to turn themselves from closed-ended funds into open-ended.
Closed-ended funds have a set number of shares and are listed on the stock market where their value fluctuates based on demand for their shares.
Open-ended funds create shares for new investors and can technically issue unlimited stock. Their share price is based on the value of the fund’s assets.
Saba said that turning the four closed-ended trusts into open-ended would ‘eliminate’ their ‘discount’, the difference between the trust’s share price and the value of its assets.
A spokesman said: ‘It is apparent that shareholders have been trapped in closed-end vehicles trading at deep discounts for years. In our view, the necessary solution is to roll or convert these trusts into open-ended funds.’
Saba holds stakes of just over 29 per cent in CQS, ESCT and Middlefield Canadian, and around 11 per cent of Schroder UK Mid Cap. In total, the four trusts carry a market cap of nearly £1.2billion. The four trusts were contacted for comment last night.
James Carthew, of investment trusts research firm QuotedData, said: ‘Saba doesn’t seem to have got the message.
‘When [Weinstein] is inevitably knocked back again, will he admit defeat or are we condemned to an endless cycle of pointless attacks?’
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