By Nell Mackenzie and Sinead Cruise
LONDON (Reuters) -U.S. activist investor Boaz Weinstein called on British critics opposing plans to unseat managers at seven underperforming UK investment trusts to stop misleading investors who have lost “enormous value”, describing their criticism as “jingoistic”.
Saba Capital Management, founded and run by Wall Street veteran Weinstein, said last month it wanted to overhaul the boards of seven close-ended investment trusts over performances it said ranged from “underwhelming” to “disastrous”.
“It’s been described, almost in a jingoistic way, that some American is coming in … to take your precious fund away,” Weinstein said on Tuesday in a presentation to elaborate on one of the most ambitious activist campaigns seen in Britain for years.
The trusts under scrutiny are 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
All the managers concerned have urged investors to vote against Saba’s proposals. The trusts hold a range of UK assets for a blend of retail and institutional investors.
Weinstein’s comments come amid a period of stress for UK assets, with Britain’s stock market losing constituents to overseas rivals and UK government bond yields hitting multi-year highs this month on worries about inflation and weak economic growth prospects relative to other major economies.
That has sparked concern among some domestic investors that prized UK assets will be scooped up cheaply by international opportunists keen to exploit volatility in the market.
‘COSTING MOM AND POP’
Weinstein dismissed the concerns, saying his proposals had already made investors millions of pounds through narrower discounts reflected in their market values.
“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.”
Saba’s plans, which include nominating Weinstein to the board of one fund and one of its lead portfolio managers, Paul Kazarian, to the other six funds’ boards, have faced resistance.
On Tuesday, managers of Herald Investment Trust raised concerns that Weinstein could destroy shareholder value if he succeeded in his attempt to gain effective control of the trust.
Weinstein, whose hedge fund manages around $5 billion in assets and currently owns roughly 23% to 30% of each UK trust Saba is targeting, said he wanted to purchase even more British assets.
Saba’s activist vehicle, the Saba CEF Opportunities Fund, had a return on investment of just over 24% in 2024 as of Dec. 13, an HSBC research note seen by Reuters said.
Weinstein said his firm planned to hire additional people in London, if investors voted in favour of his plan.
($1 = 0.8201 pounds)
(Reporting by Nell Mackenzie and Sinead Cruise, editing by Alexander Smith and Emelia Sithole-Matarise)
