US hedge fund brands London is banking on ‘a disaster’: Saba destroys chauvinist opposition to cause upheaval
The boss of the US hedge fund vying for control of seven London-listed investment funds has branded the sector a ‘disaster’ – claiming he is the ‘white knight’ needed to save it.
Saba Capital boss Boaz Weinstein said shareholders have lost out because of an “ecosystem of greed” that has damaged the performance of UK trusts. He hit back at mounting opposition to his plans to overhaul the trusts and replace their directors with his allies.
“It’s being described in this jingoistic way because I’m an American who’s going to come in and do something to take your precious fund,” the Wall Street financier said in a fiery presentation to shareholders. “We want what you want, and that’s a higher price.”
But in today’s Mail, former Pensions Secretary Baroness Altmann warns that the attack on the seven trusts is ‘a flashing red warning sign’ for British investors, putting the sector ‘seriously under threat’.
“If Saba’s predatory move succeeds, there are significant risks for ordinary investors,” she said.
‘I urge all shareholders of these seven investment funds to carefully review and vote on the proposals.’
On the attack: Saba Capital boss Boaz Weinstein (pictured) says shareholders lost because of an ‘ecosystem of greed’ that has damaged the performance of UK trusts
Saba has called meetings at seven companies – 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 her plans to resign their boards and replace them with his own nominees.
Laying out his case for taking over the trusts, Weinstein argued that the managers had “no interest” in improving the share price and merely wanted to continue collecting fees.
In contrast, Saba has large stakes in each trust, ranging from 19 percent to 29 percent, he said.
Weinstein said: “The industry is in decline. It really has been a disaster. The manager collects the fees, but they have no role in the game.
You have a boys’ club that thinks they are protecting the market. It really protects their own interests.”
He said that if Saba were to succeed in its plans to take control of the trusts, it would merge all or part of the seven funds into a new London-listed vehicle.
The fund would buy shares in other investment funds at significant discounts to the net asset value.
Should the merged vehicle include all seven trusts, the assets will have an estimated value of £3.9 billion, with only 16.5 percent invested in UK assets. Weinstein said Saba plans to grow this share to 100 percent.
The fund manager added that if the firm were to win, it would hire more staff in London and look to expand its office in Britain.
“We are the white knight of the British market,” said Weinstein.
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 existing managers.
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