- US activist investor hits back at criticism in fiery shareholder call
- Saba founder Boaz Weinstein says more independent board members will be added in time, should Saba win the upcoming shareholder votes at seven investment trusts
- UK investment trust industry might want to buckle up for more of the same if Saba wins
- Requisitioned General Meetings kick off with Herald Investment Trust on 22 January
Laith Khalaf, head of investment analysis at AJ Bell, comments:
“A war of independence has broken out in the UK investment trust sector. The US activist investor Saba is trying to convince shareholders in seven investment trusts that the boards haven’t done enough to hold investment managers to account and close discounts. Some of the trusts have hit back at Saba, suggesting its proposals would mean a non-independent board taking the reins, on the basis the proposed directors either work for Saba, or have been nominated by the firm.
“In a fiery investor call today, Saba founder Boaz Weinstein hit back at some of the blowback his firm has faced, calling into question the behaviour of some of the investment trust boards, claiming they don’t have enough skin in the game. He also confirmed the board composition proposed by Saba was temporary, with more independent members to be added in time. Independent boards are often touted as one of the advantages of the investment trust structure, and seen as a key shareholder protection.
“If Saba wins some of the forthcoming votes, the UK investment trust industry might want to buckle up for more of the same. Saba wants to overhaul the investment trusts, with the potential to merge some or all of them, and use the assets to buy more UK investment trusts trading at discounts. It would then rinse and repeat its current campaign to try to force convergence between the share price and the value of the underlying portfolio. Whatever the results of the upcoming shareholder votes it will be interesting to see if the arrival of Saba prompts investment trust boards to take more measures to address large discounts.
“Shareholders will soon get the final say on whether Saba carries the day or not. Investors in each trust need to carefully examine the options and arguments laid out before them, both by Saba and the existing board, before coming to a decision and voting their shares. Herald Investment Trust is first up with its general meeting on 22 January. There is a war of words going on between Saba and some of the investment trusts boards, and we may well get more skirmishes before the votes are cast.”
