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The head of an investment trust besieged by a US hedge fund said there is “no evidence” it would be better managed if the activist were successful.
Jonathan Simpson-Dent, chairman of FTSE 250 Edinburgh Worldwide Investment Trust (EWIT), questioned whether Saba Capital had any “experience” in early-stage investments or approval from regulators to run the UK-listed entity.
Analysts also warned that another 17 trusts on the London market could be affected if Saba took control of seven companies in the coming weeks.
Saba, led by Wall Street financier Boaz Weinstein, has proposed replacing the directors of the seven trusts with its own candidates, saying the leaders have “failed shareholders” and made bad decisions.
Today he will outline his plans in an online meeting.
But in a letter to Weinstein, Simpson-Dent questioned the credentials of Jonathan Zucker, a former lawyer and investment manager who has been nominated to run EWIT with Saba portfolio manager Paul Kazarian.
Activist: Saba, led by Wall Street financier Boaz Weinstein (pictured), has proposed replacing the directors of the seven trusts with its own candidates
He also raised questions about how much Saba would charge in fees if it took over the trust, saying it appeared the costs could be “up to eight times higher” than EWIT’s current fees.
Simpson-Dent told Weinstein that “we have seen no evidence to support” claims that Saba “would be better placed to run Edinburgh around the world.”
Opposition to Saba’s plans is growing as Weinstein prepares to outline his strategy for the seven trusts should his campaign be successful.
Analysts at brokerage Peel Hunt warned that the impact of Saba’s campaign on the UK investment trust sector “should not be underestimated”.
“If Saba is successful in one or more of its current activist strategies, this is likely to provide it with greater firepower to build dominant stakes in other trusts for similar activist campaigns,” they said.
The broker also noted that in addition to the seven trusts attacked, Saba also had “material” stakes in 17 other trusts.
Analysts at investment bank JP Morgan also weighed in on Saba Capital’s arguments yesterday, saying that almost all of the directors the firm had proposed to run the target companies had “little or no experience in UK-listed investment funds.” and in the regulatory regime”.
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