US hedge funds call London confidence ‘a disaster’: Saba slams jingoistic opposition to restructuring

The head of the US hedge fund fighting to gain control of seven London-listed investment funds has branded the sector a “disaster” and says he is the “white knight” needed to save it.

Saba Capital boss Boaz Weinstein said shareholders have lost out due to an “ecosystem of greed” that has damaged the performance of UK trusts. He responded to growing opposition to his plans to reform the trusts and replace their directors with his allies.

“It’s been described in this jingoistic way, as if I’m an American coming and going to do something to take away your precious fund,” the Wall Street financier said in an impassioned presentation to shareholders. “We want what you want, which is a higher price.”

But in an article in today’s Mail, former Pensions Minister Baroness Altmann warns that the attack on the seven trusts is “a red warning sign” for UK investors that has left the industry under a “serious threat.”

“If Saba’s predatory strategy is successful, there are significant risks for ordinary investors,” he says.

“I urge all shareholders of these seven investment funds to carefully examine the proposals and vote on them.”

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 its plans to remove their boards and replace them with your own nominees.

In making his case for acquiring the trusts, Weinstein argued that the managers had “no interest” in improving the stock price and only wanted to continue collecting fees.

By contrast, Saba has large stakes in each trust, ranging from 19 to 29 percent, he said.

Weinstein said: ‘The sector is in decline. It really has been a disaster. The manager is charging fees, but they have nothing to do with the game.

There’s this club of boys, who think they’re protecting the market. “He’s really protecting his own interests.”

He said that if Saba was successful in its plans to take control of the trusts, it would merge all or some of the seven funds into a new vehicle that would be listed in London.

The fund would buy shares in other investment trusts at steep discounts to the net asset value.

If the merged vehicle encompassed all seven trusts, its assets would be worth an estimated £3.9bn, with just 16.5 per cent invested in UK assets. Weinstein said Saba planned to increase this stake to 100 percent.

The fund manager added that if the company emerged victorious, he would hire more staff in London and look to expand his office in Britain.

“We are the white knight of the UK market,” Weinstein said.

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 manage them more effectively than the current administrators.