US activist investor Saba Capital has made its first public move against a UK-listed investment company, writing an open letter to the board of European Opportunities trust. It says that it intends to vote against the conditional tender offer that the trust has proposed and against the continuation of the trust. [Despite its 5% stake, we do not envisage that it will be successful in blocking either proposal. While it is true that the trust has had a run of relatively poor performance, the longer-term track record is still very good and most investors will give it the benefit of the doubt.]
We have reproduced the letter below:
October 19, 2023
Matthew Frederick Dobbs
Chairman of the Board
European Opportunities Trust
12 Victoria Street
London
SW1E 6DE
Re: European Opportunities Trust
Dear Chairman Dobbs,
I appreciate your response to my email and the continued dialogue on the path forward for the Fund. After careful consideration, it is our view that the Board’s conditional tender is woefully insufficient.
The Fund has underperformed its benchmark by 40% over the last five years. The idea that an investment advisor should only provide an option for shareholders to redeem 25% of their investment, if the Fund underperforms for another three years, puts the interest of the Fund’s manager ahead of shareholders.
There is no reason to keep investors in this Fund trapped for the benefit of the manager. While I appreciate your confidence in the manager’s investment thesis, shareholders who share the same confidence should remain, and shareholders who do not should have an opportunity to exit at NAV. This is a fund of liquid holdings imminently capable of providing liquidity to its shareholders.
We affirm our position against continuation, unless a full liquidity option at NAV is provided to shareholders, and would encourage other shareholders to vote against continuation.
Best Regards,
Paul Kazarian
Saba Capital
EOT : Saba Capital to vote against continuation at European Opportunities