Alex Ralph, Chief Business Correspondent, The Times, December 18 2024:
An American activist investor has launched a campaign to remove the boards of seven UK-listed investment trusts, accusing some of delivering “disastrous” returns.
Saba Capital, the New York-based hedge fund firm, issued an open letter on Wednesday calling on the boards to call a shareholder meeting by early February to vote on the changes.
It follows speculation over Saba’s intentions as it built stakes of 19 per cent to 29 per cent in each trust’s shares, making it the largest investor..
Matthew Read, an analyst at QuotedData, said that there was a “flaw” in Saba’s strategy, as quickly delivering substantial liquidity and long-term returns for all shareholders “are often mutually incompatible, particularly for some of the funds it is targeting where the underlying holdings are less liquid”.
He added that while Saba had been successful with similar attacks in the United States, the UK closed-end fund market was “fundamentally different”, with standards of corporate governance higher and returns generally better. “It seems to us that their approach is very short term in nature and this highlights a long-running issue that, because many retail investors hold their shareholdings through platforms and do not tend to vote, large professional investors get a disproportionate amount of the vote.”
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