13th Jan 2025 12:47
(Alliance News) - Saba Capital Management LP on Monday addressed "misleading" claims as it continues to push for management change at seven investment trusts.
Saba, founded by former Deutsche Bank banker Boaz Weinstein, has requisitioned General Meetings of the seven Trusts and nominated representatives to replace existing directors.
The move has sparked a tit-for-tat war of words between Saba and the seven.
On Monday, one of the seven, Keystone Positive Change Investment Trust PLC, hit back at what it termed Saba's "destructive" behaviour. On Friday, broker Investec published a note urging shareholders of all seven to vote against the moves.
Alongside Keystone, the other six trusts targeted by Saba are Herald Investment Trust PLC, Baillie Gifford US Growth Trust PLC, CQS Natural Resources Growth & Income PLC, Edinburgh Worldwide Investment Trust PLC, European Smaller Companies Trust PLC and Henderson Opportunities Trust PLC.
In a statement on Monday, Saba, addressed claims its motives are self-serving stating that as the largest investor in each Trust, "our interests are directly aligned with those of all shareholders."
"We have a proven track record of pursuing changes that return discounted funds to their full NAV and create long-term value for all shareholders."
Saba said its investment in the UK investment trust industry is already driving positive results for shareholders, noting the Trusts’ discounts to NAV have narrowed significantly over the last six months, which "we believe is due to Saba’s buying."
Saba also hit back at claims its involvement brings uncertainty and risk.
"We’re giving shareholders the chance to get out of an underperforming Trust if they so desire. If they want to remain invested, we’re providing shareholders with the opportunity to profit from this sector rather than be a casualty of it."
It described allegations that Saba's plan may introduce substantially inflated fees as a "fear-mongering" tactic.
Saba said claims by Herald Investment Trust that it has delivered "outstanding" investment performance are misleading.
Herald has "significantly underperformed" its benchmark this past year and the past three years, despite beginning 2024 with its largest position in Super Micro Computer – a company that experienced a huge surge, rising more than 300%, Saba alleged.
It called Herald's belief that, since Saba started investing in 2009, it has materially underperformed Herald as a "complete fabrication."
Saba took a shot at Keystone as well.
"Since Baillie Gifford took over [Keystone] four years ago, performance has been abysmal," Saba said.
On Monday, Keystone urged shareholders to vote against measures to restructure its board.
In September, the Trust had announced plans to return capital to shareholders.
Keystone noted Saba waited until December to announce it intended to vote against the plans, blocking the return to shareholders.
Karen Brade, chair of Keystone Positive Change said: "This destructive behaviour highlights just how disingenuous Saba has been and demonstrates its desire to take control of your company."
"We urge shareholders to vote against all Saba's resolutions. The stakes are high - if Saba succeeds in taking over the board, it will have the power, from a minority position, to make significant changes to the investment strategy, appoint itself as manager and raise fees."
On Friday, broker Investec recommended shareholders vote against Saba's proposals for change.
"Launching a campaign like this over Christmas is a classic activist tactic, clearly designed, in our view, to materially reduce the length of time that these investment companies can engage with shareholders and mount an effective defence. We see this as "greenmail", pure and simple."
Investec thinks this is all about Saba looking to "opportunistically" take advantage of a UK closed end industry that is enduring a perfect storm, after an extended and exceptionally strong period, and grow its own assets under management.
It called the developments at Keystone Positive Change, where Saba has said they intend to block the winding up of the company and an uncapped exit at a 1% discount, as "shocking".
This should leave UK investors "under no illusions about Saba’s modus operandi".
Investec said the deal of Saba's plans is "conspicuous by its absence."
"The paucity of information suggests strongly to us that Saba is relying on investor inertia, rather than the strength of its own arguments, for the resolutions to succeed," the broker added.
Investec said it is "deeply concerned" about Saba’s proposals.
Baillie Gifford US Growth Trust was down 1.2% to 264.74 pence each in London on Monday. CQS Natural Resources Growth & Income was down 3.0% to 187.25p. Edinburgh Worldwide Investment Trust was up 1.1% to 194.97p. European Smaller Companies Trust was down 0.5% at 173.21p. Henderson Opportunities Trust was down 11% to 208.00p. Herald Investment Trust was down 0.4% at 2,491.23p and Keystone Positive Change Investment Trust was down 1.0% to 244.54p.
By Jeremy Cutler, Alliance News reporter
Comments and questions to [email protected]
Copyright 2025 Alliance News Ltd. All Rights Reserved.