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US hedge fund boss Boaz Weinstein has said he wants to be a “white knight” for UK investors and the London stock market by buying into the £266bn investment trust sector.
The founder of New York-based Saba Capital is campaigning to take over seven UK investment trusts. Weinstein told the Financial Times that if he was successful, he would combine their assets and sell holdings in expensive US stocks to buy shares in UK companies and other UK investment trusts.
“We’re the white knight,” Weinstein said. “We’re not the American taking assets to the US, we’re coming to help small UK investors.
“If we’re successful and become the fund manager, then US equities like Tesla could be sold and equities of UK investment trusts will be bought.”
Investment trust shares have suffered in the general gloom about the London market: a number of companies have left the market or moved their primary listing from the UK to the US, and there have been few IPOs.
According to the Association of Investment Companies trade body, the average share price discount to net asset value for UK investment trusts is 15.4 per cent — close to the biggest since the 2008 financial crisis.
Weinstein said Saba Capital would offer a “new product . . . an investment trust in the UK that will largely hold other investment trusts. So it will create demand worth billions of pounds.”
His comments provide more detail about Saba’s plans for the trusts, which the firm is attempting to take over in one of the biggest coups the 150-year-old sector has faced. The plan is to merge the trusts into a new vehicle and use the combined assets to buy stakes in other trusts, if shareholders agree.
The trusts are currently run by Baillie Gifford, Janus Henderson, Manulife and Herald Investment Management. Referring to the Baillie Gifford US Growth trust, Weinstein said: “It means there will be one less Baillie Gifford fund on the London Stock Exchange — it’s not like M&S has delisted, the [current] trust is a shell of Tesla and Nvidia. Instead, you’ll end up with ours on the LSE.”
James Budden, a director at Baillie Gifford, said: “This is a case of twisted logic — there are hundreds of trusts listed on the LSE. If Saba goes round merging them into their fund, there will be fewer companies and less assets invested and less options and choices for investors.”
Saba is planning to become the investment manager of the trusts if their shareholders agree to replace the boards with the firm’s nominated candidates, which include Weinstein.
But its approach has been criticised as “opportunistic” with some fund managers expressing concerns that retail shareholders will not vote. One existing manager notes that shareholders can be left in a vehicle that is completely different from the one they originally bought.
“If they’re apathetic, maybe [the trusts] should have treated them better,” Weinstein said.
