Saba Investment Trust Takeover Proposal

Ash_Pole

US hedge fund Saba Capital has proposed to takeover seven UK listed investment trusts. Any opinions on this?

https://www.ftadviser.com/investment-trusts/2025/1/14/inside-sabas-3-6bn-battle-for-seven-uk-investment-trusts/

jimjames

I can't see which 7 are included in that article?

masonic

You can find a list here: https://www.reuters.com/business/finance/janus-henderson-run-investment-trusts-urge-shareholders-reject-activist-sabas-2025-01-08/

wmb194

Ash_Pole said:

US hedge fund Saba Capital has proposed to takeover seven UK listed investment trusts. Any opinions on this?

https://www.ftadviser.com/investment-trusts/2025/1/14/inside-sabas-3-6bn-battle-for-seven-uk-investment-trusts/

These are just the ones that it's moved on so far, it's also built up large stakes in others. I know it also has a 20%+ holding in Middlefield Canadian Income (LSE:MCT £130m) but hasn't acted on that one yet.

With narrowing discounts to NAV so far it's been good for me. Going back into history this isn't anything particularly new ie. buy a large stake in a IT/closed end fund that's trading at a large discount to NAV and then put pressure on it to either wind-up close to NAV or offer some kind of close to NAV share redemption. Saba may also be looking to take over management but it's not clear. If it gains management control another option could be to merge them in order to build scale.

The IT sector has been struggling for a while now with large discounts and sub-scale funds that institutional investors aren't interested in because there isn't enough liquidity in the market to trade the shares in volume without moving the price significantly either way. In an attempt to rectify this, in the past few years there have been a number of mergers, the latest being Alliance and Witan to create a £5.2bn market cap company (LSE:ALW), and quite a few have wound up or are in the process but there are still a lot of sub-£1bn trusts where something needs to happen. This appears to be where Saba is fishing.

The infrastructure and alternative energy trusts are on massive discounts at the moment and I wouldn't be surprised if things began to happen with these as well.

If you're not aware of it CityWire has good IT coverage and has a good weekly summary: https://citywire.com/investment-trust-insider/news/trust-watch-goldman-s-pe-play-starts-to-click-while-reits-see-relief/a2457985

Saba's holdings:
https://www.sabacef.com/holdings/saba-income-opportunities-fund

tacpot12

Saba are looking to change how these investment trusts operate, to benefit themselves, not the investors who are currently invested with the funds. I can't see anything good coming from their interest in UK investment trusts. Of course, some of the trusts are not being run optimally, but the answer isn't to change the management philosophy, but to improve the management. 

If the management philosophy is changed radically, the trust is unlikely to be meet the aims of the people who are invested in it. If they sell, Saba gets a lot of value cheaply, which is what they are hoping for. 

Hoenir

tacpot12 said:

Saba are looking to change how these investment trusts operate, to benefit themselves, not the investors who are currently invested with the funds. 

Saba are simply exploiting an opportunity. Investors have been trading on Investment Trust discounts for decades. 

wmb194

Saba's lost the first battle. Re Herald IT:

https://citywire.com/investment-trust-insider/news/saba-loses-first-vote-against-herald-investment-trust/a2458241?re=127839&refea=330515&link_id=1800481

WinTogether

This page is useful, it has a summary of the situation, related articles and details on how the funds have performed and compare to others https://pickafund.com/pages/saba-capital-vs-7-uk-investment-trusts

LHW99

Six out of seven rejections for SABA so far.

https://www.theaic.co.uk/aic/news/industry-news/saba-hit-for-six-as-esct-shareholders-say-no

sjw11

Since I'm 50%down on EWI, I can't see Saba making an even worse job of it

Prism

All seven sets of votes now have rejected Saba