(Bloomberg) -- Boaz Weinstein wants to control and run seven UK investment trusts after his Saba Capital Management amassed a total £1.5 billion ($1.9 billion) stake in the closed-end vehicles.
In a letter to shareholders of the trusts on Wednesday, Saba urged them to replace the boards, with Weinstein offering himself as a candidate for a board seat. His firm has called for general meetings at funds run by Baillie Gifford, Janus Henderson Group Plc and Manulife Investment Management.
Weinstein’s campaign targeting the ailing British investment trust industry comes roughly a year after he reopened his London office and started running a fund focused on UK trusts. The veteran derivatives trader, known for bringing down the London Whale, has already waged a battle to reverse discounts at US firms, winning legal cases last year against BlackRock Inc. and Nuveen.
The current boards have “failed to hold the investment managers accountable for the trusts’ wide trading discounts to net asset value,” the hedge fund manager said in the letter.
He also proposed the new boards pick Saba to run the trusts. The manager would then shift the funds’ mandates — currently ranging from investing in smaller European companies to US growth stocks — to focusing on buying other trusts that trade at a discount to NAV.
Britain’s investment trust sector has been in rapid decline over the past few years, due to a combination of high interest rates, insufficient size and liquidity, and cost-disclosure regulations. While trusts still make up roughly a third of the FTSE 250 index, a flurry of mergers that started last year has seen the sector shrink to 299 listed trusts – down by 28 — according to the Association of Investment Companies.
In the UK, Weinstein has mounted an activist campaign against Alexander Darwall’s £600 million European Opportunities Trust, which was a longtime investor in failed payments firm Wirecard AG.
(Updates with background.)
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