(Bloomberg) -- Two trusts run by Janus Henderson Group Plc have hit back at proposals by Boaz Weinstein’s Saba Capital Management, the latest in a series of trusts urging shareholders to reject the activist hedge fund’s campaign.
Henderson Opportunities Trust Plc and European Smaller Companies Trust issued appeals on Wednesday asking shareholders to vote against resolutions that would hand Saba control at crucial general meetings scheduled for early next month.
The showdown follows a letter the activist sent last month to investors in seven UK investment trusts it wants to control, including funds run by Baillie Gifford, Janus and Manulife Investment Management. The activist campaign sought board changes and called for general meetings.
Saba has amassed stakes totaling about £1.5 billion ($1.9 billion) in the closed-end vehicles, holding almost 30% in some of them. 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 December letter.
“Saba’s motives are self-serving” and “could endanger shareholder protections,” James Williams, chairman of European Smaller Companies Trust said in a circular. “Saba is attempting to take control of the company with no assurances as to what will happen to shareholders’ investments,” Wendy Colquhoun, chair of Henderson Opportunities Trust said.
Both ESCT and HOT have traded at a “disappointing” discount to NAV, showing the boards and portfolio managers “have failed shareholders,” Saba said in a statement on Wednesday.
Britain’s investment trust sector has been in rapid decline over the past few years, due to a combination of high interest rates, a lack of 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.
Other funds including Baillie Gifford and CQS Natural Resources Growth and Income also have opposed the proposals of the New York-based hedge fund, according to separate statements this week.
Meanwhile, the Association of Investment Companies — an industry lobby group — urged major retail investment platforms to ensure customers are aware of the upcoming general meetings. “It is vital that shareholders vote on the future of their investment trust,” it said in a statement.
--With assistance from Marion Dakers.
(Updates with Saba’s statement in sixth paragraph.)
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