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US hedge fund boss Boaz Weinstein said he wants to be a “white knight” to investors in the UK and London stock market by buying into the £266bn investment trust sector.
The founder of New York-based Saba Capital is campaigning for… Acquisition of seven investment funds in the United Kingdom. If successful, Weinstein told the Financial Times, he would pool their assets and sell their holdings in expensive US stocks to buy shares in British companies and other British investment funds.
“We are the white knight” Weinstein He said. “We are not the Americans moving assets to the US, we are coming to help small investors in the UK.
“If we succeed and become the fund manager, US stocks such as Tesla can be sold and British investment fund shares will be bought.”
Mutual fund stocks suffered amid the general gloom over the London market: a number of companies left the market or moved their primary listing from the UK to the US, and there were few initial public offerings.
According to the trade body the Association of Investment Companies, the average share price discount to net asset value for UK investment funds is 15.4 per cent – close to the largest since the 2008 financial crisis.
Weinstein said that Saba Capital will offer “a new product. . . A UK investment fund which will largely hold other investment funds. So it will create demand worth billions of pounds.
His comments provide more details about Saba's plans regarding the trusts, which the company is trying to seize in one of the biggest upheavals 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 approve.
The funds are currently managed by Baillie Gifford, Janus Henderson, Manulife and Herald Investment Management. Referring to the Baillie Gifford US Growth Trust, Weinstein said: “This means there will be one less fund than the Baillie Gifford fund on the LSE – it's not as if M&S has been delisted, the (current) fund is a Tesla shell and Nvidia instead, you will end up on the London Stock Exchange.”
James Bowden, a director at Baillie Gifford, said: “This is a case of twisted logic – there are hundreds of trusts listed on the London Stock Exchange. If Saba consolidated them into its fund, there would be fewer companies, less assets invested and less options for investors.”
Saba plans to become the trust's investment manager if shareholders agree to replace the boards of directors with the company's nominees, including Weinstein.
But its approach has been criticized as “opportunistic” by some fund managers Express concerns Individual shareholders will not vote. One current director points out that shareholders could be left with a very different vehicle to the one they originally purchased.
“If they were indifferent, maybe (the trusts) should have treated them better,” Weinstein said.
