Linus Uhlig (pictured) is a senior reporter at Investment Week and has extensively covered Saba Capital's UK investment trust campaign, exclusively speaking to founder/CIO Boaz Weinstein twice on the topic.
We are now at the start of the third act in the 'Saba saga', and if the archetypal Shakespearean arc can provide a blueprint for us to follow, this should be the climax.
Whether we are watching a tragedy or a comedy is unclear but after a quieter summer interval, the New York activist hedge fund's renewed burst of activity has piqued the interest of audiences once more.
Saba Capital Management waded into a sleepy corner of the financial services industry exactly 12 months ago today (19 December). No one likes being disturbed around Christmas, especially when the knock comes with a threat to your company, or your job's future.
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But just as boards were setting out-of-office replies, Saba and its pugnacious founder/chief investment officer Boaz Weinstein, requisitioned meetings at seven UK investment trusts with a bombshell letter announcing his 'Mind the gap' campaign.
Act two followed swiftly in February, with Saba setting its sights on a further four more trusts.
Weinstein cited prolonged underperformance, shares trading at a heavy discount and a stuffy "UK boys' club" culture on the boards as reasons for targeting some of the trusts. While I am not convinced the Manhattan hedge fund scene is a milieu of gender-balanced meritocracy, his criticisms landed and certainly ruffled a few feathers.
Much to Weinstein's chagrin, Saba lost each of those initial boardroom battles. But defeat at the ballot box did not mean defeat in the market. The hedge fund has since built fresh positions across the sector and has already banked several wins.
Publicly traded closed-ended funds such as investment trusts have long been fertile hunting ground for activists. Their shares can trade at a discount to the net asset value (NAV) of their portfolios, offering scope for arbitrage as well as pressure tactics.
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Of Saba's positions, CQS Natural Resources Growth & Income (CYN) has unveiled a tender offer for up to 100% of the ordinary shares in issue. Janus Henderson's European Smaller Companies trust (ESCT) also offered shareholders the option to exit with a tender offer for up to 42.5% of the issued shares. The activist has since sold out of these trusts.
More recently, Middlefield Canadian Income (MCT) became the first investment trust ever to be rolled over into an active ETF, while Smithson trust (SSON) also unveiled a rollover proposal that would allow shareholders to exit at NAV, or carry over their investment into an open-ended investment company.
Despite some scepticism from the industry about the nature of Saba's methods, the hedge fund's investments have borne fruit.
According to data from Holdings by Modular Finance, Saba's closed-end fund strategy has reaped rewards. Through a range of its underlying portfolios, Saba has generated returns of up to 49.4% on one of its positions and lost money on just eight of 35 holdings.
As 2025 progressed, Saba began to shake off its accusations of being a flat-track bully. Headlines shifted away from jeering at the self-styled ‘White Knight' across the pond to more serious considerations of the activist's ambitions and outcomes.
The hedge fund positioned itself as more than an arbitrage player merely seeking to exploit the discount. Weinstein pitched his campaign as a chance to not only disrupt the non-executive director (NED) merry-go-round at UK trusts, but also to return capital to the ‘mom and pop' investor.
During my second meeting with Weinstein this year, I questioned the integrity of his claim. For many sceptics watching from the sidelines, a New York hedge fund manager championing the helpless retail investor simply did not wash.
He admitted his self-interest to return capital to Saba clients took precedence, but insisted he was highly motivated by a desire to create better outcomes for all shareholders.
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Whether you take Weinstein at his word or not, Saba has created options for shareholders to exit at, or close to, NAV, questioned some trusts' raison d'être and brought to the table a conversation many had been quietly having about the necessity for boards to do more to get a grip on their companies growing discounts
Veteran investor Terry Smith's interview with AJ Bell last month captured the tension neatly. Smith was questioned about whether rolling the trust into an open-ended fund could risk haemorrhaging SSON's AUM if investors chose to exit at NAV.
Rightly, Smith pointed out that it was "a risk to us as a business, but not a risk to investors, which is what we should be thinking about here".
Undoubtedly many trusts utilise the features only a closed-ended structure can offer, but if Saba rattles the cage of those plagued by poor performance and structural inertia, that outcome can be ultimately remunerative for retail investors.
As Saba now enters stage three of its campaign, a rematch against Baillie Gifford's Edinburgh Worldwide investment trust (EWI), it must show that it cares more about outlining its plans for the future of the trust than trading blows with the board.
Blocking the proposed merger between EWI and Baillie Gifford US Growth trust earned rare industry praise, but transparency with shareholders about its plans for EWI must now follow.
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The beauty of the investment company structure lies in its transparency and shareholder democracy.
Weinstein has made his position clear: the campaign to remake Britain's investment trust establishment is far from finished, but he has an opportunity to - in his own words - prove he is "part of the solution", rather than being the ‘blackjack raider' he insists he is not.
Saba may not want a curtain call, but this drama deserves a denouement, at least for shareholders.
