Activist launches new campaign targeting four investment trusts
Saba Capital has outlined plans for four investment trusts to become comparable open-ended funds to eliminate discounts.
11th February 2025 10:34
by Kyle Caldwell from interactive investor
US activist investor Saba Capital has launched a new campaign calling for four investment trusts to become comparable open-ended funds.
Saba Capital said it intends to requisition general meetings on its proposals for CQS Natural Resources Growth & Income (LSE:CYN), The European Smaller Companies Trust (LSE:ESCT), Middlefield Canadian Income (LSE:MCT) and Schroder UK Mid Cap Fund (LSE:SCP).
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Two of the trusts, CQS Natural Resources Growth & Income and The European Smaller Companies Trust, were part of Saba’s initial campaign to oust the boards of seven investment trusts and introduce two new directors of its choosing.
Saba’s boardroom shake-up plans have been voted down by shareholders at six investment trusts. The final meeting for Edinburgh Worldwide (LSE:EWI) takes place at the end of this week on 14 February.
Boaz Weinstein (pictured above) runs Saba Capital and oversees $5.5 billion (£4.4 billion) in assets at the New York-based hedge fund.
Saba says the four investment trusts have been “trading at deep discounts for years”, which has left shareholders “trapped”.
It said: “During our campaign to deliver value to shareholders of UK-listed investment trusts, we received thoughtful feedback from our fellow shareholders that has shaped the request we now plan to put forward at CYN, ESCT, MCT and SCP.
“While we acknowledge that shareholders were not ready to fully replace the boards with new directors, it was clear from our conversations that many investors agree with Saba on one crucial point: the importance of the option for liquidity at net asset value (NAV).”
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Saba added that open-ended funds, which have a single price, are “free of the structural issues that plague closed-end funds”.
“As a result, we intend to requisition general meetings to give you the chance to vote on a proposal for the trusts to implement a scheme or process that would provide you [with] the opportunity to roll your investment into a better performing open-ended fund with the same strategy and the same manager.”
The activist investor is able to call general meetings because it holds more than 10% of the shares in each trust. It holds over 29% in CQS Natural Resources Growth & Income (currently trading on a discount of -8.6%), European Smaller Companies Trust (discount of -7.5%), and Middlefield Canadian Income (discount of -8.9%), with just over 11% in Schroder UK Mid Cap Fund (discount of -8.2%).
At the time of writing, none of the four investment trusts had issued stock exchange responses to Saba’s proposals.
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