American activist Boaz Weinstein wants to be the ‘white knight’ of the British stock market
Unlock Editor’s Digest for free
Roula Khalaf, editor of the FT, picks her favorite stories in this weekly newsletter.
US hedge fund boss Boaz Weinstein has said he wants to be a “white knight” for British investors and the London stock market by buying the £266 billion investment trusts sector.
The founder of New York-based Saba Capital is campaigning for take over seven British investment trusts. Weinstein told the Financial Times that if successful, he would pool their assets and sell stakes in high-priced US stocks to buy shares in British companies and other British investment funds.
“We are the white knight,” Weinstein he said. “We are not Americans bringing assets to the US, we are coming to help small British investors.
“If we are successful and become a fund manager, then US stocks like Tesla could be sold and British investment fund stocks bought.”
Investment trust shares were hurt by the general gloom surrounding the London market: a number of companies exited the market or moved their primary listing from the UK to the US, and there were several IPOs.
According to trade body the Association of Investment Firms, the average share price discount to net asset value for UK mutual funds is 15.4 per cent — close to the highest since the 2008 financial crisis.
Weinstein said Saba Capital will offer “a new product . . . an investment trust in the United Kingdom that will largely hold other investment funds. So it will create billions of pounds worth of demand.”
His comments provide more detail on Saba’s plans for trusts, which the company is trying to take on in one of the biggest shake-ups 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 agree.
The foundations are currently managed by Baillie Gifford, Janus Henderson, Manulife and Herald Investment Management. Speaking about the Baillie Gifford US Growth fund, Weinstein said: “This means there will be one less Baillie Gifford fund on the London Stock Exchange — not that M&S has delisted, but [current] trust is a shell of Tesla and Nvidia. You will end up with ours at LSE instead.”
James Budden, director at Baillie Gifford, said: “This is a case of twisted logic – there are hundreds of trusts listed on the LSE. If Saba decides to merge them into its fund, there will be fewer companies and fewer assets invested and fewer options and choices for investors. “
Saba plans to become an investment manager of the trusts if their shareholders agree to replace the boards with candidates nominated by the company, which includes Weinstein.
But some fund managers criticized his approach as “opportunistic”. expressing concern that retail shareholders will not vote. One existing manager notes that shareholders may end up in a vehicle that is completely different from the one they originally purchased.
“Maybe if they’re apathetic [the trusts] should have treated them better,” Weinstein said.
