Saba Capital has established a holding of around $1bn in UK investment companies. about 18% of its total in closed-end funds, according to its founder and chief investment officer Boaz Weinstein.

Speaking at the London School of Economics’ alternative investments conference, Weinstein said Saba struggled to invest as much as it wanted in the frequently illiquid funds, buying ‘maybe 20m a day’.

However, he was surprisingly positive on the £267bn sector, where his firm has invested in around 35 investment companies, praising the strong corporate governance of UK and saying shareholders were ‘treated properly’ unlike in their US equivalents.

Boaz told his audience he was attracted to the UK by the wide share price discounts that emerged in investment companies over a year ago as rapidly rising inflation and interest rates took their toll on valuations.

Queensberry rules

But he said he also admired the British love of fair play and a ‘Marquess of Queensberry Rules approach’, meaning boards and fund managers played by the book.

‘I love the UK as an opportunity because there’s more of a Marquess of Queensberry Rules approach of acting properly and treating people properly, whereas in the US, they give rabbit punches and kidney punches from the side.’

Referring to Saba’s recent court victory over BlackRock’s attempt to reduce the voting rights of investment company shareholders, he said it would never have been possible to do such a thing in the UK, where it would be illegal.

‘When the shareholder is abused, as they’ve been in the US by BlackRock, for example, we have to go to court and none of those things are available in the UK, yet the UK still has a big discount, which is part of the appeal to us,’ Weinstein (pictured) said.

Kill the chicken

However, the master chess champion revealed a more threatening side, saying that, in the words of one of his investors, he was prepared ‘to kill the chicken to scare the monkey’ to enforce change.

So far, not even in the battle with European Opportunities (EOT ), where his firm pushed unsuccessfully for a 50% tender offer, has he resorted to seizing control to sack a board or fund manager in the UK.

Only in the US has Saba done that, taking over two investment companies and turning them into its Saba Capital Income & Opportunities funds 1 (BRW) and 2 (SABA). The ticker for fund 1 bears Weinstein’s initials, a reflection of his personal commitment, he said.

Widespread double-digit discounts across equity investment trusts presented the ‘best arbitrage’ opportunities he had ever seen, said Weinstein, presenting himself as an accidental champion of ordinary investors frustrated by poor share price returns.

‘It’s a state of dislocation because as retail investors have given up, we’re there not for them, but we’re there to bring them across the finish line to back to NAV [net asset value],’ claimed Weinstein.

However, his most successful UK trade saw Saba make an estimated 30% return last year trading shares in the £11bn Scottish Mortgage (SMT ), one of the UK’s biggest and best known investment trusts. That did not involve contact with either the fund managers at Baillie Gifford or its board.

Correction: This article originally stated Saba held $5.4bn in UK investment companies. This is the global figure for what Saba holds in closed-end funds, including the US.