Lights go out at Crystal Amber as activist loses crucial vote

Activist AIM-listed fund is to wind up and return £128m to shareholders after a continuation vote was blocked by a US discount hunter.

Crystal Amber (CRS ), the activist AIM-listed fund, is to wind up and return £128m of assets to shareholders after losing its own battle with an activist US investor. 

The 13-year-old Guernsey investment company, whose fund manager Richard Bernstein has waged campaigns against IP developer Allied Minds (ALML), banknote printer De La Rue (DLAR) and Hurricane Energy (HUR), met its match yesterday when it lost a shareholder continuation vote. 

Although just over half of the votes cast were in favour of the fund continuing, it failed to reach the 75% threshold required to pass the extraordinary resolution at the annual general meeting. 

The result was not a shock as Saba Capital, a New York-based activist founded by former star derivatives trader Boaz Weinstein (pictured below), had said in June it would use its 26% stake to vote against. 

After spiking 2% today in response to Monday’s late afternoon announcement, shares in Crystal Amber eased 0.5% to 120.4p on a 22% discount to their estimated net asset value (NAV) of 153.1p, according to Numis Securities. 

Weinstein, who made up to $300m when JP Morgan lost over $6bn in its infamous ‘Whale’ trade on credit default swaps nine years ago, can look forward to a big uplift on its holding as the wide discount narrows while the company sell its assets and returns capital. 

However, while all investors in Crystal Amber will benefit from this, there may be disappointment among long-standing shareholders such as Merseyside Pension Fund, CG Asset Management and Charles Stanley broking clients that the distinctive company will bite the dust. 

Although Crystal Amber announced in 2013 it would hold a continuation vote at the 2021 AGM, the result needn’t have gone this way if it had fostered a broader shareholder following or prevented the shares falling so far below NAV, a value opportunity that was bound to attract predators. 

Crystal Amber noted that excluding Saba and one other US hedge fund, which shorted De La Rue and Allied Minds shares to hedge their position, more than three quarters of investors had voted for the company to carry on. 

Crystal Amber will prepare proposals in the coming weeks to reorganise and wind up the company in order to return capital to investors. It believes it can pay out at least £40m or 50p a share before 30 June 2022, with more to follow. 

It says it has been in talks with potential trade buyers for its five main strategic holdings – De La Rue, currency trader Equals Group (EQLS), Hurricane Energy, medical device manufacture GI Dynamics and Allied Minds – which account for 89% of NAV. It will provide an update on its 18.1% shareholding in Allied Minds next month. 

Although shares in the 4%-yielder have shot up 40% in the past year, longer term Crystal Amber has been a disappointment, returning 86% over a decade, according to Numis data, below the 114% of an underperforming UK stock market. 

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