AVI's Treanor: Saba's approach to activism is 'largely self-serving'
Boaz Weinstein, founder and CIO of New York hedge fund Saba Capital, has withstood his fair share of criticism since launching his first campaign against seven London-listed investment trusts in December 2024.
The self-styled ‘white knight’ of the industry has been branded a ‘vulture’, ‘blackjack raider’ and the ‘City of London’s Public Enemy Number One’ by trust managers and members of the British press.
But how do fellow activists feel about his approach?
As the heated exchange between Saba and Edinburgh Worldwide (EWI) reached its conclusion last week, Asset Value Investors’ Tom Treanor gave his view.
Treanor co-manages the £70m MIGO Opportunities (MIGO), which hunts discounted investment trusts, as well as the closed-end sleeve of AVI’s £1.1bn Global Trust (AGT) − a portfolio that also targets valuation anomalies in Japan and family-controlled holding companies across the globe.
Speaking to Investment Trust Insider, Treanor described Weinstein’s fundamental tactic as ‘entirely valid’.
‘Encouraging and/or forcing boards’ to bridge the gap between a trust’s share price and net asset value (NAV) is ‘a really useful part of the ecosystem,’ he said. ‘I think boards have become far too complacent, and Saba has been a wake-up call for a lot of them.’
Since Saba made its big push two Decembers ago, the number of trusts repurchasing shares has surged. Buybacks rose 36% to £10.2bn last year, up from £7.5bn in 2024, according to data from the Association of Investment Companies (AIC). Discounts also narrowed, with the average trust discount shrinking from 15% to 12.5% throughout last year.
However, Treanor was less positive about the activist’s tinkering with trust boards.
‘Where Saba’s tactics diverge from ours is when they pursue management contracts,’ he said. ‘We think that’s a largely self-serving approach.’
Questions over the power wielded by shareholders to alter trust leadership were recently raised with the Financial Conduct Authority (FCA) by EWI chair Jonathan Simpson-Dent.
Speaking at an investor Q&A earlier this month, Simpson-Dent highlighted that Saba could automatically have ejected the EWI board at its requisitioned vote last week if fewer than 60% of other shareholders had turned out to vote.
‘I do not think it’s right that a minority shareholder can put in a new board,’ he said. ‘That does not feel fair on the other 70% of shareholders.’
Treanor took particular issue with board interference when newly proposed directors are not independent from activist groups, as was the case with Saba’s initial slate of nominees which he judged ‘a mistake’.
Third Point merger
The manager touched specifically on AVI’s public campaign against Third Point Investors (TPOS) last year following its proposal to acquire Malibu Life Reinsurance, and in doing so transform itself into a reinsurance company.
AVI raised concerns over governance, including the lack of a full exit for dissenting shareholders and the fact that Malibu Life was wholly owned by the Third Point Opportunities Master Fund, for which TPOS acted as a feeder vehicle. Weinstein supported the deal, which ultimately passed in August.
‘We weren’t impressed when they publicly backed an irrevocable commitment to support the Third Point merger, despite a very active and public campaign by ourselves and other shareholders,’ Treanor said.
‘There’s a clear principle that if you radically change an investment approach or policy, there should be a commitment to offer dissenting shareholders a full exit at NAV.’
On transparency more broadly, he said: ‘AVI believes activism works best when both sides are upfront and transparent about their motivations and demands. Relatedly, parties should strive for accuracy in their public communications, as this helps frame and shape the debate more constructively.’
Alts activism
Exposure at both AGT and MIGO is focused entirely on alternative asset trusts.
Last year, MIGO upped its stake in private equity, increasing its holding in Pantheon International (PIN) and initiating a new position in HarbourVest Global Private Equity (HVPE), with both trusts trading at large discounts of around 30%.
Saba also acquired a holding in PIN as it leaned into alternatives towards the end of the year.
Addressing complaints that the alts space is less suited to activist interference, Treanor said: ‘While it is clearly a truism that with less liquid portfolios your ability to raise cash to buy back stock is more limited than in a closed-end fund with an entirely listed portfolio, there are still things they can do.’
He welcomed HarbourVest’s largest-ever secondary sale of five portfolio funds for roughly $300m at a 6% discount in December – a third of the proceeds having been earmarked for share buybacks.
‘There’s a very clear arbitrage between the prices private buyers are willing to pay for these assets and the discounts public market investors apply,’ he said.
‘Although the underlying assets are ostensibly highly illiquid, they’re actually much more liquid than they appear to be on the surface and trusts like HarbourVest have scope to do much more of that sort of thing in the future.’
