A new investment manager is being onboarded at Crystal Amber (CRS ) to refresh its strategy following the resignation of Richard Bernstein, who has led the £95m trust since it launched in 2008.

Tarncourt Capital will take over the fund from Crystal Amber Asset Management, with a key priority being to diversify its highly concentrated portfolio.

The listed fund’s top holding, Morphic Medical, accounts for 73.5% CRS’s net asset value (NAV), with 18.2% in cash. Through years of investment, the trust now owns 97.7% of Morphic Medical, which has recently had a regulatory and commercial breakthrough with a weight loss device.

The board said today that ‘the optimal time to seek to realise its investment in [Morphic] would be following FDA approval and access to the US market’.

Crystal Amber’s ‘refreshed investment strategy’ under Tarncourt will see the trust focus on ‘high-conviction, deep value opportunities’ across the UK and Europe – the goal being to ‘reduce the concentration of the fund’s portfolio, allowing the company to increase diversification and retain its fund status, thus reducing risk to the fund and its shareholders’.

Tarncourt, which is run by founder and private equity investor Charles Dickson, will take an ownership stake in the trust. It has agreed to purchase 2.82 million shares, or 4.5% of total share capital, from activist Saba Capital, which pushed Crystal Amber into wind-down back in 2021. 

The Boaz Weinstein-led hedge fund will remain CRS’s largest shareholder, continuing to own a fifth (20.9%) of the trust after the deal.

It had been the single largest owner, but the partial sale of its stake brings Saba in line with Merseyside Pension, which also owns 20.6% of CRS’s shares. Both groups have indicated their support for the change in manager and renewed strategy.

In a stock market announcement, Crystal Amber said: ‘In light of these factors and following engagement with major shareholders, the board has determined that the appointment of a new investment manager that can assist with the investment requirements and commercialisation of MMI and adopt a new strategy utilising the fund’s cash resources to make new investments represents the best course to enhance long-term shareholder value and liquidity.’

It thanked Bernstein, who now wishes to ‘pursue other ventures’, for his 17 years managing the trust.

Crystal Amber’s shares are up 236.9% since he launched the trust in 2008, trailing 31.7 percentage points behind the FTSE 250. It was also beaten by its peers in the Association of Investment Companies’ UK Smaller Companies sector, which were up 386.7% on average.

For most of its history, CRS allocated 4% of its net asset value (NAV) per annum to purchasing FTSE puts, which dragged on performance but provided some downside protection versus its peers. The trust also created and gifted new shares to charities, having a further negative effect on NAV.

Since shifting away from this approach at the request of activist shareholders in 2020, shares in Crystal Amber are up 250.3% over the past five years, far outpacing the 31.4% gain made by the FTSE 250 and 46.8% return reported by its average peer.