Revealed: Former Saba manager starts buying investment trusts in ‘coat tails’ strategy

Veteran closed-end fund investor Pierre Weinstein is understood to have been active in London's investment trust sector since switching to a different hedge fund this year.

A former Saba Capital fund manager has started buying into the investment trust sector since jumping ship to another US hedge fund this year, Citywire has learned.

Pierre Weinstein, no relation to Saba founder Boaz Weinstein, worked at Saba for 15 years until joining Verition Fund Management as head of special situations investing at the start of 2025.

Since then, his new firm has been upping activity in the sector and gaining exposure to investment trusts trading at discounts, according to multiple industry sources.

Names Verition is believed to have gained exposure to include CQS Natural Resources Growth and Income (CYN ) and the European Smaller Companies Trust (ESCT ), which have both been Saba targets.

While not believed to be taking as aggressive or large-scale an approach as Saba – which has launched public campaigns against nine investment trusts in the past six months and built stakes in many more – Pierre Weinstein at Verition represents another entrant to the sector with a strategy based on closing discounts, as well as the potential and playbook to turn activist.  

Verition, which has its HQ in Connecticut but offices globally, describes itself as a ‘multi-strategy, multi-manager hedge fund’. With $12.6bn of assets under management, the firm is roughly twice Saba’s size.

Trusts where Verition is believed to have gained exposure or sought to buy include Aberdeen’s New India Investment Trust (ANII ), alongside CYN and ESCT. 

European Smaller Companies was one of Saba’s original seven targets, with the Boaz Weinstein’s firm failing to replace the board and take control of the trust earlier this year.

The Janus Henderson-run portfolio and CQS Natural Resources were then among the next round of trusts that Saba requisitioned meetings at. Saba’s aim was to force the trusts to convert into open-ended funds, which would have created a profit for anyone who had bought the shares at a discount to net asset value (NAV).

After long negotiations, CYN on Wednesday announced a tender offer following the same step at ESCT, facilitating effectively the same outcome for Saba and allowing them to exit.

Against that backdrop, Verition is among several other hedge funds and arbitrageurs, also known as ‘arbs’, that have been stepping up activity in the London-listed funds space more recently, figures working in the industry told Citywire.

Multiple people described this group of investors as hanging onto Saba’s ‘coat tails’, and trying to profit from actions taken to close discounts at various trusts.

Verition declined to comment.

Arbitrage strategies typically involve buying listed funds, or sometimes using derivatives, while shorting and betting against the underlying holdings. If successful, that allows arbs to make money when discounts narrow, irrespective of whether trust portfolios rise or fall in value.  

While the catalyst is less clear than at ESCT or CYN, Aberdeen New India’s discount has also started to narrow more recently. It closed at just under 12% yesterday, having averaged over 17% in the past year, according to Deutsche Numis data.

‘Foreign money is coming’

Having previously worked with Boaz Weinstein at Deutsche Bank, Pierre Weinstein worked at Saba for 15 years from its launch as a standalone firm in 2009.

He has long worked on strategies arbitraging closed-end funds (CEF) – the US equivalent of investment trusts – and co-managed Saba funds which started to buy into the London-listed sector a couple of years ago.

While it is unclear exactly when Pierre Weinstein left his old employer, his appointment as Verition’s head of special situations, a newly-created role, emerged at the end of October 2024. That was less than two months before Saba publicly launched its first campaign against the so-called ‘miserable seven’ investment trusts.

In a practice also used by Saba, Verition is believed to have used contracts for difference to gain trust exposure. The US hedge fund is yet to disclose any trust positions in regulatory filings. Sector sources explained its stakes may simply not be big enough to mandate that, but the use of derivatives or nominee accounts to buy on one’s behalf could be another factor.

More broadly, activity from players like Verition and Saba is expected to continue while investment trust discounts remain wide.

‘Foreign money’s coming one way or another,’ said one investor. The same person referenced a groundswell of interest in the UK sector from US funds and even an Australian fund specialising in CEF arbitrage, helped by Saba-sparked publicity.

Conversely, the opportunity set has arguably become more limited since Saba played its hand last December, with fewer equity trusts with liquid, easy-to-hedge holdings still trading at double-digit discounts today.  

Saba has been vocal about its attention to continue buying and shaking up investment trusts which are languishing at discounts, with two new positions in Utilico Emerging Markets (UEM ) and Worldwide Healthcare (WWH ) coming to light in the last week.

Disclosure: The writer owns the European Smaller Companies Trust.