After crashing onto the investment trust scene at the end of last year, a series of defeats has dulled Saba Capital’s bravado but Boaz Weinstein’s firm hasn’t stopped engineering exits or buying into value, says Deutsche Numis.

In the broker’s first half review of corporate action among London-listed investent companies, the New York-based asset manager was identified as a prominent force driving change in the industry. Although its requisitions of seven trusts at the end of last year, seeking to replace the boards and install itself as manager, were all defeated by shareholders in high-profile votes, this didn’t deter Saba, which went on to organise further requisitions.

While the gung-ho approach of Saba boss Weinstein may have been toned down along with his rhetoric around the investent trust industry, which he previously denounced as a ‘UK boys’ club’, Deutsche Numis chief analyst Ewan Lovett-Turner said Saba has ‘not gone away’.

Lovett-Turned calculated Saba currently has stakes in around 30 trusts, which have a combined value of more than £1.3b, and said ‘brash, public [campaigning] has been replaced by behind-the-scenes negotiations, which, we believe, gives more potential for all sides to come out with a “win”.’

The more low-key strategy appears to be paying off, and Saba has ‘yielded success with several large exits at close to NAV’ but has also been ‘willing to take a discount’, said the analyst.

Having bought stakes in trusts at wide discounts, Weinstein and his team have made a number of exits at net asset value (NAV) via the conversion of Middlefield Canadian Income (MCT ) into an exchange traded fund (ETF), and the wind-ups of Keystone Positive Change (KPC ) and Henderson Opportunities (HOT ).

The asset manager achieved an out via tender offers at CQS Natural Resources Growth & Income (CYN ) and European Smaller Companies (ESCT ), as well as Polar Capital Global Financials (PCFT ), which had already scheduled a five-year tender opportunity. 

The new approach to dealing with trusts has also given Saba room to sell shares at a discount, including its 12% stake in Montanaro UK Smaller Companies (MTU ) after the board repurchased 20m shares in one day in May at a discount of 8.5%, versus the average discount of 11% over the past year. Sources with knowledge of the situation suggested the discount on the share repurchase was in fact 7%. 

Saba initially reduced its stake in Bellevue Healthcare (BBH ) via a redemption in late 2024, then rebuilt its holding at a discount, and Lovett-Turner said it ‘now appears to be exiting via buybacks following adoption of a zero-discount mechanism’.

The activist has also reduced its stakes during active buybacks at Geiger Counter (GCL ), Montanaro European Smaller Companies (MTE ), Lowland (LWI ), Edinburgh Worldwide (EWI ), and Worldwide Healthcare (WWH ).

The corporate action that has swept across the trusts space shows that despite Saba’s initial blitz attack being defeated, it has caused major ructions for boards.

Lovett-Turner said boards are ‘seeking to keep the wolf from the door’ with more active discount control mechanisms, including numerous trusts introducing single-digit discount policies.

‘We believe this has been a positive catalyst for numerous boards being more focused on managing discounts for the benefit of all shareholders,’ he said.

Following its initial, public defeats, Saba is likely to be counting the exits it has made as successes and it hasn’t been put it off consistently increasing its stakes in the remaining trusts it holds.

In May and June alone Saba increased its holdings in several trusts as Lovett-Turner said it proceeds with a strategy of ‘buying where value emerges’.

Saba Capital’s disclosed holdings in the investment trust sector 

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Trust	Stake in May	Stake in June	Latest stake
Herald (HRI )	29.1%	29.1%	30%
Baillie Gifford US Growth (USA )	29.3%	29.3%	29.3%
Middlefield Canadian Income (MCT )	29.2%	29.2%	29.2%
Crystal Amber (CRS )	28.7%	28.2%	25.4%
Edinburgh Worldwide (EWI )	25.1%	25.5%	24.5%
River UK Microcap (RMMC )	14.7%	15.1%	15.1%
Schroder UK Mid Cap (SCP )	12.2%	12.2%	12.2%
Bellevue Health (BBH )	15.9%	15.8%	10.8%
Brown Advisory Smaller Companies (BASC )	5%	6.1%	10%
BlackRock Smaller Companies (BRSC )	10%	10%	10%
Utilico Emerging Markets (UEM )	5.7%	5.7%	5.7%
Fidelity Emerging Markets (FEM )	5.7%	5.7%	5.7%
Baillie Gifford European (BGEU )	5.3%	5.3%	5.3%
Henderson International Income (HINT )	5.2%	5.2%	5.2%
VPC Specialist Lending (VPC )	0%	5.2%	5.2%
Impax Environmental Markets (IEM )	5.20%	5.20%	5.20%
Ecofin Global Utilities (EGL )	5.1%	5.1%	5.1%
Henderson Smaller Companies (HSL )	5.1%	5.1%	5.1%
Abrdn Dividend Income & Growth (ADIG )		5.1%	5.1%
Abrdn UK Smaller Companies (AUSC )	5.1%	5.1%	5.1%
Baillie Gifford UK (BGUK )	5.0%	5.0%	5.0%
BlackRock Throgmorton (THRG )	5.0%	5.0%	5.0%
North American Income (NAIT )	5.0%	5.0%	5.0%
Montanaro European Smaller Companies (MTE )	9.7%	5.0%	5.0%
Worldwide Healthcare (WWH )	5.4%	5.0%	4.9%
European Opportunities (EOT )	4.7%	4.7%	4.7%
JPM European Discovery (JEDT )	5.2%	4.5%	4.5%
Geiger Counter (GCL )	12.2%	5.4%	4.4%
Lowland (LWI )	5.1%	5.1%	4.1%
JPM UK Small Cap & Growth Income (JUGI )	3.0%	3.0%	3.0%
CQS Natural Resources (CYN )	29.1%	29.1%	0%
Keystone Positive Change (KPC )*	0%	0%	0%
Henderson Opportunities (HOT )*	0%	0%	0%
European Smaller Companies (ESCT )	18.1%	0%	0%
Montanaro UK Smaller Companies (MUT )*	0%	0%	0%
Polar Capital Financials (PCFT )	0%	2.70%	0%

Source: Deutsche Numis; London Stock Exchange filings

(*=previously exited holding; bold = disclosed holding that has increase since start of May)

While several trusts have provided Saba with an exit, which had the benefit of stabilising their share registers, Lovett-Turner said there needs to be ongoing commitment to ‘keep the discount tight and maintain scale’.

‘Several investment companies have wound-up, but Saba was as much a symptom as a cause of the issues for some...,’ he said.

‘We await next steps for several investment companies with large Saba stakes’.

In May, Citywire revealed that former Saba manager Pierre Weinstein (no relation to Boaz Weinstein) had also started buying into the investment trust sector this year since switching hedge fund to join Verition.