US activist Saba Capital was busy in the second half of last year and the true extent of its activity in the UK closed-ended sector is starting to show as documents reveal it has a position in 35 investment companies.

According to the annual report for Saba Capital Income & Opportunities, the closed-end fund held shares in 11 UK investment companies directly and 34 others through total return swaps. Nine of the companies were owned outright as well as having swaps on them.

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Direct Ownership	Value ($)
European Opportunities (EOT )	$12,324,934
JPMorgan Mid Cap (JMF )	$31,332
Herald (HRI )	$51,201
Schroder UK Mid Cap (SCP )	$3,441,085
BlackRock Smaller Companies (BRSC )	$1,009,199
Henderson Opportunities (HOT )	$1,173,912
European Smaller Companies (ESCT )	$4,421
JPMorgan European Discovery (JEDT )	$61,741
Schroder British Opportunities (SBO )	$1,289,879
Abrdn Diversified Income and Growth (ADIG )	$6,695
Abrdn Smaller Companies Income (merged with Shires Income)	$462,405
Total	$19,856,804

Source: Saba

Swaps allow an investor to gain exposure to an asset without having to own it. The swaps are bought from an investment bank which purchases the underlying investment company shares and passes on the income and capital gains to Saba in return for a fee.

According to the report the swaps, which have been arranged through JPMorgan, expire at the end of October 2024.

Included in the list are well-known trusts that previously Saba has not been connected with, such as Templeton Emerging Markets (TEM ), Mercantile (MRC ), Scottish Mortgage (SMT ) and five other Baillie Gifford trusts.

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Owned via swap trade	Value ($)
Abrdn Diversified Income and Growth	$90,588
Abrdn New India	$591,521
Aberforth Smaller Companies	$2,177,805
Abrdn UK Smaller Companies	$1,869,472
Baillie Gifford European Growth	$380,862
Baillie Gifford UK Growth	$3,584,967
Baillie Gifford US Growth	$6,325,644
Baker Steel Resources	$144,639
Barings Emerging EMEA Opportunities	$199,638
BlackRock Smaller Companies	$2,327,040
Brown Advisory US Smaller Companies	$154,685
CQS Natural Resources Growth & Income	$366,325
Edinburgh Worldwide	$12,848,879
European Smaller Companies	$4,051,314
Fidelity Emerging Market	$8,162,970
Henderson EuroTrust	$1,134,541
Henderson Opportunities	$174,527
Henderson Smaller Companies	$216,817
Herald	$3,943,446
Invesco Select	$26,937
JPMorgan European Discovery	$29,414,415
JPMorgan Mid Cap Investment	$2,223,165
JPMorgan UK Smaller Companies	$227,309
Keystone Positive Change	$2,250,738
Mercantile	$8,499,956
Middlefield	$1,492
Polar Capital Technology	$4,858,748
River & Mercantile UK Micro Cap	$777,634
Schiehallion	$41,507
Schroder UK Mid Cap	$270,740
Schroders Capital Global Innovation	$12,782
Scottish Mortgage	$11,281,845
Templeton Emerging Markets	$2,473,854
Total	$111,106,802

Source: Saba

Unsurprisingly, several of these companies are undergoing some kind of corporate activity including: Invesco Select, which is ditching its umbrella structure; Abrdn Smaller Companies Income, which merged with Shires (SHRS ); JPMorgan Mid Cap (JMF ) which is planning to merge with JPMorgan UK Smaller Companies (JMI ), the latter is also held by Saba; and Abrdn Diversified Income & Growth (ADIG ), which has proposed a wind-down.

The holdings do not show the full picture, as they fail to account for the amount invested according to London Stock Exchange disclosures, which for instance shows Saba owns almost 10% of European Opportunities Trust (EOT ) through seven Cayman Island registered funds, along with the US based Capital Income & Opportunities fund.

However, it does show how bullish Boaz Weinstein, the founder and chief investment officer of Saba, is on closed-end funds, including in the UK where, excluding 3i Group (III ), the sector trades on a wide 15% discount to asset value.

Writing in the annual report he said US and non US closed-end funds ‘provide a rich opportunity set for future investments’ and had grown from 20% to 60% of the $402m (£315m) fund during the period and is the largest single asset exposure within the fund with an average discount of 15.6%.