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US hedge fund boss Boaz Weinstein says he wants to become a “white knight” for British investors and the London stock market by taking over the mutual fund sector worth £266bn.
The founder of New York-based Saba Capital is campaigning to buy seven British investment trusts. Mr Weinstein told the Financial Times that if successful, he would combine the two men’s assets, selling their holdings in expensive US stocks and buying shares in British companies and other British investment trusts.
“We are the white knights,” Weinstein said. “We are here to support small UK investors, not Americans bringing assets to the US.
“If we succeed and become a fund manager, we could sell US stocks such as Tesla and buy UK investment trust stocks.”
Mutual fund stocks are struggling due to the overall gloom in the London market. Many companies withdrew from the market or moved their primary listings from the UK to the US, and there were very few IPOs.
The average share price discount to net asset value for UK mutual funds is 15.4%, near the highest since the 2008 financial crisis, according to industry body the Investment Companies Association.
Weinstein said Saba Capital will “offer new products.” . . It is a British investment trust and will primarily hold other investment trusts. Billions of pounds worth of demand will therefore be created. ”
His comments provide further details about Saba’s trust plans. Sabah is attempting to take over the trust in one of the biggest coups the 150-year-old sector has faced. The plan is, if shareholders agree, to combine the trusts into a new vehicle and use the combined assets to buy shares in other trusts.
These trusts are currently managed by Baillie Gifford, Janus Henderson, Manulife and Herald Investment Management. Referring to the Baillie Gifford US Growth Trust, Mr Weinstein said: “This means there will be one less Baillie Gifford fund on the London Stock Exchange. M&S is not being delisted, but the (current) trust is the empty shell of Tesla and Nvidia.” Instead, it will be ours at LSE. ”
James Budden, a director at Baillie Gifford, said: “This is a case of twisted logic. There are hundreds of trusts listed on the LSE. If Saba were to combine them into its own funds… , there will be fewer companies and fewer assets invested in, and fewer choices and options for investors.”
Mr. Saba will become the trust’s investment manager if shareholders agree to replace the board with candidates nominated by the company, including Mr. Weinstein.
But that approach has been criticized as “opportunistic” and some fund managers have expressed concerns that individual shareholders will not vote. One existing business owner points out that shareholders could be left with a completely different vehicle than the one they originally purchased.
“If they were indifferent, maybe (the trust) should have treated them better,” Weinstein said.
