Investment trusts face up to return of the arbs

Aggressive activist investors can be good for trusts - up to a point.

What do the Argentinian Navy and Alliance Trust have in common? Believe it not, they have both been targeted by the same hedge fund. Elliott Associates, that made its name seizing the Argentinian tall ship ARA Libertad after non-payment of debt, has built up a 10% stake in the trust. Argentina’s foreign affairs minister called Elliott founder Paul Singer a “vulture” following the news, and the Alliance Trust board may be privately expressing the same sentiment this week. Arbitrageurs have been circling the beleaguered hedge fund sector for months, and their tactics include building...