Square Mile's David Holder: Lessons from the Saba saga

Conflict far from over

The oft-sleepy world of UK closed-ended investment trusts has been anything but over recent months, as New York hedge fund and activist investor Saba Capital parked its tanks on the lawns of a series of boards.

Of course, this is not the first time activist investors have had investment trusts in their crosshairs. Arbitrage activity frequently coincides with periods when such investment vehicles trade at significant discounts over a prolonged period. What is unusual about the Saba saga is both the scope of the approach, with positions taken in upward of 20 trusts, and its concerted aggressive nature. Initially, Saba's intentions were not widely known. In some cases, such as Scottish Mortgage investment trust, they were relatively short-lived shareholders, selling out once a sizeable share...