Have you ever watched a quiet, well-mannered fund suddenly turn into the financial equivalent of a cage fight? That’s exactly what’s happening right now with a small but feisty global growth trust listed in London. A New York hedge fund manager with a reputation for shaking boards until something falls out has just fired another warning shot – and the discount narrowed almost instantly. Welcome to the return of the activist season.
Saba Capital Is Back – And It Means Business
Late November 2025, a letter landed on the doormat of a well-known Edinburgh-based investment trust. The sender? Boaz Weinstein’s Saba Capital Management. The message? Short, polite, and absolutely lethal: convene a general meeting or we will, because we intend to replace every single director.
It’s round two. Earlier this year the same activist tried to seize control of seven British investment trusts in one go. Shareholders slapped him down across the board. Most people assumed the story was over. Clearly, nobody told Saba.
What Actually Sparked the New Fight?
The trust in question runs a concentrated portfolio of innovative smaller companies around the world – think disruptive healthcare, frontier tech, that sort of thing. Over the last three years its net asset value has fallen roughly 30%. The share price has done even worse because the discount widened at exactly the wrong moments.
Compare that with the UK market, which has compounded at a very respectable pace over the same period, and you can see why an activist starts licking his lips. A 100 percentage point performance gap is the kind of number that makes hedge-fund blood pressure spike.
“The Company’s Net Asset Value return of -30.8% and Share Price return of -35.0% have massively underperformed its self-selected benchmark… by more than 100 percentage points.”
– Excerpt from the activist’s letter, November 2025
The Discount Trap – Why It Matters So Much
Investment trusts can trade away from their underlying asset value. When sentiment turns sour, that gap – the discount – can yawn open like a black hole. For shareholders, it’s doubly painful: you lose on the assets and then lose again on the wrapper.
At the end of November the trust was standing at around a 5% discount. That sounds modest until you realise the average for the broader sector (stripping out a couple of outliers) sits nearer 13-14%. In other words, the market is still giving the manager the benefit of the doubt – but only just.
The moment the activist letter hit the wires, the discount snapped tighter to about 4%. Classic market reaction: threat of forced change often does more for the share price in 24 hours than three years of patient fundamental work.
The Manager’s Counter-Punch
The board didn’t waste any time. Within hours they fired back a robust defence. Their main points boil down to three:
- The activist is quoting the wrong benchmark – comparing a global small-cap growth portfolio to the FTSE All-Share is apples and oranges.
- Over the past twelve months the trust has actually delivered 17.5% NAV total return against a benchmark up only 4.8%.
- The current discount is already tighter than the peer-group average for global smaller companies.
Fair points, all of them. But here’s the rub: activists don’t really care about last year’s relative outperformance when the three-year number is still deep red. They care about the structural opportunity – a decent portfolio trapped in a closed-end wrapper that the market has temporarily forgotten how to love.
A Quick History Lesson – This Isn’t Saba’s First Rodeo
Back in the first quarter of 2025, Saba requisitioned general meetings at seven separate trusts. The campaign was remarkably co-ordinated. Same arguments, same proposed directors, same demand: hand over the keys or we’ll take them.
Retail shareholders turned out in droves – something almost unheard of in the normally sleepy world of investment trusts – and crushed every single resolution. The activist walked away empty-handed.
Fast-forward ten months and the mood music has changed. Several high-profile trusts have since announced strategic reviews, tender offers, or full redemptions under exactly this kind of pressure. Precedents are being set. Shareholders are learning that activism can actually work.
What Happens Next? Three Realistic Scenarios
Nobody has a crystal ball, but experience suggests the story usually plays out in one of these ways:
- Negotiated Settlement – The board announces a chunky tender offer or a formal continuation vote with enhanced buybacks attached. Saba declares victory and sells into the liquidity. Everyone goes home happy (or at least not furious).
- Full Proxy War – Requisitioned meeting goes ahead. Both sides flood shareholders with circulars. Turnout will be massive. If the board loses even one resolution, the whole house of cards collapses.
- Managed Wind-Down or Conversion – In the nuclear option the trust announces it will convert to open-ended status or return capital progressively. Discount collapses to zero overnight, but the manager loses the mandate.
My money – if you’ll pardon the expression – is on door number one. Boards hate uncertainty, and activists hate spending money on losing fights. A face-saving deal normally appears once the shouting reaches a certain decibel level.
Why Retail Investors Hold All the Cards
One fascinating subplot in all these battles is the re-emergence of the private shareholder as kingmaker. Platforms have made it trivially easy to vote these days. When 60-70% of the register is held by individuals, a well-organised campaign on social media or investment forums can swing the result.
The industry body for investment companies has already put out the call: “Every vote counts.” Translation – please, please turn up this time as well.
The Bigger Picture for Closed-End Funds
Make no mistake: we’re watching a structural shift. The golden age of launching quirky, illiquid, permanent-capital vehicles and then ignoring the share price for decades is drawing to a close. Discounts are no longer shrugged off as “someone else’s problem.”
Activists have spotted a rich seam: decent assets, lazy governance, disengaged retail holders. Mix in cheap borrowing and a compliant registrar, and you have a repeatable trade.
Whether that’s good or bad for the industry depends on where you sit. Long-term growth managers hate the short-term noise. Income seekers quite like the idea of someone forcing lazy boards to hand money back when discounts blow out.
What Should Shareholders Do Right Now?
If you own the trust – or any trust facing similar pressure – here’s my personal checklist:
- Find your voting forms (they’ll arrive soon if the meeting is requisitioned).
- Read both sides carefully – activist letters are surprisingly well written these days.
- Ask yourself one question: do I still believe in the manager’s long-term philosophy, even if the last three years have been rough?
- If the answer is yes and the discount is already tight, you probably vote with the board.
- If you’ve lost faith or simply want your money back at close to NAV, the activist suddenly looks like your new best friend.
There’s no objectively “right” answer. It’s your capital.
Either way, the next few weeks are going to be fascinating. Popcorn at the ready.
