Janus Henderson chief criticises ‘very aggressive’ action by hedge fund Saba

Unlock the Editor’s Digest for free

Roula Khalaf, Editor of the FT, selects her favourite stories in this weekly newsletter.

The chief executive of Janus Henderson has criticised the US hedge fund that is attempting to take over the management of seven UK investment trusts as “very aggressive”.

Ali Dibadj, who leads the $382bn asset manager, said that Boaz Weinstein’s Saba Capital was swooping in to try to run the trusts to “take advantage of the management fee”.

Saba Capital has taken stakes in seven trusts — two of which are managed by Janus Henderson — and is seeking shareholder agreement to overhaul their boards and install its own candidates.

“If you haven’t seen what’s going on in the UK investment trust world today please pay attention on behalf of your clients,” Dibadj told professional investors at Janus Henderson’s UK Investment conference in London on Wednesday.

“You have an inconsequentially small, very aggressive . . . hedge fund [that] has come in and decided to bet on you and your clients not voting, to take over those funds, to take advantage of the management fee.

“They’re betting on complacency. Please, please don’t be complacent, don’t let them take over.” He added that the whole £266bn UK investment trust sector was, in effect, “under attack”.

Saba Capital said: “All of these trusts have board members that are part of this ecosystem . . . taking fees away from the pensioners for what? They are supposed to work for you, the shareholders, and they themselves are sitting on other trusts trading at similar discounts.

“We are here to rehabilitate this broken set of trusts and . . . a broken industry that hasn’t been able to grow.”

Saba added that it was one of the world’s largest backers of investment trusts and similar products, with $6.6bn invested. 

Dibadj’s comments come as Saba’s campaign faces a backlash. The trusts, which are also managed by Baillie Gifford, Herald Investment Management and Manulife, have raised concerns about Saba’s plan to put its own candidates on the boards.

ShareSoc, the industry body for individual investors, also said on Wednesday that it “strongly opposes” Saba’s proposals. Mark Northway, director at ShareSoc, said the activist’s plans “envisage a lack of independent governance and an incestuous and self-interested appropriation of the trusts’ investment mandates.”

Saba has focused on the seven trusts’ performance and the fact that their share prices lag behind the value of their assets.

The trusts it is targeting are: Baillie Gifford US Growth, CQS Natural Resources Growth & Income, Edinburgh Worldwide Investment, European Smaller Companies, Henderson Opportunities, Herald Investment and Keystone Positive Change. The hedge fund’s stakes range from 19 to 29 per cent of each of the trusts and add up to a total value of £1.5bn.

The UK’s investment trust industry has been under pressure from higher interest rates, regulation and a focus on fees, prompting some investors to exit.

Alan Brierley, an analyst at Investec, said it was “time to man the barricades against an egregious and opportunistic attack, but also for some industry self-reflection”.