January 17, 2025 • 30 mins
In this week's Merryn Talks Money market roundup, there's only one story on our host's mind. Merryn and Money Distilled newsletter author John Stepek talk about US activist investor Boaz Weinstein of Saba Capital and his high-profile attempt to unseat the boards of seven UK-listed investment trusts. Weinstein argues that a combination of weak three-year performance and too much tolerance of wide discounts means investors should welcome Saba's attentions; the boards argue that Saba is self-serving and that victory for the US investor would leave shareholders facing an uncertain future. "Everyone is right", concludes Merryn. But if you're a shareholder in any of these trusts, then what should you be doing about it?
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Episode Transcript
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Speaker 1 (00:02):
Bloomberg Audio Studios, Podcasts, radio News. Welcome to the Meren
Talks Money Weekly rounder, our debrief on the biggest stories
(00:24):
in markets and economics and' Merenthum's that web editor in
Larnch for Bloomberg UK Wealth and.
Speaker 2 (00:29):
I'm joined the Seniors Report and author of the Money
Distilled newsletter.
Speaker 1 (00:33):
Right now, when we say the stories this week, we
don't really mean the stories. We mean the story because
there is only one. Well in our little niche and
our little niche, there is only one and that is
what's going on in the UK investment trust industry now.
Earlier this week, John spoke to Boas Weinstein, chief investment
(00:53):
officer and founder of Saba Capital Management. If you haven't
listened to that episode, go and listen to it because
it sets us up for what we're going to talk
about today. In a nutshell, Weinstein and his firm Suba
Capital are attempting to take control of seven UK investment
trusts because they're trading on high discounts. Have been trading
(01:15):
on high discounts, then has the value? Maybe their returns
have been a little rubbish, maybe the governance is all
it should have been, etc. So they want to take
control of these of these trusts. We're going to talk
about what that means and why maybe they should maybe
they shouldn't.
Speaker 2 (01:28):
Too knows.
Speaker 1 (01:29):
Anyway, since we published that podcast with Weinstein, some of
the trusts that is looking at have contacted us and said, look,
do you know what this isn't all right? He said
some stuff that maybe misinformation, maybe not information. We don't
agree with what he says about this. We don't agree
with what he said about that. So we want to
have our say. Now, we can't have all seven chair
people of those trusts on where we could be kind
(01:51):
of chaotic and slightly carnage like. So John and I
are going to run through all the concerns that everybody
has and try and come to some kind of conclusion
towards the end. Now, one thing I want to add
before I do that is that regular listeners will know
that I am on the board of a couple of
UK listed investment trusts. Neither of these trusts are on
(02:13):
saba's lists, so it's not relevant, but there is, you know,
that's out there. I've got some skin in the investment
trust game. I don't think I'm conflicted anywhere, but you know,
I'll leave that up to you now, you know, right, John?
Do you know what I think?
Speaker 2 (02:25):
Boy? Do you think? Man? I think I've had.
Speaker 1 (02:28):
Too many emails on this.
Speaker 2 (02:30):
Sorry, Like I love that they sent them all to you.
This is a great thing of it, like being able
to kind of just come on, do an interview, chataway.
Is someone rail everyone up and then you get all
the complaints. It's fantastic. It's like Bitcoin all over again.
Speaker 1 (02:46):
It is Bitcoin all over again. And you know, a
couple of people would like me to do something about you,
like the Bitcoin people would like you to do something
about me. So I'm not going to do anything about
you as long as you don't do anything about me.
Speaker 2 (02:57):
I think that sounds like a good deal.
Speaker 1 (03:00):
Okay. The other thing I think is that I've got
so many windows open on my desktop looking at this.
There are so many different views, And do you know
what I really think? In the end, No, everybody's right. Absolutely,
everybody is right. Everybody who has written to me, everybody
who's telephoned me, contacted me on LinkedIn, abuse me on Twitter.
(03:24):
Everybody has a point about this. It all comes down
to do you think it's reasonable for an investment trust
to trade it a discount. Do you think long term
is three years or do you think long term is
five years? What do you think a reasonable fear fears?
What does governance really mean to you?
Speaker 2 (03:41):
Etc?
Speaker 1 (03:42):
Etc. Do you think that the investment trust industry is
such an important part of the UK investment and finance
ecosystem and in particular maybe even the startup ecosystem, that
it should be somehow protected in a way that other
companies aren't, etc. And there are great arguments on both
sides for them. Now, on the same day that we
released your fascinating chat by the way, with their birds,
(04:04):
one them, would you actually like to have my job?
Speaker 2 (04:06):
You do this really well? I know I couldn't possibly.
I mean, for start, I mean start getting some of
the complaints dayrectly.
Speaker 1 (04:13):
Ah, that'll always come to me anyway. The same day
that we put that out, Burzwinstein also had his own
webinar where he talked for over an hour about why
he's doing and what he's doing, and quite rude about
a lot of people, quite rude about a lot of directors,
very rude about quite a few fun managers. And he
talks a lot about about things that you know, not
(04:35):
not everything he said, with the stuff that I would
have agreed to. You talk about the principal agent problem,
about how the manager is the agent and in all
these trusts the manager has a mistake and no skin
of the game, and the manager is there to protect
the assets, et cetera. All true, but that's what the
board is there for. The board represents the principal and will.
Boards don't in the main own very many shares relative
(04:56):
to institutions, because boards are individuals, right. So if you
own ten pounds, twenty pounds, thirty thousand pounds, and in
some cases much more of a trust, you've got put
a reasonable bit of your personal money in it. But
obviously it's nothing compared to what the institutions might have.
So it's skin in the game, but not in an
institutional kind of way. So there was some confusion that
irritated me a little. Got to say boas this did
(05:16):
irritate me, confusion between the manager and the board. And
I think in my experience of this sector anyway, that
boards are very good at remaining independent from the fund managers.
So that irritated me a little. But I did you know,
I got that general idea that in the main what
a fund manager wants to do is hang onto assets.
That's what they want. You know, most big fund managers
(05:38):
are asset gatherers. They want to get money, keep money,
take the fee on that money. And in that sense,
investment trust are very good for fund managers because that
money is trapped, unlike an open ended fund where that
money is not trapped. Investment trust are great because they
just sit there little pool of permanent capital. Take your
fee every year. So you know, that's one thing he
said that really made sense. It also makes sense to
(05:59):
say that the trust to your targeting, you do have
horrible performance over three years, horrible And if your time
frame is for three years, and you would certainly look
at some of the baby gifted stuff and you get
why on earth am I holding this? Why can't they
make it better? Why have they lost forty fifty percent
of my money over three year? This is horrible Because
if you look at it longer term, not so horrible.
And if you approve the strategy, then you know you're
(06:19):
going to give it another four or five years before
you start to lose your temper.
Speaker 2 (06:23):
Yeah, I mean, I do think and certainly from a
conversation in the interview. But I did make the point
that the last three years, particularly that's when interest rates
started rising, there are good micro reasons why performance would
be specifically bad over this time period. And I also
think if you are quite careful about the starting date
that you choose, you know, you can choose a date
(06:45):
before the big sale of Hartens, so you can make
it look even worse than it is. I mean, that's
one thing you notice whenever you're messing around with chats
on the Bloomberg term, know that if you change the
starting date, it can make a substantial difference, even though
you're broadly making the same sort of point. So I
did sort of say, I said, you know, so what
but this three year thing? And he said, go, you said,
(07:05):
you're a very you're a very forgiven investor. So I
started thinking, you know, in the hedge find world, three years,
where as in the investment transport three years is a
relatively short time for him.
Speaker 1 (07:19):
Yes, yes, And I do think, by the way, everybody
that's going in and watching and obviously listen to John's
podcast first, but then do go and watch both Mindstone speaking,
because uh, you know, there's a lot to argue with,
but there's a bit what he says. And you know,
I'm sorry about this. I don't want to repeat things
that make people feel a little sad. But he says
to Bailly Gifford, aren't you embarrassed? Aren't you embarrassed? And
(07:43):
you know this is very feisty stuff. Bailly Gifford is
one of the one of the big and most respective
fund managers in the UK, and he pulled out their
three years performance and nically it looks over three years
in a couple of places, and he says, look, aren't
you embarrassed by this? Look what you've done. Look how
much money you have lost your investors. And you know
(08:04):
that is it's potent stuff. It's true because this is
real money. If you invested at the top, that's real
money that you work for. That you said, and it's gone,
it's gone, And this should be a response to that.
Speaker 2 (08:16):
I agree, and I think that either well, you can,
you can have discussions and make excuses and all the rest.
And again it's always possible to do that. At the
end of the day, the job the fund managers fundamentally
is to look after their customers money and make more
of it in the fundamental favor of all of these
(08:37):
trustes that none of them are necessarily you know, they're
not benchmark huggers. But the problem is, if I mean
doing there is a fair point where if you've been
sort of viewed as a techie growthy fund in the
last you know, three years and you still struggled to
you know, come up to the S and P, especially
if most of your investments are in the US, then
(08:59):
that is train out how to explain that. We leasily
if you'd been putting all your money in an S
and P five hundred passive tracker with the rest of
the population over this time period, and you do probably
have a rate to feel a little bit faired up.
Speaker 1 (09:13):
So there is this key thing here. There is a
problem in the sector. A lot of the discounts in
the investment to respector they have become structural. They're there
and they haven't gone away in three years is too long.
And we did have and I'm sure that everyone in
the industry will have read it. There was Alan Briley
of Investor put out a note last year where he
(09:33):
pointed out that this stuff is beginning to be a problem.
He said it wasn't last yearously it was a year
before October twenty twenty three, and I remember it coming
out and him saying, look, we've got an end of
cycle challenge here. There are various exceptional events going on,
but this is a perfect storm and it comes with
some self inflected wounds and you lot have got to
(09:55):
do something about it. You haven't responded fast enough to
all sorts of things. There's discounts of multi years highs.
There's blood in the water. This is going to attract
arbitra's and it's going to attract corporate buyers unless you
do something about it. You have got to do something
about your discounts to get out there, create tenders, buy
back properly, make sure these discounts come down to levels
(10:17):
where you are not going to be attacked. And of
course the sector did not react fast enough, did not
react fast enough that advice from his vest a couple
of years ago. And here we are, So is there
a problem, yes, Does the investment trust sector needs to
find a way out of that problem? Yes? But is
saba the answer? Is Sabah the answer the solution to
(10:41):
that problem? And I would say so far in part yes,
because here we are having this conversation. Here we are
having it and already, you know, the trust that that
has targeted are already putting forward while they would wouldn't
they putting forward various strategies to deal with that strategy,
a strategic review from one of them putting dividends up,
(11:03):
offering cashis Exitt's talking more about discount management. Their Edinburgh
Worldwide Trust has been talking about a big capital return
next year, BG Growth actually nothing one of the others,
and nothing Herald, nothing but Keystone has put in place
or was attempting to put in place a full cash
(11:24):
exit for everyone, which now it can't really do because
of this business with SABA, who aren't going to vote
for it. So they are now putting in place some
things and you'll see other trust in the market looking
around and going, wow, we might be next. We got
to do something and really stepping up by bags or
certainly talking about stepping up by bags. So we have
a catalyst here. We have a catalyst that is forcing
(11:46):
boards to sit down and say, what can we do
to deal with these structural structural discounts. And it's very
hard to turn around performance in five minutes, right, but
you can maybe do something about the discounts and if
you can't. If you can't, let's say you buy back
and buy back and buy back and buy back, and
that it can't remain and your trust becomes very small.
(12:07):
Well maybe that's just the way it is, right.
Speaker 2 (12:09):
Yeah, I mean I think the the most obvious value
that SABA has added is to put a rocket up
the backside of the sector. You know. I think that
I don't think really can be argued with, and to
be fair, I don't think anyone really is arguing with it.
You know, like these trusts have taken action. The other
(12:33):
trusts that are sort of on the hit list, some
of them are taking action or at least talking about it.
And I think that that in itself is good because
also you know, it draws attention to the sector. But
the UK capital market as a whole we've been complaining
about for quite a while and you know whatever, you know,
(12:53):
it's had nearly four years worth now consecutive withdrawals. But
the point is that this sort of thing where somebody's
noticing the value and it's happening. You know, It's like
I mean, Herald has gone from trading on a discount
of I think it was you know, it was around
about ten percent for most of last year and now
he's trading on the premium were like one point five percent.
And to be fair, I mean, Herald is probably one
(13:15):
of the most well one of the trusts on this
list that I would sort of feel it would be
a shame if it was taking over. We can discuss
that in a moment, but the point is, you know,
it was trading a persistent discount and now it's not.
So Saba has been good for shareholders in that trust
and then all the other trusts because they've all kind
of seen their discounts closed. So it's definitely been value
(13:38):
to that. And I think the only question from the
from the ultimate point of view of our listeners, I
guess who you know are the people who hold investments
in these trusts, you kind of retail investor, what does
what's the next step and what does it mean for them,
you know, if SABA wins or if Saba doesn't win.
(14:00):
And from that point of view, I think that's where
it gets slightly more complicated, just because you know, at
the end of the day, if you were fed up
weight Herald and you were waiting for the discount to
close before you got out well, you know that it's
your chance. You know, you should sell today done.
Speaker 1 (14:13):
You know at absolutely, but.
Speaker 2 (14:16):
Also you know, I would also like to know, for example,
if you were in Keystone, which is you know, I
don't think again, I don't think even you know, the
chairperson would argue the performance in that has been back.
So apart of me also does wonder, like, what what
are you thinking if you are currently a Keystone shareholder?
(14:37):
Why why is it still on your portfolio at all?
You know, It's like I do think there's got to
be an element the people taking responsibility here because one
of the things that we keep that so everyone keeps
talking about is that there are a lot of retail
shareholders on these registers, so a lot of retail shareholders
own them. And one of the arguments is that SABA
has come along and because you need to get fifty
(14:59):
percent of however, many votes are cast, so abbas get
like thirty percent already or nearly thirty percent in most
of these trusts, and so when it goes in and votes,
if most of the retail shareholders don't turn hop, then
they're automatically going to win. And obviously people keep saying, well,
retail shareholders are apathetic, but I'm not sure. I don't
I don't actually really understand that you have to be
(15:22):
a fairly active investor to have ended up in any
of these seven. You have to be someone that chose
to buy them. You're not getting put into this by
your auto enrollment pension. So if you if you don't
go out and vote, or if you don't even you know,
if you don't have an opinion and you're not aware
of this, then what are you doing with your portfolio?
It's like, why is this stuff there and you don't
(15:43):
know about it? I mean, it's not that hard to vote.
Speaker 1 (15:47):
Yeah, but it's interesting John on this business of voting
and that several people have said to me in the
last couple of days, this is so awful because poor
retail investors, it's so hard for them to vote. Well,
it kind of isn't interactive investors operating and opt out
rather than an opt in system. For years now, Huggers, Landown, Ajball, etcetera.
They all have very efficient voting systems. If you want
(16:08):
to vote, you can vote now. If people don't vote
in this, I think it'd be very interesting and then
you and I can do lots of great podcasts on
shareholder democracy and what's wrong, howe you able should get
on with it, etc. But I have had one from
the share Society, an email from them about the problems
with the nominee system. I either way that your shares
are held on platforms, so you don't hold them directly,
(16:29):
the platform holds them for you, and ownership bus is
slightly fuzzy, and they believe that there are problems with communications,
so it's actually very hard for trust boards to directly
contact shareholders. So I would say the main problem there
is communication, and if I were to be allowed to
reform this system, I would try and make it easier
(16:49):
for companies and trust of course our companies to communicate
directly with their own shareholders, even if they hold their
shares on platforms.
Speaker 2 (16:56):
You're rate well because a lot of this. I mean,
I've never ever seen account pain as aggressive as this
to get shareholders vote, which again I think is yet
another indicator of you know, some of the potential problems
in the sector. It's like you all waits, so now
that your job's at risk, you're getting the thing out
of it to make sure that you know your your
shareholders coming vote. I'm fascinated to see what the ton
(17:19):
out is like, because I think that it will be
a really strong test of the points that you know
in your book about shareholder democracy share you know, I think,
and nicely, it's really exciting from that point of view.
I mean, you know, very much looking forward to it exactly.
Speaker 1 (17:36):
I know, I'm slightly embarrassed about being excited about it,
because really, you know, I should be horrified and bold, etcetera.
I'm kind of excited. Okay, So that's voting out the
way why you should do it, et cetera. So now
the question is what should you do? How should you vote?
What is Saba asually trying to do here? And I
did have got him the emails relentless, John. I had
(17:59):
one from them in the sector who said that day,
you know, what Saba is doing is perfectly valid, but
he really wishes that Boras Swinstein would drop the mom
and pop stuff and all the talk about how he's
the white knight and the defender of the retail investor
and all that stuff, when all he's actually doing is
a perfectly reasonable arbitrage, that's it, and he's doing it ruthlessly.
(18:21):
He's using these discounts of the difference between the navy
and the market price, and at the same time to
gather assets. And if you look at the asset gathering
part of it. We had some communication with Karen Braid,
the share of Cheek Keystone, and her core question is
if you are the white Knight, if you are the
(18:41):
great protector of the retail investor. Keystone has already offered
a full cash exit for all shareholders who want it
at net hash and value minus one percent one percent,
obviously being too to pay all the expenses of doing
the whole thing, etc. Now, as that is already on
the table, if Saber wants everyone to get out at
(19:01):
full value, why are they stopping this happening? Why stop
Keystone investors reclaiming their funds first? And then if you
then people who don't you want to go to your
own offering, then they're left over for you. If you're
not doing that, it'd rather suggest that the whole thing
that you're trying to do with Keystone at least is
simply to gather assets in order to reap the fees
(19:22):
from that later.
Speaker 2 (19:23):
I have struggle to see what what is the I
don't know where the comebacks to that.
Speaker 1 (19:27):
I don't know, but all about it. You just want
to interrupt because I'm slightly concerned that Boas is listening
to this. Boas, I would like you to send your
hate mail to John.
Speaker 2 (19:37):
You're doing Twitter.
Speaker 1 (19:38):
It's but on Twitter is going to come to me.
Speaker 2 (19:43):
Oh yeah, that's the point. Okay, Yeah, said, but I
think that's that's not a non field point. Okay, But
the moment pops off is part of the rulessness. You know,
it's gonna it's a negative sales page either. If if
you argue that the relying and shareholder apathy, then on
(20:03):
the flip side of that is, well why are they
coming on like this podcast? I would keep quiet. You know.
If I was relying on shareholder apathy, then I'm not
sure I would publicize this as much. So maybe you know,
there's an element of hearts and minds alongside of course,
you know, I mean if they phtograted the seven, then
they want to win them all and yeah, and obviously
(20:25):
they make money off the fees, so you want as
many assets as possible.
Speaker 1 (20:29):
For one a lot it would be four billion quid. Yeah,
that's why could be quite a trust or trust wouldn't it.
Speaker 2 (20:34):
I mean, that is the other thing. It's like what
their planet they do with it, I guess is where
a it's where some of the quite a bit of
the criticism comes from. But also it's where I guess
that my own view and you understand boards a lot better.
But the some of the mechanical aspects of this, like
how do you like with these portfolios without driving down
(20:59):
the share price, for example, and things like they can
you know, the governments, you know, you can have to
overhaul these these entire kind of structures. And is that
not going to distract to the point that possibly it's
going to be detrimental to performance. I mean, I don't know,
(21:19):
but I think that the changeover process is bound to
be disruptive and complicated in ways that are not clear
right now.
Speaker 1 (21:28):
Well, that's a good point, and changes are always disruptive,
but a lot a lot of the of the stocks
held in a lot of these portfolios are perfectly standard
liquid stuff. And he has said that there will be
if were he to get herald, there would be a
year for the liquidation, et cetera. The big one in
Bailey Gifford, the private company of Culture SpaceX and as
he himself says, I don't. I'm pretty sure there's a
(21:49):
market for that.
Speaker 2 (21:50):
Yeah, and that is fair enough, and I can see
why they keep that anyway.
Speaker 1 (21:55):
Yeah, yeah. It more of the question is, I mean,
there are governance questions there are Does does Saber Capital
really understand exactly how intense the compliance and regularly burdens
on trust boards in the UK? Are you know, it's
not normal and not acceptable to simply have two non
(22:17):
non independent directors on a board. It doesn't it doesn't
work like that. And he has said that over time
he would get more directors onto his new boards, etc.
But starting out like that too, non independence, it's it's
not ideal that that's not how that's not how we work.
So there are there are governance issues around that, although
he says they'd be short term, one would hope they
would be short term. And then there is the matter
(22:39):
of the new strategy. And again, you know, I'm I
think I'm slightly less bothered by this than than some
other people in the market, because it seems to me
that Weinstein is suggesting that in almost all cases there
would be an opportunity for people to get out at
(22:59):
a few percentage points at least below nav So it's
not necessarily compulsory to roll over into his new strategy,
which slightly suggested all the arguments about his performance record
and his fees and all that kind of thing. If
p you can get out without having to go into
that strategy, how effective that strategy is and how much
(23:21):
it costs is slightly moved.
Speaker 2 (23:23):
Yeah, I think that's that's true. I think that's all
fair enough, and I guess yeah, I mean, from the
point of view voting, I suppose my issue again sort
of comes back to what you're thinking as a shareholder
of these trusts. So it's like, if you own HAIRLD
because you want to take advantage of a small cup
(23:44):
global tech stocs, and that's actually a strategy that you
believe in, then I struggle to see why you would
be keen to swap that out for a strategy of
closing investment trust there's going in the UK yep. But
again with some of the other trusts, you're kind of like, well,
(24:07):
you know, they've get less sort of. I guess specifically,
Herald and c CQS seem like quite unique trusts in
terms of what they're aiming for. Some of the other stuff,
and also the kind of ones that are already getting
rolled over I can. My main question to shareholder on
them is like, well you should revisit this and think about, well,
(24:29):
why why do I own this again? And then think
about what you want to vote for in light of
that question, because, like I said, I mean certainly something
like Keystone, which is which? Which is going to be sold? Anyway?
I think maybe have a wee look if you've got
that in your portfolio, look at other things that you've
got in your portfolio that maybe you haven't thought about
for a while, and think about, well, why is this
(24:50):
stuff here in the first place?
Speaker 1 (24:52):
John, I think you've been quite polite there, aren't you.
We are actually saying something incredibly rude, but in quite
a polite way.
Speaker 2 (24:58):
That's the best way to have been told. I could
called up to HL the last team. I did it
in non polite way, so I thought, not.
Speaker 1 (25:09):
Okay. So one thing that I don't think John and
I are going.
Speaker 3 (25:12):
To do here is to slog through the very catchy
discussion about everybody's performance and what is sub's actual performance
over three years, five years, ten years, What are the
actual fees?
Speaker 1 (25:24):
What is this? What is that because I think that
we might work on the basis that that Windstan Taba
will be reasonably good to their word and give everyone
an exit. So I suppose John's question is the right one.
Would you like to have some cash back at maybe
only a couple of percentage points below nav And by
the way, in most of these cases, you can have
that right now. You're going to have it right now.
(25:46):
So if if all you wanted to get out with
your cash relatively intact, I mean obviously not if you've
lost thirty forty fifty with one of the funds, maybe
if you went in the top. But either way you
want to get out close to navy, just do it now,
and then you know what, if you want to go
back into the saber strategy later, assuming he wins one
of these, he'll have a lifted vehicle and you can
(26:07):
buy back in when all the chaos is complete. So
that seems like a great way to do it. If
you actually want to be in this saber strategy, take
your money, wait, buy back in later. If you don't
want to be in the Saber strategy and you do
want to stick with, for example, Herald or whatever it was,
then you need to get out there and vote, to
(26:28):
hang on to the strategy that you like. Is that
a fair end interpretation job?
Speaker 2 (26:33):
Definitely, I think that is the important thing, because that
was the other thing that jumped to whenever I was
having the discussion with boys. Was I mentioned the you
know they can saying a bit who or the cynical
views that you think the retail share holders want vote
and he basically agreed, not in so many words, by saying, well,
you know, the alternate view is that if the retail
showholders don't vote is because they're not engaged enough with
(26:55):
the current management and they don't think they're doing a
good job. So you know, he'd be said yes and no.
For if you don't show up, it's a vote for
cyber so for the other.
Speaker 1 (27:07):
Well, it's true, I mean same with politics, right, not
voting is the equivalent to voting in the end?
Speaker 3 (27:16):
Very cheap?
Speaker 1 (27:17):
Boy, do you get insights on this show? Is there
is there anything else we need to discuss? I suppose
one thing I would say is there's been a lot
of conversation about the importance of the investment trust industry
as a whole to the UK financial sector. It's important
that there it's got all the infrastructure around it, and
(27:40):
in particular, the companies such as Herald that invests in
small companies and growing companiesn't a part of a startup
infrastructure and how important that is, and I agree that
it's very important, absolutely it is. However, however, the key
purpose of a fund trust is to make money for
its investors. You can't just be part of the ecosystem.
(28:02):
The ecosystem alone is not enough. You have to make
the money. You have to fulfill the requirements of the
people who've given you their money. So it's not enough
just to talk about how we have to protect this
sector because it's so important to the UK ecosystem.
Speaker 2 (28:16):
That's not enough, No, it's not. And the other point
is that is the thing that sharpens these things is
competition and events like this. You know, the fact that
you know, boys Weinstein's able to do this demonstrates that
something has been going wrong and hasn't been addressed quickly enough.
And I guess that's the point of free market and
(28:37):
I guess my people just not used to free markets
functioning in this way. Oh well, depth, what any of
you pay for it?
Speaker 1 (28:49):
Thank you? John? Right, So there we go. The key
answer here is that everybody is right and everybody is
also wrong. That is my final in site for the day.
Make your decision, but whatever you decide, get up there
and float. This is important for showlder democracy. It's important
(29:09):
to the trust if you want to stay involved with
that trust, and it's really important to the fund managers
you run those trusts. I mean, they don't want to
lose this money. Do they think about them? Think of
the fund managers. Thanks for listening to this week's Mary
and Drugs Money Debris. If you like our show, rate
to review and subscribe wherever you listen to podcasts. Also
be sure to follow me and John on Excel, Twitter
(29:31):
at marinas w and John Underscore Staffac. This episode was
produced by Summer Siety and Moses, and sound designed by
Blake Maples and Our executive producer is Brendan Francis Needham.
Question and comments on this show and all our shows
always welcome. Our show email is Merrow Money at Bloomberg
dot net, but obviously you can send your hate mail
director John and me on Twitter
Speaker 2 (30:01):
B
Bloomberg Audio Studios, Podcasts, radio News. Welcome to the Meren
Talks Money Weekly rounder, our debrief on the biggest stories
(00:24):
in markets and economics and' Merenthum's that web editor in
Larnch for Bloomberg UK Wealth and.
Speaker 2 (00:29):
I'm joined the Seniors Report and author of the Money
Distilled newsletter.
Speaker 1 (00:33):
Right now, when we say the stories this week, we
don't really mean the stories. We mean the story because
there is only one. Well in our little niche and
our little niche, there is only one and that is
what's going on in the UK investment trust industry now.
Earlier this week, John spoke to Boas Weinstein, chief investment
(00:53):
officer and founder of Saba Capital Management. If you haven't
listened to that episode, go and listen to it because
it sets us up for what we're going to talk
about today. In a nutshell, Weinstein and his firm Suba
Capital are attempting to take control of seven UK investment
trusts because they're trading on high discounts. Have been trading
(01:15):
on high discounts, then has the value? Maybe their returns
have been a little rubbish, maybe the governance is all
it should have been, etc. So they want to take
control of these of these trusts. We're going to talk
about what that means and why maybe they should maybe
they shouldn't.
Speaker 2 (01:28):
Too knows.
Speaker 1 (01:29):
Anyway, since we published that podcast with Weinstein, some of
the trusts that is looking at have contacted us and said, look,
do you know what this isn't all right? He said
some stuff that maybe misinformation, maybe not information. We don't
agree with what he says about this. We don't agree
with what he said about that. So we want to
have our say. Now, we can't have all seven chair
people of those trusts on where we could be kind
(01:51):
of chaotic and slightly carnage like. So John and I
are going to run through all the concerns that everybody
has and try and come to some kind of conclusion
towards the end. Now, one thing I want to add
before I do that is that regular listeners will know
that I am on the board of a couple of
UK listed investment trusts. Neither of these trusts are on
(02:13):
saba's lists, so it's not relevant, but there is, you know,
that's out there. I've got some skin in the investment
trust game. I don't think I'm conflicted anywhere, but you know,
I'll leave that up to you now, you know, right, John?
Do you know what I think?
Speaker 2 (02:25):
Boy? Do you think? Man? I think I've had.
Speaker 1 (02:28):
Too many emails on this.
Speaker 2 (02:30):
Sorry, Like I love that they sent them all to you.
This is a great thing of it, like being able
to kind of just come on, do an interview, chataway.
Is someone rail everyone up and then you get all
the complaints. It's fantastic. It's like Bitcoin all over again.
Speaker 1 (02:46):
It is Bitcoin all over again. And you know, a
couple of people would like me to do something about you,
like the Bitcoin people would like you to do something
about me. So I'm not going to do anything about
you as long as you don't do anything about me.
Speaker 2 (02:57):
I think that sounds like a good deal.
Speaker 1 (03:00):
Okay. The other thing I think is that I've got
so many windows open on my desktop looking at this.
There are so many different views, And do you know
what I really think? In the end, No, everybody's right. Absolutely,
everybody is right. Everybody who has written to me, everybody
who's telephoned me, contacted me on LinkedIn, abuse me on Twitter.
(03:24):
Everybody has a point about this. It all comes down
to do you think it's reasonable for an investment trust
to trade it a discount. Do you think long term
is three years or do you think long term is
five years? What do you think a reasonable fear fears?
What does governance really mean to you?
Speaker 2 (03:41):
Etc?
Speaker 1 (03:42):
Etc. Do you think that the investment trust industry is
such an important part of the UK investment and finance
ecosystem and in particular maybe even the startup ecosystem, that
it should be somehow protected in a way that other
companies aren't, etc. And there are great arguments on both
sides for them. Now, on the same day that we
released your fascinating chat by the way, with their birds,
(04:04):
one them, would you actually like to have my job?
Speaker 2 (04:06):
You do this really well? I know I couldn't possibly.
I mean, for start, I mean start getting some of
the complaints dayrectly.
Speaker 1 (04:13):
Ah, that'll always come to me anyway. The same day
that we put that out, Burzwinstein also had his own
webinar where he talked for over an hour about why
he's doing and what he's doing, and quite rude about
a lot of people, quite rude about a lot of directors,
very rude about quite a few fun managers. And he
talks a lot about about things that you know, not
(04:35):
not everything he said, with the stuff that I would
have agreed to. You talk about the principal agent problem,
about how the manager is the agent and in all
these trusts the manager has a mistake and no skin
of the game, and the manager is there to protect
the assets, et cetera. All true, but that's what the
board is there for. The board represents the principal and will.
Boards don't in the main own very many shares relative
(04:56):
to institutions, because boards are individuals, right. So if you
own ten pounds, twenty pounds, thirty thousand pounds, and in
some cases much more of a trust, you've got put
a reasonable bit of your personal money in it. But
obviously it's nothing compared to what the institutions might have.
So it's skin in the game, but not in an
institutional kind of way. So there was some confusion that
irritated me a little. Got to say boas this did
(05:16):
irritate me, confusion between the manager and the board. And
I think in my experience of this sector anyway, that
boards are very good at remaining independent from the fund managers.
So that irritated me a little. But I did you know,
I got that general idea that in the main what
a fund manager wants to do is hang onto assets.
That's what they want. You know, most big fund managers
(05:38):
are asset gatherers. They want to get money, keep money,
take the fee on that money. And in that sense,
investment trust are very good for fund managers because that
money is trapped, unlike an open ended fund where that
money is not trapped. Investment trust are great because they
just sit there little pool of permanent capital. Take your
fee every year. So you know, that's one thing he
said that really made sense. It also makes sense to
(05:59):
say that the trust to your targeting, you do have
horrible performance over three years, horrible And if your time
frame is for three years, and you would certainly look
at some of the baby gifted stuff and you get
why on earth am I holding this? Why can't they
make it better? Why have they lost forty fifty percent
of my money over three year? This is horrible Because
if you look at it longer term, not so horrible.
And if you approve the strategy, then you know you're
(06:19):
going to give it another four or five years before
you start to lose your temper.
Speaker 2 (06:23):
Yeah, I mean, I do think and certainly from a
conversation in the interview. But I did make the point
that the last three years, particularly that's when interest rates
started rising, there are good micro reasons why performance would
be specifically bad over this time period. And I also
think if you are quite careful about the starting date
that you choose, you know, you can choose a date
(06:45):
before the big sale of Hartens, so you can make
it look even worse than it is. I mean, that's
one thing you notice whenever you're messing around with chats
on the Bloomberg term, know that if you change the
starting date, it can make a substantial difference, even though
you're broadly making the same sort of point. So I
did sort of say, I said, you know, so what
but this three year thing? And he said, go, you said,
(07:05):
you're a very you're a very forgiven investor. So I
started thinking, you know, in the hedge find world, three years,
where as in the investment transport three years is a
relatively short time for him.
Speaker 1 (07:19):
Yes, yes, And I do think, by the way, everybody
that's going in and watching and obviously listen to John's
podcast first, but then do go and watch both Mindstone speaking,
because uh, you know, there's a lot to argue with,
but there's a bit what he says. And you know,
I'm sorry about this. I don't want to repeat things
that make people feel a little sad. But he says
to Bailly Gifford, aren't you embarrassed? Aren't you embarrassed? And
(07:43):
you know this is very feisty stuff. Bailly Gifford is
one of the one of the big and most respective
fund managers in the UK, and he pulled out their
three years performance and nically it looks over three years
in a couple of places, and he says, look, aren't
you embarrassed by this? Look what you've done. Look how
much money you have lost your investors. And you know
(08:04):
that is it's potent stuff. It's true because this is
real money. If you invested at the top, that's real
money that you work for. That you said, and it's gone,
it's gone, And this should be a response to that.
Speaker 2 (08:16):
I agree, and I think that either well, you can,
you can have discussions and make excuses and all the rest.
And again it's always possible to do that. At the
end of the day, the job the fund managers fundamentally
is to look after their customers money and make more
of it in the fundamental favor of all of these
(08:37):
trustes that none of them are necessarily you know, they're
not benchmark huggers. But the problem is, if I mean
doing there is a fair point where if you've been
sort of viewed as a techie growthy fund in the
last you know, three years and you still struggled to
you know, come up to the S and P, especially
if most of your investments are in the US, then
(08:59):
that is train out how to explain that. We leasily
if you'd been putting all your money in an S
and P five hundred passive tracker with the rest of
the population over this time period, and you do probably
have a rate to feel a little bit faired up.
Speaker 1 (09:13):
So there is this key thing here. There is a
problem in the sector. A lot of the discounts in
the investment to respector they have become structural. They're there
and they haven't gone away in three years is too long.
And we did have and I'm sure that everyone in
the industry will have read it. There was Alan Briley
of Investor put out a note last year where he
(09:33):
pointed out that this stuff is beginning to be a problem.
He said it wasn't last yearously it was a year
before October twenty twenty three, and I remember it coming
out and him saying, look, we've got an end of
cycle challenge here. There are various exceptional events going on,
but this is a perfect storm and it comes with
some self inflected wounds and you lot have got to
(09:55):
do something about it. You haven't responded fast enough to
all sorts of things. There's discounts of multi years highs.
There's blood in the water. This is going to attract
arbitra's and it's going to attract corporate buyers unless you
do something about it. You have got to do something
about your discounts to get out there, create tenders, buy
back properly, make sure these discounts come down to levels
(10:17):
where you are not going to be attacked. And of
course the sector did not react fast enough, did not
react fast enough that advice from his vest a couple
of years ago. And here we are, So is there
a problem, yes, Does the investment trust sector needs to
find a way out of that problem? Yes? But is
saba the answer? Is Sabah the answer the solution to
(10:41):
that problem? And I would say so far in part yes,
because here we are having this conversation. Here we are
having it and already, you know, the trust that that
has targeted are already putting forward while they would wouldn't
they putting forward various strategies to deal with that strategy,
a strategic review from one of them putting dividends up,
(11:03):
offering cashis Exitt's talking more about discount management. Their Edinburgh
Worldwide Trust has been talking about a big capital return
next year, BG Growth actually nothing one of the others,
and nothing Herald, nothing but Keystone has put in place
or was attempting to put in place a full cash
(11:24):
exit for everyone, which now it can't really do because
of this business with SABA, who aren't going to vote
for it. So they are now putting in place some
things and you'll see other trust in the market looking
around and going, wow, we might be next. We got
to do something and really stepping up by bags or
certainly talking about stepping up by bags. So we have
a catalyst here. We have a catalyst that is forcing
(11:46):
boards to sit down and say, what can we do
to deal with these structural structural discounts. And it's very
hard to turn around performance in five minutes, right, but
you can maybe do something about the discounts and if
you can't. If you can't, let's say you buy back
and buy back and buy back and buy back, and
that it can't remain and your trust becomes very small.
(12:07):
Well maybe that's just the way it is, right.
Speaker 2 (12:09):
Yeah, I mean I think the the most obvious value
that SABA has added is to put a rocket up
the backside of the sector. You know. I think that
I don't think really can be argued with, and to
be fair, I don't think anyone really is arguing with it.
You know, like these trusts have taken action. The other
(12:33):
trusts that are sort of on the hit list, some
of them are taking action or at least talking about it.
And I think that that in itself is good because
also you know, it draws attention to the sector. But
the UK capital market as a whole we've been complaining
about for quite a while and you know whatever, you know,
(12:53):
it's had nearly four years worth now consecutive withdrawals. But
the point is that this sort of thing where somebody's
noticing the value and it's happening. You know, It's like
I mean, Herald has gone from trading on a discount
of I think it was you know, it was around
about ten percent for most of last year and now
he's trading on the premium were like one point five percent.
And to be fair, I mean, Herald is probably one
(13:15):
of the most well one of the trusts on this
list that I would sort of feel it would be
a shame if it was taking over. We can discuss
that in a moment, but the point is, you know,
it was trading a persistent discount and now it's not.
So Saba has been good for shareholders in that trust
and then all the other trusts because they've all kind
of seen their discounts closed. So it's definitely been value
(13:38):
to that. And I think the only question from the
from the ultimate point of view of our listeners, I
guess who you know are the people who hold investments
in these trusts, you kind of retail investor, what does
what's the next step and what does it mean for them,
you know, if SABA wins or if Saba doesn't win.
(14:00):
And from that point of view, I think that's where
it gets slightly more complicated, just because you know, at
the end of the day, if you were fed up
weight Herald and you were waiting for the discount to
close before you got out well, you know that it's
your chance. You know, you should sell today done.
Speaker 1 (14:13):
You know at absolutely, but.
Speaker 2 (14:16):
Also you know, I would also like to know, for example,
if you were in Keystone, which is you know, I
don't think again, I don't think even you know, the
chairperson would argue the performance in that has been back.
So apart of me also does wonder, like, what what
are you thinking if you are currently a Keystone shareholder?
(14:37):
Why why is it still on your portfolio at all?
You know, It's like I do think there's got to
be an element the people taking responsibility here because one
of the things that we keep that so everyone keeps
talking about is that there are a lot of retail
shareholders on these registers, so a lot of retail shareholders
own them. And one of the arguments is that SABA
has come along and because you need to get fifty
(14:59):
percent of however, many votes are cast, so abbas get
like thirty percent already or nearly thirty percent in most
of these trusts, and so when it goes in and votes,
if most of the retail shareholders don't turn hop, then
they're automatically going to win. And obviously people keep saying, well,
retail shareholders are apathetic, but I'm not sure. I don't
I don't actually really understand that you have to be
(15:22):
a fairly active investor to have ended up in any
of these seven. You have to be someone that chose
to buy them. You're not getting put into this by
your auto enrollment pension. So if you if you don't
go out and vote, or if you don't even you know,
if you don't have an opinion and you're not aware
of this, then what are you doing with your portfolio?
It's like, why is this stuff there and you don't
(15:43):
know about it? I mean, it's not that hard to vote.
Speaker 1 (15:47):
Yeah, but it's interesting John on this business of voting
and that several people have said to me in the
last couple of days, this is so awful because poor
retail investors, it's so hard for them to vote. Well,
it kind of isn't interactive investors operating and opt out
rather than an opt in system. For years now, Huggers, Landown, Ajball, etcetera.
They all have very efficient voting systems. If you want
(16:08):
to vote, you can vote now. If people don't vote
in this, I think it'd be very interesting and then
you and I can do lots of great podcasts on
shareholder democracy and what's wrong, howe you able should get
on with it, etc. But I have had one from
the share Society, an email from them about the problems
with the nominee system. I either way that your shares
are held on platforms, so you don't hold them directly,
(16:29):
the platform holds them for you, and ownership bus is
slightly fuzzy, and they believe that there are problems with communications,
so it's actually very hard for trust boards to directly
contact shareholders. So I would say the main problem there
is communication, and if I were to be allowed to
reform this system, I would try and make it easier
(16:49):
for companies and trust of course our companies to communicate
directly with their own shareholders, even if they hold their
shares on platforms.
Speaker 2 (16:56):
You're rate well because a lot of this. I mean,
I've never ever seen account pain as aggressive as this
to get shareholders vote, which again I think is yet
another indicator of you know, some of the potential problems
in the sector. It's like you all waits, so now
that your job's at risk, you're getting the thing out
of it to make sure that you know your your
shareholders coming vote. I'm fascinated to see what the ton
(17:19):
out is like, because I think that it will be
a really strong test of the points that you know
in your book about shareholder democracy share you know, I think,
and nicely, it's really exciting from that point of view.
I mean, you know, very much looking forward to it exactly.
Speaker 1 (17:36):
I know, I'm slightly embarrassed about being excited about it,
because really, you know, I should be horrified and bold, etcetera.
I'm kind of excited. Okay, So that's voting out the
way why you should do it, et cetera. So now
the question is what should you do? How should you vote?
What is Saba asually trying to do here? And I
did have got him the emails relentless, John. I had
(17:59):
one from them in the sector who said that day,
you know, what Saba is doing is perfectly valid, but
he really wishes that Boras Swinstein would drop the mom
and pop stuff and all the talk about how he's
the white knight and the defender of the retail investor
and all that stuff, when all he's actually doing is
a perfectly reasonable arbitrage, that's it, and he's doing it ruthlessly.
(18:21):
He's using these discounts of the difference between the navy
and the market price, and at the same time to
gather assets. And if you look at the asset gathering
part of it. We had some communication with Karen Braid,
the share of Cheek Keystone, and her core question is
if you are the white Knight, if you are the
(18:41):
great protector of the retail investor. Keystone has already offered
a full cash exit for all shareholders who want it
at net hash and value minus one percent one percent,
obviously being too to pay all the expenses of doing
the whole thing, etc. Now, as that is already on
the table, if Saber wants everyone to get out at
(19:01):
full value, why are they stopping this happening? Why stop
Keystone investors reclaiming their funds first? And then if you
then people who don't you want to go to your
own offering, then they're left over for you. If you're
not doing that, it'd rather suggest that the whole thing
that you're trying to do with Keystone at least is
simply to gather assets in order to reap the fees
(19:22):
from that later.
Speaker 2 (19:23):
I have struggle to see what what is the I
don't know where the comebacks to that.
Speaker 1 (19:27):
I don't know, but all about it. You just want
to interrupt because I'm slightly concerned that Boas is listening
to this. Boas, I would like you to send your
hate mail to John.
Speaker 2 (19:37):
You're doing Twitter.
Speaker 1 (19:38):
It's but on Twitter is going to come to me.
Speaker 2 (19:43):
Oh yeah, that's the point. Okay, Yeah, said, but I
think that's that's not a non field point. Okay, But
the moment pops off is part of the rulessness. You know,
it's gonna it's a negative sales page either. If if
you argue that the relying and shareholder apathy, then on
(20:03):
the flip side of that is, well why are they
coming on like this podcast? I would keep quiet. You know.
If I was relying on shareholder apathy, then I'm not
sure I would publicize this as much. So maybe you know,
there's an element of hearts and minds alongside of course,
you know, I mean if they phtograted the seven, then
they want to win them all and yeah, and obviously
(20:25):
they make money off the fees, so you want as
many assets as possible.
Speaker 1 (20:29):
For one a lot it would be four billion quid. Yeah,
that's why could be quite a trust or trust wouldn't it.
Speaker 2 (20:34):
I mean, that is the other thing. It's like what
their planet they do with it, I guess is where
a it's where some of the quite a bit of
the criticism comes from. But also it's where I guess
that my own view and you understand boards a lot better.
But the some of the mechanical aspects of this, like
how do you like with these portfolios without driving down
(20:59):
the share price, for example, and things like they can
you know, the governments, you know, you can have to
overhaul these these entire kind of structures. And is that
not going to distract to the point that possibly it's
going to be detrimental to performance. I mean, I don't know,
(21:19):
but I think that the changeover process is bound to
be disruptive and complicated in ways that are not clear
right now.
Speaker 1 (21:28):
Well, that's a good point, and changes are always disruptive,
but a lot a lot of the of the stocks
held in a lot of these portfolios are perfectly standard
liquid stuff. And he has said that there will be
if were he to get herald, there would be a
year for the liquidation, et cetera. The big one in
Bailey Gifford, the private company of Culture SpaceX and as
he himself says, I don't. I'm pretty sure there's a
(21:49):
market for that.
Speaker 2 (21:50):
Yeah, and that is fair enough, and I can see
why they keep that anyway.
Speaker 1 (21:55):
Yeah, yeah. It more of the question is, I mean,
there are governance questions there are Does does Saber Capital
really understand exactly how intense the compliance and regularly burdens
on trust boards in the UK? Are you know, it's
not normal and not acceptable to simply have two non
(22:17):
non independent directors on a board. It doesn't it doesn't
work like that. And he has said that over time
he would get more directors onto his new boards, etc.
But starting out like that too, non independence, it's it's
not ideal that that's not how that's not how we work.
So there are there are governance issues around that, although
he says they'd be short term, one would hope they
would be short term. And then there is the matter
(22:39):
of the new strategy. And again, you know, I'm I
think I'm slightly less bothered by this than than some
other people in the market, because it seems to me
that Weinstein is suggesting that in almost all cases there
would be an opportunity for people to get out at
(22:59):
a few percentage points at least below nav So it's
not necessarily compulsory to roll over into his new strategy,
which slightly suggested all the arguments about his performance record
and his fees and all that kind of thing. If
p you can get out without having to go into
that strategy, how effective that strategy is and how much
(23:21):
it costs is slightly moved.
Speaker 2 (23:23):
Yeah, I think that's that's true. I think that's all
fair enough, and I guess yeah, I mean, from the
point of view voting, I suppose my issue again sort
of comes back to what you're thinking as a shareholder
of these trusts. So it's like, if you own HAIRLD
because you want to take advantage of a small cup
(23:44):
global tech stocs, and that's actually a strategy that you
believe in, then I struggle to see why you would
be keen to swap that out for a strategy of
closing investment trust there's going in the UK yep. But
again with some of the other trusts, you're kind of like, well,
(24:07):
you know, they've get less sort of. I guess specifically,
Herald and c CQS seem like quite unique trusts in
terms of what they're aiming for. Some of the other stuff,
and also the kind of ones that are already getting
rolled over I can. My main question to shareholder on
them is like, well you should revisit this and think about, well,
(24:29):
why why do I own this again? And then think
about what you want to vote for in light of
that question, because, like I said, I mean certainly something
like Keystone, which is which? Which is going to be sold? Anyway?
I think maybe have a wee look if you've got
that in your portfolio, look at other things that you've
got in your portfolio that maybe you haven't thought about
for a while, and think about, well, why is this
(24:50):
stuff here in the first place?
Speaker 1 (24:52):
John, I think you've been quite polite there, aren't you.
We are actually saying something incredibly rude, but in quite
a polite way.
Speaker 2 (24:58):
That's the best way to have been told. I could
called up to HL the last team. I did it
in non polite way, so I thought, not.
Speaker 1 (25:09):
Okay. So one thing that I don't think John and
I are going.
Speaker 3 (25:12):
To do here is to slog through the very catchy
discussion about everybody's performance and what is sub's actual performance
over three years, five years, ten years, What are the
actual fees?
Speaker 1 (25:24):
What is this? What is that because I think that
we might work on the basis that that Windstan Taba
will be reasonably good to their word and give everyone
an exit. So I suppose John's question is the right one.
Would you like to have some cash back at maybe
only a couple of percentage points below nav And by
the way, in most of these cases, you can have
that right now. You're going to have it right now.
(25:46):
So if if all you wanted to get out with
your cash relatively intact, I mean obviously not if you've
lost thirty forty fifty with one of the funds, maybe
if you went in the top. But either way you
want to get out close to navy, just do it now,
and then you know what, if you want to go
back into the saber strategy later, assuming he wins one
of these, he'll have a lifted vehicle and you can
(26:07):
buy back in when all the chaos is complete. So
that seems like a great way to do it. If
you actually want to be in this saber strategy, take
your money, wait, buy back in later. If you don't
want to be in the Saber strategy and you do
want to stick with, for example, Herald or whatever it was,
then you need to get out there and vote, to
(26:28):
hang on to the strategy that you like. Is that
a fair end interpretation job?
Speaker 2 (26:33):
Definitely, I think that is the important thing, because that
was the other thing that jumped to whenever I was
having the discussion with boys. Was I mentioned the you
know they can saying a bit who or the cynical
views that you think the retail share holders want vote
and he basically agreed, not in so many words, by saying, well,
you know, the alternate view is that if the retail
showholders don't vote is because they're not engaged enough with
(26:55):
the current management and they don't think they're doing a
good job. So you know, he'd be said yes and no.
For if you don't show up, it's a vote for
cyber so for the other.
Speaker 1 (27:07):
Well, it's true, I mean same with politics, right, not
voting is the equivalent to voting in the end?
Speaker 3 (27:16):
Very cheap?
Speaker 1 (27:17):
Boy, do you get insights on this show? Is there
is there anything else we need to discuss? I suppose
one thing I would say is there's been a lot
of conversation about the importance of the investment trust industry
as a whole to the UK financial sector. It's important
that there it's got all the infrastructure around it, and
(27:40):
in particular, the companies such as Herald that invests in
small companies and growing companiesn't a part of a startup
infrastructure and how important that is, and I agree that
it's very important, absolutely it is. However, however, the key
purpose of a fund trust is to make money for
its investors. You can't just be part of the ecosystem.
(28:02):
The ecosystem alone is not enough. You have to make
the money. You have to fulfill the requirements of the
people who've given you their money. So it's not enough
just to talk about how we have to protect this
sector because it's so important to the UK ecosystem.
Speaker 2 (28:16):
That's not enough, No, it's not. And the other point
is that is the thing that sharpens these things is
competition and events like this. You know, the fact that
you know, boys Weinstein's able to do this demonstrates that
something has been going wrong and hasn't been addressed quickly enough.
And I guess that's the point of free market and
(28:37):
I guess my people just not used to free markets
functioning in this way. Oh well, depth, what any of
you pay for it?
Speaker 1 (28:49):
Thank you? John? Right, So there we go. The key
answer here is that everybody is right and everybody is
also wrong. That is my final in site for the day.
Make your decision, but whatever you decide, get up there
and float. This is important for showlder democracy. It's important
(29:09):
to the trust if you want to stay involved with
that trust, and it's really important to the fund managers
you run those trusts. I mean, they don't want to
lose this money. Do they think about them? Think of
the fund managers. Thanks for listening to this week's Mary
and Drugs Money Debris. If you like our show, rate
to review and subscribe wherever you listen to podcasts. Also
be sure to follow me and John on Excel, Twitter
(29:31):
at marinas w and John Underscore Staffac. This episode was
produced by Summer Siety and Moses, and sound designed by
Blake Maples and Our executive producer is Brendan Francis Needham.
Question and comments on this show and all our shows
always welcome. Our show email is Merrow Money at Bloomberg
dot net, but obviously you can send your hate mail
director John and me on Twitter
Speaker 2 (30:01):
B
Host
Merryn Somerset Webb
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