Boaz Weinstein, the US corporate predator who targeted a septet of investment trusts he called 'the Miserable Seven', has been given a drubbing. To paraphrase The Smiths, he is the one who should be miserable now, having been defeated at six of them so far. There is just one remaining vote at which he could potentially save a vestige of face: on St Valentine's Day at Baillie Gifford's Edinburgh Worldwide trust.
Weinstein has been all mouth and no trousers in this enterprise. As well as the miserable jibe, he asked trust managers if they had 'no shame' over their performance, slammed their boards as a 'boys' club' and dismissed criticism of himself as 'jingo-ism.'. Regardless of all the hot air, the trusts and the wider industry do have a case to answer and should take this episode as a catalyst for improvement.
Weinstein's Saba Capital Management was emboldened to take a tilt because the trusts have been trading at a discount to the value of their net assets. More could have been done to narrow these discounts, but instead an open goal was left for the raider. On the prowl: Boaz Weinstein's Saba Capital Management was emboldened to take a tilt because the trusts have been trading at a discount to the value of their net assets.
Trusts had done too little to engage with the small shareholder base on which they relied for their salvation from the raiding party. That needs to change. Some investment platforms made matters worse by making it hard for people to vote. And as Baroness Altmann has pointed out, ludicrous EU rules have made investment trusts listed in London appear significantly more expensive for savers than they are in reality. Weinstein's raid comes at a time when the City is on the defensive. A string of companies have been taken over by US bidders or decided to defect and list their shares on Wall Street.
London is perceived by international investors as a sluggish market, plagued by low valuations, too many old-economy businesses and too little tech, heavy handed regulation and a socialist government whose policies risk ushering in stagflation. Maybe much of this is unfair: the UK is certainly not the only country with tricky politics. It doesn't matter: that has become the view. Government and the City need to work harder if it is to change.
What should be done to boost share investment?. Abolishing stamp duty on share purchases would be a good place to start. Investment trusts could help underpin the Government's growth ambition. They are a brilliant way for small private investors to gain exposure to innovative companies, technology and infrastructure developments. Most allow savers in with a modest lump sum or regular monthly subscription. Over my time in financial journalism, there have been numerous attempts to sing their virtues.
I hope this saga acts as a wake-up call to boards that private shareholders are not a nuisance, as some chairmen seem to think, but an asset. They famously, for instance, helped make sure Marks & Spencer saw off a hostile bid by Sir Philip Green twenty years ago and now they have saved the investment trusts. It may be a chore and an expense to send out reports and voting papers and to stage an annual meeting, but a solid private investor base can provide long-term intelligent capital.
