Investec view: On 18 December 2024, Saba Capital Management (Saba) launched a broadside at seven investment companies, that it has derogatorily referred to as “the Miserable Seven”. Launching a campaign like this over Christmas is a classic activist tactic, clearly designed, in our view, to materially reduce the length of time that these investment companies can engage with shareholders and mount an effective defence. We see this as “greenmail”, pure and simple. However, it goes beyond the “greenmail” that Warren Buffett described as “odious and repugnant” in his 1984 shareholder letter (see Appendix on page 8). In our opinion, this is all about Saba looking to opportunistically take advantage of a UK closed end industry that is enduring a perfect storm, after an extended and exceptionally strong period, and grow its own assets under management. Shocking developments at Keystone Positive Change, where Saba has said they intend to block the winding up of the company and an uncapped exit at a 1% discount, should leave UK investors under no illusions about Saba’s modus operandi. We are deeply concerned about Saba’s proposals on many levels. While the devil is supposed to be in the detail, the latter is conspicuous by its absence. Just how are shareholders expected to make an informed decision with Saba failing to provide even basic information on key fundamental issues including their own track record, future portfolio exposure, fee arrangements, liquidity options and discount control mechanisms. The paucity of information suggests strongly to us that Saba is relying on investor inertia, rather than the strength of its own arguments, for the resolutions to succeed. Do shareholders really believe that they will enjoy the same level of protection if Saba is successful and the current Board is replaced with a two-person Board, consisting of a Saba employee and a Saba nominated appointee? Moreover, should Saba’s resolutions pass, for those managing money on behalf of clients who either vote for Saba, or don’t vote given this information vacuum, how do they justify such a “leap-of-faith” action to their clients? Regarding performance records, Saba hasn’t been shy in lambasting the “Miserable Seven”, based on average discounts and shareholder total returns over the past three years. We note that this period started a few days before a brutal de-rating of the UK closed-end industry, with the transition from the great moderation to a new regime of higher inflation/interest rates and volatility creating exceptionally strong headwinds, particularly for those focussed on long-duration investments and interest rate sensitive asset classes. On p5, we show the long-term performance records of the seven investment companies (10 years or since IPO), discount history and share issuance/buybacks.