This episode explores the strategies employed by Boaz Weinstein, founder of Saba Capital, to generate alpha by targeting mispricings in closed-end funds. Against the backdrop of Weinstein's 16-year experience on Wall Street, the discussion centers on his unique approach of identifying and exploiting discounts between a closed-end fund's net asset value (NAV) and its market price. More significantly, Weinstein details how his firm's substantial investments (reaching $7 billion) have influenced fund managers to take actions, such as open-ending funds or share buybacks, to close these discounts, resulting in significant returns for investors. For instance, Weinstein cites instances where he successfully pressured management to implement changes, leading to immediate double-digit percentage gains for shareholders. The conversation also touches upon his experiences in the UK market, where he faced resistance but ultimately achieved similar results. In contrast to other activist investors who have underperformed, Saba Capital's approach, which involves significant investment and legal action when necessary, has yielded superior returns. What this means for the future of closed-end funds is a potential shift towards greater shareholder value and the emergence of a new class of activist investors focused on arbitrage opportunities within this asset class.
