At the Money Special: Activist Investing for NAV
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This week, an unconventional At The Money episode.

At Future Proof Miami, I sat down with Boaz Weinstein. He is a previous guest on Masters in Business. He runs Saba Capital. And he's one of these people that looks at the world a little differently than everybody else. He identifies mispricings in real time. And not only does he purchase various funds that are mispriced, he then goes about agitating for change.

One of the areas that he had been doing this with in the past was SPACs, and we've talked about that on our previous recording with him. Lately, he has been agitating for change in closed-end funds that are trading at double-digit discounts to fair value. A closed-end fund trades like an ETF, but it's constructed of holdings like a mutual fund, and

And the actual closed-end fund will trade up or down simply in response to trading supply and demand. Anyway—

Rather than have me babble, here is our extra special edition live from Future Proof Miami at the money with Boaz Weinstein. So let's start talking a little bit about what you actually do. You have been delivering equity like returns with credit like risks, with bond like risks. That's quite a trick. Tell us a little bit about the areas you focus on.

Sure. So I've had my firm for 16 years. It's a hedge fund and we have three publicly listed vehicles, one of them being an ETF and two closed-end funds on the New York Stock Exchange. And I

And I've been working on Wall Street continuously other than when I was in school since I was 16. And over that time, I've had the chance to be right sometimes, wrong sometimes, and also seeing how people

people that were right for a while and, you know, people worship to Garzarelli or Cathie Wood or, you know, whoever the flavor of the period was. But eventually we realize how hard it is to know where the markets are going to go. And sometimes we excuse ourselves because we say, okay, it was a surprise. It was 9-11 or it was COVID. But predicting the markets is really tough. And

And, you know, I say this, we've been in a bull market, so beta has paid off, but it's not always going to. And I always was very focused on arbitrage. I was always interested in mispricings, not having the beta,

being long one thing, short another thing, looking for mispricings, whether it was in the SPAC market when they tumbled and they had bond-like risk, as you said, with some equity upside when they were trading below their redeemable value and they were in T-bills. And about 10 years ago, 12 years ago now, I got very interested in a product that many of you in the audience are familiar with because it's a retail product,

which is closed-end funds. Now, if I asked for hands, who knows what a closed-end fund is? I think almost everyone's... I didn't even ask, and that guy stuck his hand up, okay? So people know what they are. I just want to just take a second, though, because what I love about what we do in closed-end funds

is that it does not require us to think we know the future, the direction of markets. But as you all probably know, there's about 500 of them. About half are in the UK, half are in the US, a small number in Australia and Canada. And often they own public securities, maybe entirely public.

Sometimes they own illiquid, private securities, REITs, private equity, music royalties, all sorts of exotic things. But I've been focused on the public security side. So funds, we see actually the sponsors of them right here front and center. We have BlackRock, we have Nuveen. Nuveen has dozens of muni funds. BlackRock has about 80 of these closed-end funds. And you can check every day.

on Bloomberg or elsewhere, what the NAV is. And there is no disputing what the NAV is. The NAV is calculated off of the closing price. So all of us would agree what the NAV is. So you have the NAV, you have the price. And those two things are often not the same. And when the NAV is at a big discount,

It isn't necessarily an opportunity, Barry, because it can stay at that discount for a decade. Why should it not become a bigger discount? Who's to say that that's money well spent? Maybe the discount reflects the manager's fees and the investor's inability to change things. So what we've done is we've come in with an institutional-grade offering, be it our private funds or our publicly listed funds, and we bought $7 billion of closed-end funds.

So we're the world's largest owner of closed-end funds, and we didn't just buy 7 billion willy-nilly. We picked the ones with the biggest discounts, with the best language, with the managers that are going to be most, in our view, likely to do a deal, because here's where the rubber meets the road. If you buy a dollar of NAV for 86 cents, and even if it takes you two years to turn 86 back into 100...

you have added equity-like returns on top of whatever the underlying return is. And sometimes the underlying return is munis, it's things we want. And so what I found over time is that the bigger we got, the more votes we got, and the more we got management to take steps, and I'll pause in a second, give you the microphone back, to press a button and immediately give everyone 86 back into 100.

What are those steps? Open end to closed end fund. Make it into like an ETF or a mutual fund. The discount disappears overnight. And that's because of the arbitrage opportunity. That's because, yeah, ETFs are redeemable opportunities.

You can create them, you can redeem them. Mutual funds, the manager has to sell and give you NAV back. And so open-ending a closed-end fund, no one disputes, will give the entire discount back to the investor who has suffered in it if they bought it at IPO or otherwise. And so if you think about it, we're not talking about small potatoes. 86 to 100, by the way, is more than 14%. And I think you all know why. 100 to 86 is 14%. So, you know, we have been...

successful in getting it done faster and faster because as we went from a billion to three to five to seven our ability to vote the bums out as they say if they don't do what's right for shareholders and put in a board that will is is now causing managers to increasingly take proactive steps to narrow the discounts before we ever get to their their board meeting so let's talk a little bit about that move from two billion to seven billion when I had you on Masters in Business

You had a chunk of money in SPACs, and we could talk about SPACs a little later, and you had a chunk of money in closed-end funds. And part of the conversation was the difficulty in getting entrenched management's attention to say, hey, why are you selling dollar bills for 75 cents? Why aren't you unlocking this value? Tell

Tell us the process that led you to go from $2 billion in closed-end funds to $7 billion. Right. And unfortunately, they're not the ones selling a dollar for $0.85. It's the frustrated shareholder that has seen it sit there, and they have no way to get back to a dollar without us because they're small investors. And so over time...

We started to get more successful at it. Thanks for mentioning, you know, we got these kind of institutional awards. And all of a sudden, institutions, U.S. state pensions, looked at this as an alpha that they don't have in their portfolio. So, you know, if they give us... And often an institutional ticket is over $100 million. If we, from a state pension, we got four of them in the last two years, it allows us to get bigger, faster, stronger, so that...

We don't have to have a 15% position in the fund if we have a 29% position in the fund management is very worried that we'll be able to Cause the fund to liquidate and they would lose a hundred percent And so basically they know that something screwed up that they could have given up a little bit of fees to shrink the fund buy back stock and

Buying back a dollar for 88 cents is accretive to NAV, make their investors money, but it's always really a question of greed where the manager says,

I don't want to do that. People should be patient, whether it's been a year or five years, and they don't want to shrink their fund. And if they wait too long, I'm going to shrink their fund for them in a much more severe way. And in two cases, actually, we replaced the manager, and we were nominated, awarded with the mandate. So we now run two of these funds. We have two closed-end funds of closed-end funds. And so, you know, it's really just like...

fight between two asset managers that have a vested interest in themselves, but also I'm invested alongside the shareholders. I want what they want. I want a chance to exit at NAV. If the investor doesn't want to, if you open in the fund and they stay, great. If the manager tenders for shares at NAV and you don't want to tender for some reason, your loss, great. But my view is that

Just because this thing IPO'd in 1949, by the way there's one in the UK IPO'd 1855, just because it IPO'd in 1855 doesn't mean until 3055 the shareholder has to suffer under the discount because they signed up to have to elect a board and the board is supposed to be working for shareholders and what I find as a patriotic American capitalist is that over in the UK the boards have not

have not forgotten that they're working for shareholders much more than in the US, where often we have to face entrenchment. One of the things we have to do that our shareholders don't is pay legal bills and go to court as we have successfully suing for our right, for example, to vote all of our shares. So it is a scrappy fight, but in about 80 instances now, we have gotten management to

give investors a chance to exit at any of your close, which they never, ever would have done without us. And the returns of a closed-end fund that looks like a 60/40 portfolio, you've been generating returns of about 12% in a lot of these products.

Your competitors, the other activists in the space, have been underperforming that. They've been doing about 4%, which doesn't seem especially exciting. What are you guys doing so differently with closed-end fund challenges that has led to the track record and the success Saba's put together? Yeah, so I think you're referring to our ETF. The ticker is CEFS, like closed-end funds, plural.

And actually, those other competitor products are not activists. They're in fact not... It's not that they're sometimes. They're just trying to find closed-end funds they like, or maybe it's more like an index approach to closed-end funds. And if you buy a closed-end fund at minus 14,

And a year later, it's still at minus 14. Well, you've paid the manager their fee. You've also charged your investor the fee. So you have kind of two layers of fees. So you better be narrowing that discount or you're not delivering alpha. And so some of them are here, by the way. Invesco has a product called PCEF. And what I also find interesting in this space is that it's so retail-centric.

And if Morgan Stanley Wealth Management has recommended PCEF, it will grow more, even at making 4% a year than the same underlying closed-end funds making 12% a year. So I think PCEF probably has grown more than us in the last five, we're actually celebrating our eighth anniversary of this ETF. And so, yeah, so if you're not,

If you own 100 closed-end funds and the only ones that are narrowing are the ones Saba's in, you're going to have a pretty mediocre return after fees. Or all of ours. I do not buy a closed-end fund where I feel like if it doesn't narrow, I'm not going to go to management and say, please, you have easy steps to make it narrow. Do not put your own greed in front of your shareholders.

You just had an interview in the Financial Times last month, and I love the quote, I love punching a bully in the nose. Tell us what you were doing in the UK and why the Financial Times decided to have a sit down with you. So in the UK...

the market is even older than it is here. And it's actually like, there's a lot of pride about, they're called investment trusts there. It's, I think, 40% of the FTSE 250 are these investment trusts. People seem to like them. They get to go every year and sit in a meeting and hear about the economy and have a ribeye. And even if the manager has underperformed or outperformed, there is a lot of love for the product. But what happened was,

In 2021, when we had inflation and we had a crisis in the UK, the LDI crisis, and people were selling things, and then later, even in 2024, they increased capital gains taxes, and it caused people to want to sell in front of that before the new tax code. And the problem with these products is they don't have natural buyers.

at low discounts. Only really savvy investors that look for a double digit discount are there to buy them. So they can fall like a knife from minus one to minus 13. And with enough selling, no matter how big we are, even at seven billion in a 500 billion space, you know, that discount can grow. So in the UK, there was a lot of selling thanks to these two problems.

And we ramped up and we bought 29% positions in some of these funds. And only then were they willing to do things that they are now, we're now currently engaged, it's in the press with four of the boards, and two of the other boards have already agreed, we're gonna give investors a cash option to exit an NAV,

Open-end or tender and that's what we wanted if you want to keep your if you want to keep getting your your Steak dinner every year and you want to stay in your closed-end fund whether it's underperformed by 40 or outperformed by 8 which were two actual funds in question fine But but there is a set of shareholders Not just us that if you offer them a chance to get out at nav they will take it because they're not foolish They'll take they'll make a 12% gain your portfolio literally goes up by 12 13 percent in a day and

If it was instantaneous. And then you take that money and you do something else savvy with it. You buy another closed-end funded a discount or you buy an open-ended fund. So, you know, to no one in this audience will it be a surprise that if you offer someone a free 13% with no consequences, they're going to want to take it. But it took me getting to 29% for the managers to want to do something about it. And so I sent a letter on December 18th to seven of them at the same time saying,

and you have the right in the UK with a position size above 5% to call an annual board meeting, and they have to hear, they have to vote on any proposal, and I sent a letter to seven funds, and my proposal was,

replace all of you and replace them with us. So it was very aggressive and they closed ranks, they did all sorts of things to get the vote out. They did phone voting. Can you imagine an election where you call on the phone and you say, I don't even know what they said. They said, we think it's better if you vote against Saba and vote with your manager. Do you want to do that? I don't know if they got the right person on the phone. I don't know if they gave me a fair hearing, but they actually took phone votes as the main way to reach shareholders and they defeated us on that proposal.

And then the Telegraph said, "We need to send that American home with his tail between his legs." And then somebody wrote, "Okay, he's stuck. What's he gonna do? He lost. What's he gonna do?" And I'm like, "I'm not stuck. You're stuck." Because now everyone knows the score is, let's say, 42 to 30. You got 42% of the vote. We got 30.

If some of you in the audience buy this fund at minus 10, I'm not a group with you. You go and buy it at minus 10 because you want the discount to close. If collectively the arbitrageurs of the world buy 10% of it, my 30 is 40, their 42 is 32 or 33 if they buy some unvoted shares. So we're in this kind of...

very uncomfortable spot right now. This is very recent where there's these funds sitting out there and everyone knows the distance between us losing and us winning and so I'm in negotiations with them. But just to say, because what are we talking about is that small potatoes, there is 13 billion pounds in the UK market of just publicly traded, untraded

underlyings, no illiquids where you worry about the NAV. 100% public or 99% public is £13 billion of trapped discount. So if somebody snapped their fingers, Charlie Munger, rest in peace, emperor of the world kind of conversation, if you opened all closed-end funds that are just public,

The British pensioner and some institutions would be up 13 billion pounds, the same kind of number in the U.S. So we're talking about real, real money. Deep domain expertise, strong relationships, broad capabilities. It's what makes Stifel one of the industry's leading providers of M&A and capital raising services in the middle market.

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So it's 13 billion there, about 13 billion here. It's kind of unfathomable that the efficient market has not found a way to close that gap unless you're the actor that is on behalf of the efficient market.

arbitraging the gap. Tell us a little bit why all this money is lying around and nobody else has come up and closed this discount yet. Well, so activism is hard. You make enemies. I don't need to be Nuvine's friend. They're down the way. When we had, maybe there's someone here from Nuvine, so I can, someone, someone's... No one's raising their hand. Okay, fine. So here's what Nuvine did. Federal law

In the Investment Company Act, passed in Congress in 1940, says every share gets to vote. Every share gets to vote. Sound good? Every share gets to vote. The lobbying industry got in state law something that says, well, they can limit your vote because no one investor should have an undue influence.

You know, like we had federal law being different than state law for whatever, for marijuana, for whatever it is. You can have these at odds. And they limited our vote. We had like 20% of a fund. They only let us vote 9.99. So we went to court, and the judge did not need to hear the case. The judge decided on summary judgment that Nuvine had broken the law and that they were

hurt our ability to vote all our shares, and Naveen appealed, and the appellate court rejected unanimously Naveen's appeal, and then a different manager did the same thing, and we had to take that manager to court. So, you know, it's not, to answer your question, it's not easy. You have to be willing to roll up your sleeves and pay legal bills and fight for

Those kinds of battles, you're not just paying for one fight. It could affect the next 50, right? If you can get the law to change, to be clear. So not everyone's willing to be activist and the activists are not so happy to run afoul of the managers who they need. If you think about an amazing manager like BlackRock, the biggest, right?

Why would it make sense for an activist to fight with BlackRock about their own closed-end funds if they need to go and lobby them on Disney or, you know, whatever, Nestle, whatever it may be? So I'm in this weird place where I'm willing to just be an activist in my own space in asset management. And then it's not really an arbitrage barrier because these funds can stay at discounts for decades unless someone is going to go...

go to the mat and have the buying power to get there, they are not arbitrage. And you're right. There's been papers by Nobel Laureate economics professors in Chicago about the puzzle of the closed-end fund discount. But it's not really a puzzle if you don't have a mechanism to narrow it. And you do. The mechanism to elect a board. And right now...

the industry went to the New York Stock Exchange, right now meaning in the last year, and said, "Oh, we don't need those board meetings anymore." And they convinced the New York Stock Exchange to put forward a proposal to say the board meeting is not mandatory, even though it had been around for 90 years.

And they kind of trick them by saying, well, we did this for ETFs. But ETFs, you don't need an annual board meeting because you can always vote with your feet and exit at NAV. And closed-end funds are very different. You need your voice. You need the ability to elect a board. So the SEC...

put out a 12-page paper saying this is not going to fly. And now they're coming back with trying to have a new proposal. The NYSE hasn't decided yet on it. But basically, it's a very tough fight. But it's a big fight because we're talking about billions and billions of dollars. Even just recently, we made a

a very nice deal, mutually beneficial deal with BlackRock. We love BlackRock now, they love us. And so the next day, two tickers, BMEZ and BIGZ, two tickers the very next day. Someone's giving me a fist bump. Do you own those tickers?

Okay, well, the very next day, those two tickers combined market value was up $200 million. So if you think about somebody goes to McKinsey and they're going to try to tweak, please help our company do... You made $200 million because they announced a buyback tender, so there is enormous sums of money that that gentleman and that gentleman and this semi-gentleman can achieve

By buying discounts, it's not that complicated. It's so much easier than what Stan Druckenmiller does. You buy discounts and you buy them over and over and over again, and then you have shares, and then you vote them if they don't do something about it. And more and more, the managers are doing something about it. So I wanted to say to all of you, for those of you who are not invested in this space, that it is, I think, an enormous opportunity, especially when markets are a little bit expensive to a lot expensive, to invest.

try to earn a very nice return from something that doesn't require the market to go up. So I want to talk a couple of things about that. I want to talk about what you're buying, but I also want to talk about the difference from when you're a $2 billion nat annoying the big closed-end funds to a $7 billion, hey, we could take a substantial position in this fund. We could take 51% and vote you out. Tell us how the...

The process has changed as you've accumulated more assets under management. Are they taking you more seriously? The fact that BlackRock cut a mutually beneficial deal with you sounds like, oh, Boaz is kind of a pain in the ass. Let's just...

Let's just hear them out. Has it changed over the past decade? Well, look, they know that their shareholders made $200 million the next day. And actually, that's not even all of it because the act of tendering hasn't even occurred. So it was like an initial gain, and then there's some more gain to come between the end of this month and I think May or June for the second fund. So it's real sums of money. They can look good.

We had a very, actually very professional negotiation with them and we're very happy with the tone and by both directions. So, but what they are doing separate from us,

is I think they've decided that these discounts are not worth the damage to the brand. I'm not talking about that manager particularly. There are a couple managers who are now doing things like if you look at the yields on closed-end funds one year ago or a year and a half ago versus now, it actually went up 300 basis points even though rates didn't go up. The reason they went up 300 basis points is the manager decided to bump up the distribution

And I'm of two minds about it because there are some funds that used to have a 6% distribution and went all the way to 20 or 14. So it seems a little bit like, a little bit, I don't know what the word is, but like if one day you're able to pay six and all of a sudden you're able to pay 20, do you think that the dentist, the really nice dentist who, you know, has a chain of dental problems,

establishments understands that that 14 is a return of your own money. You put a dollar in, the assets are only earning six. They're giving you six, but

But then the next day they're starting to give you 20. What's that 14? That 14 is your own dollar coming back to you. And what happens is, and you guys will know this, people will go on Morningstar and they'll sort by yields and they'll say, amazing, look at this manager. And I get to have 20% and I get to have growth equities. Sounds like the greatest thing ever. And they will bid up those closed-end funds and the discount starts to go away. And there's some of them that even traded a premium. And so that's...

That's all fine, but there is no alchemy in finance. At some point, if they cut that dividend again, you can have a 15% loss, 20% loss in a single day. Otherwise, that fund is just going to shrink and shrink and shrink because it's shrinking by that 14 every year. Just to say managers now are taking steps without us to return capital to investors at NAV through over-dividending, through tendering, through other discount management plans. In the UK,

To their credit, they actually are replacing managers that have underperformed with better managers and that can cause the funds to trade better. So I like it because it helps my existing portfolio. I do wonder, well, what if this whole thing goes away? That's kind of an interesting topic, but it's been around for this discount for a century. I don't think, even with these steps, I don't think it's going away.

And what are in these closed-end funds? Is it bonds? Is it equities? Is it convertibles? What are the publicly traded holdings that these closed-end funds tend to hold? Right. So I'm not going to recommend my own fund overtly. I'm going to do it telepathically to all of you, okay? Because I can't overtly tell you to go invest. Just let me do it and you relax at

at the beach. But I'm going to recommend another fund because I do want to give a ticker. It's kind of the right, nice thing to do. And it's actually a fund I recommended some months ago at Grants. I spoke at Jim Grant's conference and at the time we had a 2% position. So we were really quite small, but I didn't mind recommending it even though we're buying it. We now have a 7% position. And the ticker is GDV, like gold does...

Very. I don't know. Someone have a better one from that? And it's a Gabelli fund. And Gabelli has a number of funds that trade at premiums to NAV. What? Premiums to NAV? Like, you know, even one of them has a 60% premium. So you can have funds at premiums also, which is another story. But this fund's at a double-digit discount. It's at a 13 discount. So you have a fund whose biggest holding is American Express. It's got J.P. Morgan.

It's got Google, I believe. It's got those kinds of stocks. And it's $3 billion. But if it was at NAV, it would be 14% more than $3 billion. So we're talking literally about $400 million to shareholders if it was open-ended or if they somehow found a way to raise the discount. So I like it because it's nice to be able to take a $200 million position in something.

We have positions as big as 450 million in single funds. That's one that a lot of people here could buy at minus 13. You like the portfolio. The fees are high because these fees were set long ago. They're about 120 bps. You have to think about that. There is a lot to do in the US and the UK right now, especially because the speed at which we're narrowing discounts has gone

So you mentioned – you just alluded to something I want to follow up on. There are 500 or so closed-end funds between the U.S. and the U.K. About – if I recall you saying this correctly, about 100 of them trade at a double-digit discount to NAV. Right.

How long can this go on for? Are you going to put yourself out of business by creating all this value? Or is this something that is going to persist forever? So when these funds are not trading at discounts, the market can grow. They do secondary offerings. They bring new IPOs for that new hottest ESG, you know, market.

tech, whatever it may be, whatever the thing that is sellable. And so there have been a shrinkage in the number of funds, but that's generally because of merger. I don't believe I'm going to put myself out of business because as big as we are at $7 billion, again, it's $500. Now, we are seven out of a much smaller set of interesting funds. But lo and behold, if the market sells off, I'm not going to be able to keep it

from selling off in my names either. And like when 2020 happened, all of a sudden, almost every fund was interesting. And that's the thing is, if a fund's at minus 14 and you have a big sell-off, yeah, it can go to minus 20. Usually comes back pretty quickly. If it's at minus one and you have a big sell-off,

it can go to minus 20 just as quickly. And so there isn't a safety net where you would have people to catch it, people to say, wow, at minus 16, 17, I like it even more. So I do think all sorts of funds that we were historically activist in or not, one of them, by the way, is a fund we were activist in that we shrunk, it shrunk. It's trading now at plus one.

And they've done two rights offerings. They've grown that fund. So I think the industry, when it's not at a discount, can issue. When it is at a discount, it needs us even more. And we also, even when it's in its normal state, are cleaning up the weakest, biggest discounts. And I think, ironically, we're in some ways an ally of the industry, even as an activist, because we're making it possible for

for them to bring new funds. You all obviously followed the saga of Bill Ackman trying to bring a $25 billion closed-end fund. If you think about location, location, location for real estate, what is the reason why he couldn't bring

a 25 billion or even a much smaller closed-end fund, discount, discount, discount. People were worried, if I buy it at IPO, what if it goes to a discount? I'll look silly. What's the mechanism to stop it from going to 100 to 90? And maybe that's even not an unlikely case. And so the protecting against the discount

having a discount management policy. If it ever gets to X, I'll buy it back. That kind of thing. I think that's the way forward for the industry to be able to issue more of these things. But it is challenged because you all know as well as I do about actively managed mutual funds, low-cost ETFs. And so there is some theory, like when Hurt on the Street wrote about my case in London,

The journalist is basically like, what do we need these things for? Now, that offended a lot of the UK market. Some of them are not needed. Some of them that have truly illiquid assets are needed because an ETF would be the wrong wrapper for it. So I do think there is a home for closed-end funds, and I can't get enough of them. I really, for 12 years, have just...

been interested in the hows and whys, it changes what regions, what product types. Right now the most interesting are equities. You're asking just run-of-the-mill public equities and the UK is more interesting on average because the governance is better.

So, look, the name of your ETF, the symbol is CEFS, closed-end funds, but you ended up taking over two closed-end funds yourself as managers. Tell us about those. How did you end up running these? And what's the performance been like? What's the discount look like today?

So there is a manager, Voya, that had a fund, seeing some heads nod, and we bought 24% of the fund. There was an election coming up, and some days before the election, they announced that for the better of shareholders, they thought, the board thought, that instead of us just needing the majority of the votes...

which is usually how I think about elections, we would need 60% but it wasn't even only that. We wouldn't need 60% of the votes. We would need 60% of all shares, voted or unvoted. And I think they got something like 56% to vote. So we would need more than every vote. So we took them to court, it was in Arizona,

And, you know, it's always funny, like, if you've been in legal disputes in discovery, you're like, wait a second, how would you do that knowing that we would get to see the source documents? And there was some documentation that...

that they were worried about losing the AUM to our action and it was really to entrench, which the board is supposed to be working for shareholders. It seems like they're working for Voya. So we took them to court and we won and Voya resigned as manager and they said they'll stay as manager until we can find a new one. And we set up a special committee and the committee, I was not a part of it, they decided to give it to us

Maybe they were worried if they didn't give it to us, we might not approve of the new manager or maybe they thought we deserved it. But since then, something really interesting happened. We changed the mandate, Barry. It was all high-yield loans. And in a very opportune time, we sold all high-yield loans between June of '21 when we took it over and the start of the 2022 bear market.

and we replaced it, even yield. So sell a single B loan or a double B loan at 350 over LIBOR, it was called at the time, and sell it at 350 over, and then buy a SPAC

at 350 over because they were trading at a three and a half point discount to their one year maturity date and you would basically still earn your 350 but you would have gone from single b double b loans to triple a t bills in a box at you know jp morgan or bank america and then 2022 happened and

and we were out of 257 closed-end funds, we were the number one performer. So we got very lucky. I'm not gonna be able to do that magic trick again. And I would have been very happy to be 25th out of 250, but instead we were first. So it did not change, our fund is still trading at a discount. It's trading at like a, one of them's at a seven, one of them's at a nine, but single-digit discounts. But what I wanna tell you is that my general counsel said,

I'm going to spare you the second story. Do we really want to run one of these? Because what if we do badly and what if they say, you see, it's not so easy? And I said, I really want to run it to show that there is a better way. I'm going to change the governance, how votes are cast, to be friendly to the shareholder.

So it used to be that, let's say the election was staggered, we're going to do it all in one year, so you can get us all out in one period, change it in other ways, and we're going to offer shareholders an exit near NAV, and we did that in both funds. So something that we're often not able to get the managers to do without coercion. So I run two funds, the tickers are S-A-B-A and B-R-W-E.

But sometimes people look at the track record and they don't realize we only took one of them over a year ago, 14 months ago, and one of them about three and three-quarter years ago. So that's been great. We changed the investment type to include SPACs, but right now they mainly own closed-end funds. So I have a product which is closed-end funds, mainly of closed-end funds. And what's kind of fun about that is I took their capital...

And now I have their capital working against them because I'm buying their own funds with that capital to then vote against management and hopefully get all of you and me NAV. And that's been really fun again because I don't have to read the Wall Street Journal. I mean, I have other reasons to read it, but this is a space where like,

can you turn 85 cents back into a dollar or not? And it's just a, it's not easy, but it's totally different than regular investing. So I want to sum up your, part of your investing philosophy as a statement you once made, I don't make directional bets, I make mispricing bets. And that's a huge change of perspective, how a lot of people in finance bet

Deep down inside, doesn't that mean that you're just a value investor? Is that the space? Are those the waters you swim in?

Yeah, but I'm never, well, by the way, those three funds have beta to them, but most of my assets are hedged, and I even manage tail protection money for different pension funds. I think people are a product of their vintage, like when you hear about your grandfather grew up in the war or whatever, and that's why he's all cranky or whatever, but I grew up in a period of war for the markets. I had a trading book.

in 1998, right when Russia was defaulting. And then like three years later was, you know, Enron and then was 9-11 like two months after that. And six months after that was WorldCom. So my vintage was not to be directionally long and it was not even in my makeup. It was more to be an arbitrageur

Isn't that value? Yeah, arbitrage is value. But I also think you have to find your niche and where you're comfortable. And I'm most comfortable where A is mispriced to B. And I can actually put both legs of the trade on.

So in the last two minutes or so we have, I want to talk about your ETF because it's relatively new to see somebody with your background in that space, CEFS. Who are the buyers of closed-end funds, ETF, and what's the investment target? What are you looking to generate in a fund like that? And then what are the holdings?

Yeah. So I'll be a little careful because I don't know exactly. I don't want to mark it. Okay. You're asking the question. I'm asking because I'm fascinated by this product. And anytime there's an opportunity to say to clients, hey, we're going to try and get you equity-like returns with bond-like risks, people sit up and pay attention. There aren't a lot of

credible products from managers. I could market for you. There aren't a lot of credible products from managers with as long a track record as you've amassed that people don't really know about. This is a relatively unknown product that really checks the box. - Yeah, all right, and just as a disclaimer,

We've owned in some periods almost all fixed income and now we happen to own mostly equities. So it's not bond-like risk, it's bond and equity-like risk, let's say. So we've seen it grow every year. We had no distribution plan. We had no distribution. It started with like a couple million dollars and maybe it's now 255 or so. It gets creations every few days. So I think some value investors have thought to say, okay, I know this is a space where

That's interesting, and I have this eight-year track record, and instead of buying it after I read that Saba bought it, why don't I just give it to Saba and let them do their thing? That's the name of my firm. So I think it's got a pretty dispersed shareholder base. These products have grown. There's one, I think, that...

Amplify has, I think the ticker for that is YYY. And I think it grew over the same period more than we grew and it again had less than one third of the return that we had. So I do look at the market as highly inefficient that if you have somebody doing something for eight years and is very similar to someone else and one made 12, one made four, you would think by year seven or something you would start to out-raise them. I'm not very focused on how big it gets because

Almost all of our AUM is in our hedge funds. I just think it's really neat to have a product that mom and pop can invest in that has no incentive fees, that has 110-bit management fee, just to say, because sometimes people get confused, and the fact that the funds themselves borrow money at SOFR and have their own fees that get imputed into our expense ratio, people get confused and think, I've read it on Seeking Alpha that we charge 5% or something, but no, our fee is 110 bips. You don't even keep all of it because we have...

a firm that's helped us structure it. So I just think it's nice to have an ETF out there where people can get kind of Saba Lite if they want a long-only product. And so it holds mostly U.S.,

equities through closed-end funds of venerable managers like BlackRock and PIMCO. So as Boaz discussed, he runs a hedge fund, Saba Capital. It's about $7 billion, but he also runs an ETF of closed-end funds. The stock symbol is CEFS. It's a little over $200 million in assets. You get to participate in the same strategy, only in an ETF,

not a hedge fund. Investors who are looking for relatively steady gains with modest volatility, the activist approach has proven successful in identifying closed-end funds that are trading at a discount. This is one way you could get that exposure. I'm Barry Ritholtz. You've been listening to Bloomberg's At The Money. Don't give up, don't give up the money.

Thank you.

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