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US hedge fund manager Boaz Weinstein’s main investment strategy has suffered losses this year, extending a run of lacklustre returns for two of his key funds as bets on credit markets fail to come good.
The $1.9bn flagship fund of Weinstein’s firm Saba Capital, which tries to make money through bets on dislocations in the credit market, was down about 6.5 per cent this year as of November 21, according to performance numbers seen by the Financial Times.
Weinstein is best known for spotting and trading against a JPMorgan credit derivatives trader known as “the London Whale” in 2012. The US bank suffered billions of dollars in losses as it tried to close out large positions in the market, while Weinstein’s firm made big gains.
Saba’s main fund was up 3.4 per cent last year and down 16.9 per cent in 2023, although in 2022 it surged 22 per cent as equities and bonds sold off violently, with Weinstein saying at the time that global stocks could be heading for a Japan-style bear market lasting decades.
However, since then stocks have largely enjoyed a strong run. This year, markets have rebounded from the turmoil triggered by US President Donald Trump’s “liberation day” tariffs in April, while wobbles in credit markets have proved shortlived.
Saba’s $1bn carry-neutral tail hedge master fund, which aims to shield investors from market downturns, is down 12.7 per cent this year, according to numbers seen by the FT. It lost 2.7 per cent last year and 16.7 per cent in 2023.
Saba declined to comment.
The losses for the flagship fund contrast with Saba’s greater success in its high-profile activist campaigns against closed-end funds managed by companies including BlackRock and Eaton Vance in the US and Baillie Gifford and Janus Henderson in the UK. As these fund structures do not have a mechanism to make sure share prices match the value of the underlying assets, they often trade at a discount to net asset value.
Saba reached a settlement with BlackRock in January after waging an 18-month battle against the US asset management giant over the performance and alleged governance issues of a number of its closed-end funds.
This year, Weinstein’s focus has been on UK investment trusts, in an attempt to tighten discounts at companies that he says have not delivered value for shareholders. In some cases he has called for them to be wound down or turned into funds that allow easy redemptions.
The strategy has borne fruit, with several of his portfolios linked to closed-end fund investing and with total assets of more than $1bn under management positive this year and last. Saba’s $240mn closed-end opportunities 1 fund, for instance, has made mid-single digit gains this year after rising 20.2 per cent in 2024 and 17.7 per cent in 2023.