BlackRock, a major player in the world of passive investing, is currently facing a challenge from activist fund Saba Capital. The conflict centers around ten of BlackRock’s closed-end funds, which are trading at a significant discount to the value of their assets. Boaz Weinstein, the founder of Saba Capital, is calling for BlackRock to offer to buy back shares from investors in order to unlock an estimated $1.4 billion in value. Saba is also seeking to place nominees on the funds’ boards to negotiate for lower fees.
Closed-end funds differ from mutual and exchange-traded funds in that they do not offer new shares to incoming investors, allowing their share prices to deviate from the value of their assets. This discrepancy can lead to opportunities for activists like Saba to push for changes that they believe will benefit investors.
The standoff between BlackRock and Saba represents a departure from Blackrock’s usual position as a disruptor in the financial industry. The outcome of this battle could have significant implications for both funds and investors involved.
As the situation unfolds, investors and industry watchers will be closely monitoring the shareholder meetings scheduled for the second half of June. It remains to be seen how BlackRock will respond to Saba’s demands and whether the proposed changes will be implemented.
Overall, the clash between BlackRock and Saba Capital demonstrates the ongoing evolution and competition within the financial world. Activist investors are increasingly challenging established players, forcing them to reevaluate their strategies and operations. The ultimate result of this conflict will shape the future landscape of the asset-management industry.
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