SABA have prompted one of the best NAV up days for CRS this year..who'd have thought it! Unfortunately they do not benefit much as hedged against most of the listed positions. |
Sounds like CRS now looking to sell all their stakes, with rumours of interest for DLAR. HUR's also gone right up today, which is a surprise - no DLAR = no block to the D4E. |
 SABA have been very active in CEF in US fir a while. This is very much their modus operandi here.In 2015, Saba introduced a fund that invests in closed-end funds, or CEFs, quarterbacked by partner Pierre Weinstein (no relation). Unlike their more common mutual fund cousins, CEFs issue a fixed number of shares when they go public. Shares trade at either premiums or, far more often, steep discounts to their net asset values, or NAVs. Activist investors like Saba buy stakes in discounted funds and cajole management into taking steps to reduce the discount by making tender offers for shares at NAV, converting or merging into open-end mutual funds, or liquidating.Weinstein confesses he likes the moral dimension to his activism. "It gives me a great deal of pleasure that there are thousands of little investors who benefit," he says. Oddly, for the cut-throat world of big egos and sharp elbows, nearly everyone who crosses paths with Weinstein seems to . . . like him. "He was this great combination of super polite, humble, and smart," says Ron Tanemura, who okayed hiring Weinstein at Deutsche in 1998. "A real gentleman," adds David DeLucia, a former Goldman Sachs partner and chess opponent.https://www.institutionalinvestor.com/article/b1m3lx01dnj9mq/Boaz-Weinstein-Is-Making-Bank-He-s-Not-Happy-That-You-Know-About-It |
Only commentary I've seen so far:
"Small cap activist Crystal Amber threatened by activist with discontinuation
Friday, 25 June 2021, 7:36 am
You don't see this very often: a well-known activist fund being targeted by another activist for poor performance.
Well, that's just happened to old Richard "Bernie" Bernstein, the ex Schroders scribbler that set up Crystal Amber to invest in and shake up British small cap companies.
When he started he out Bernstein blazed a bit of a trail with a few succeses but recently he hasn't had much luck, with a few of the names in his portfolio really performing terribly, such as Hurricane Energy.
Now, though, Saba Capital Management has turned up with 25pc in Crystal Amber and written a letter to Bernie threatening to vote to against the Continuation Vote. Below is the link to this morning's statement:
Not much is known about Saba but there is a fund of that name set up by an uber punchy Deutsche Bank trader called Boaz Weinstein, who made a fortune from last year's market rout in March and April.
Watch out Bernie!" |
To me it seems morally repugnant to short stocks and then vote to wind up an IT so that IT has to dump those stocks and trash the share prices. |
ok thanks specto. Will hold and wait for now. |
Still not sure what Saba get for all this effort - have they shorted all the listed holdings, in proportion? Done some ALM, what about DLAR & EQLS?
Do they get puny stakes in the two unlisteds, and is that their profit?
Or do they force CRS to sell in the market, which crashes all the s/ps, and close their shorts into that?
Need to see the full letter from Saba, and what CRS's room for manoeuvre is. |
They seem to be spinning it as reorganisation, but simple fact atm is that continuation vote will fail. Perhaps in specia 25% of the holdings to Saba, and try to continue the remainder in a new co?
Can't see there'll be anywhere near NAV from a forced sale. |
What do we think? My original thought is that it's more likely to be a reorganisation rather than full sell off as DLR has a lot of upside potential atm. |
this was a busted flush long ago
last one please turn the lights out |
" Yesterday afternoon, a letter was received by the Fund from Saba Capital Management, L.P. ("Saba"), which holds more than 25 per cent. of the voting rights of the Fund, to inform the Fund that Saba will be voting its ordinary shares against the Continuation Vote and that, accordingly, the Continuation Vote will not pass."
So CRS going to "..reorganise, reconstruct, or wind up the Company following the Continuation Vote not being passed at the next Annual General Meeting..".
Saba have done them - they'll doubtless ask for inspecie to cover their shorts. If a full sell-off, no idea how they'll get shot of the unlisted two, nor HUR, nor ALM, nor others. Isn't a single fully liquid co - not considering size of holdings (eg DLAR 14% of co, EQLS 22.4% of co).
Can't say it's not the right thing tho. |
CRS sold its £5m holding in Redde for a heavy loss a few months ago at around 170 - 180p, after their activist intentions were rebuffed.
Redde is currently 385p, up 120% from their selling point.
CRS were wrong with their overpriced purchase, wrong with their activist intentions and wrong with their selling point. We all get things wrong sometimes, but Bernstein is making a career out of it.
It is time this vehicle for director self interest was wound up.
No position |
GID 17.7p/share, Board Intelligence 4.2p/share, "Other" 14.5p/share (inc the disappearing HUR). On a c.100p share price vs c.129p NAV, not sure there's any trade here. Agree you'd need a strong view on GI Dynamics (either worth a lot more, or worthless) to be taking the punt. Figs from last month's NAV.
Perhaps flip side is there's c.80p in DLAR & EQLS, so the downside isn't huge. But neither's the upside for a complicated trade shorting the holdings. And the discount to NAV for the performance isn't nearly high enough IMO. |
The activist about to get activised? Kick the manager out and get the trust paid out in specie. Use the stock to close the short positions and you should have a nice risk-free profit...in theory. CRS are shortly about to get wiped out on HUR, either by D4E swap or insolvency, which could be the catalyst they need for shareholders to vote out the trust management.
The problem is that you have stuff like GI Dynamics in there that no one could realistically value or want to hold long term. The arb relies on stuff like this paying out not just the likes of DLAR. Not sure I'd take that bet! |
See the FCA's short position disclosures. Saba are short 2.2% De La Rue, 1.2% Allied Minds. The only UK stocks where they have notified short positions. They're probably going to try to open-end CRS. |
Saba capital up to 24% Takeover on the cards ? Question is what do they see that nobody else does ? |
They've previously got round cash shortages by converting some of the positions to CFD (at 10% margin). May do that again if confident (& when are they not - perhaps when looking at the ten year performance). |
Expect a disposal of stock in De La Rue after results are released tomorrow, no cash available for Crystal Amber buy backs let alone the Management Fees and charges which ultimately end up in the pockets of the poorly performing management who squandered so many millions on the always indebted Hurricane!! Equals share price under pressure while this continuing liquidity persists! Meantime NAV discount is illusory!! |
Regardless of any profits in the past, recent mistakes on HUR seem to be unending. Not just the initial purchases but buying recently when the board had already indicated that the restructuring would severely reduce shareholder stakes in the company.
HUR say:
As at the date of this Explanatory Statement, one major shareholder has held discussions with the Plan Company, but this shareholder has not undertaken, or given any indication that it would be willing, to provide additional financial support sufficient to dispense with the need for the Restructuring. Another major shareholder indicated to the Plan Company's nominated advisor that it would not be prepared to enter into confidential discussions regarding an unnamed company, being the Plan Company, that would involve the sharing of inside information in respect to that company and during which the identity of the Plan Company would have been disclosed. Since the launch of the Practice Statement Letter on 30 April 2021, this major shareholder has requested the resignation of both the chairman and the senior independent Director of the Plan Company. Both Directors retain the full support of the Board.
So it seems, according to HUR, Kerogan refused to put extra cash in and CRS refused to enter into any discussions that would take them inside, and hence HUR were unable to discuss any options for CRS to refinance them. With this as the background, I doubt CRS will be able to prevent a court from deciding the restructuring plan was the only option.
Then the requisition of the General Meeting to remove all the directors gives 28 days for HUR to call the meeting by which time the plan will be approved by the court and the newly-appointed directors will come in just in time to implement the restructuring or call in the administrators.
HUR clearly not covered themselves in glory, but CRS seem to have made a lot of very preventable errors here. |
Agreed. As for Hurricane Energy, I wish I'd banked £43 million in profits!
"Since investing in Hurricane, the Fund has realised profits of £43 million." |
These are the top 4 holdings of the company with their current value:
De La Rue plc 57.5p
Equals Group plc 21.6p
GI Dynamics Inc. 18.0p
Allied Minds plc 13.9p
These four add up to 111p so you are already getting a 10% discount from these 4 with all other investments thrown in for free. Hurricane Energy is a red herring and irrelevant to the valuation of this company. |
@edwardt - CRS certainly been wrong on HUR, consistently. Can't blame them for not wanting to get wiped out in the D4E tho. But if they didn't like management, the time to call an EGM was long ago.
Seems to be a pattern - CRS punt something (be it Northgate, DLAR, ALM, HUR), it goes wrong, they average down, it goes more wrong, they eventually kick up a stink.
Unconvinced the discount's large enough here. Effectively paying fees (2% pa) for a portfolio you could replicate yourself (ex the unlisteds), and in sizes you could get out of again. Few if any of CRS's holdings are sellable if/when things go wrong (eg 14% of DLAR, 23% of EQLS, 21% of ALM).
And to top that, the stock-picking seems particularly poor. S/P where it was a decade ago. |
While totally agree with the requested action to hold the failed management at Hurricane responsible, what about the responsibility of the fund itself in its repeating support of a failure of investment? Someone taking that stupid investment decision to be sacked or fee deducted? |
being wrong and knowing the company has value but needs the brooms at the top changing is different. i like his gumption. |
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