Please see below for this week's news from ShareSoc followed by a selection of interesting items from the rest of the financial media. 

We start the Financial News with updates regarding Saba as they remain in the spotlight.  Please scroll down for the rest of the Financial News.

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US hedge fund Saba Capital recently requisitioned general meetings at seven investment trusts: Baillie Gifford US Growth Trust (#USA); Edinburgh Worldwide (#EWI); Keystone Positive Change (#KPC); Henderson Opportunities Trust (#HOT); European Smaller Companies Trust (#ESCT); CQS Natural Resources Growth & Income (#CYN); and Herald Investment Trust (#HRI).

Unless most private shareholders vote at these general meetings, Saba’s resolutions will pass, enabling Saba to take control of these trusts. In this webinar an expert panel discussed the implications of Saba’s actions and how issues with the current nominee system prevent shareholders executing their right to vote. Followed by a brief outline of the rights of shareholders who hold their shares through brokers or investment platforms, and how they can cast their vote.

ShareSoc responds to the Chancellor’s proposals on the application of inheritance tax to residual pensions. 

Money Maze Podcast – Kintbury Capital’s Long-Short European Equity Strategy with Chris Dale, Founder & CIO.

A growing trend of flows away from active investors to passive index trackers may damage the price discovery process and efficient capital allocation.

The first Saba vote was a resounding defeat for Saba, but investors still need to vote at all 6 other Investment Trusts under attack. In this article, the manager of European Smaller Companies Trust (ESCT) makes his pitch for your vote, pointing out that even Saba said its performance had been good. He fails to mention, however, that the discount to NAV is partly down to forced selling resulting from the ongoing debacle over misleading cost disclosure rules which meant some platforms removed certain trusts. An industry wide issue.

Hargreaves Lansdown reports a record 41% of its customers holding the Herald Investment Trust actually voted in last week’s general meeting and record levels are also voting in the general meetings for the other 6 of the "Saba Seven" investment trusts. 
(Financial Times subscription required)

ShareSoc director Amit Vedhara is quoted in this article excoriating certain Lloyds share dealing platforms for preventing shareholders from voting on the crucial Saba resolutions.

The News is still coming thick and fast on the Saba Capital attacks.  There is confirmation of a short attack on Saba itself, as US hedge fund, Weiss, shorts both Herald and Edinburgh Worldwide, in the expectation Saba will eventually lose both votes and have to dump its large stakes, driving share prices down.
(Times subscription required)

This article points out that Activist campaigns targeting UK-listed investment trusts are nothing new, but Saba Capital’s latest effort stands out for its over-reach, ambition, implications and lack of transparency.

Ruth Sunderland says the war isn't over.  First battle won, 6 more votes to go and it may not even end there. 

Herald won round one, but only round one. April sees directors up for re-election and a continuation vote, so Herald shareholders need to show up, all over again.
And there are 6 more Trusts still to get through their own votes. 
It may not always be as easy as it should be to vote, but often it is, so make sure you get your vote in by looking for the ‘Corporate Actions’ links on your platform’s website. Private investors dominate share registers on trusts more than ever and can make a real difference when it matters.

After the Daily Mail outed Lloyds as a 'blocker' to voting in the Saba raid Trust votes, the FCA also wrote to all platforms to check what communications they were passing on to shareholders, so now Lloyds u-turns with a 'workaround'. This means you have to call Scottish Widows etc. to get them to vote as you want on Saba proposals. Why they didn't just add it as a Corporate Action is unknown.

Has Saba been and gone on a possible raid on the giant Smithson Investment Trust? Having only declared a small stake, was it too big to take a bite off? Chew on the fact that Saba has stakes in c.30+ trusts.  And make sure you vote on the 6 trusts currently under attack.
(Times subscription required)

While Saba narrowed discounts to NAV on 7 trusts with its buying spree, there's potentially money to be made on the 90% of trusts that still have wide discounts.  Is now the best time to pick up some cheap stocks? Boards have woken up to the risks of activists and will be working hard to narrow discounts. Choose wisely and do your research.
(Times subscription required)

Jeff Prestridge wades in and highlights the need to act now and also the estimated £200m size of the RGL legal claim against Hargreaves Lansdown from its alleged over-promotion of Woodford WEIF. ShareSoc also endorses the RGL claim and encourages all investors in WEIF to, at the very least, explore this option.

More about Hargreaves' lawsuit in Investment Week, a magazine for the financial services industry. If investment advisers can be persuaded to recommend to their clients that they should join the RGL claim and get back some compensation, then the RGL claim size could soar. This is one to watch. 

Excellent article summarising how little-known Chinese start-up, DeepSeek, up-ended the entire AI stocks universe by last week releasing a free open-source AI that it only spent $6m on training and that is as good as OpenAI's best and latest product (o1), that cost $7bn to train and develop. 2nd Mover effects...
Speculation is rife that the hedge fund behind DeepSeek 1) also shorted the key competitor stocks impacted by its release and 2) has not declared an illegally acquired hoard of c.50,000 hugely expensive Nvidia chips used to train DeepSeek AI.

The Financial Ombudsman (FOS) orders much larger compensation payments than St. James's Place (SJP) had offered, in multiple complaints. In these cases, charges had been levied for multiple years of advice that had never been provided. Even if the first step in seeking compensation for unjust charges is a complaint to SJP, it appears that proper redress only comes if it is then escalated to the FOS. Ask your friends and family to check if they have been charged for SJP's annual reviews and for advice they never received, they could be due compensation.

FCA Chief Exec basically says to the government, we will loosen the rules if you are willing to take the blame when consumers get defrauded, or money launderers run riot etc. etc.
This is clearly a response to the financial sector lobbyists, who hate their compliance costs and have convinced the government that a "light regulatory touch" leads to growth. Not so sure about the math in that equation.
(Financial Times subscription required)

Consumer expectations for the UK economy have fallen to a new low as the government continues to come under pressure about the outlook for the country’s finances.
(Times subscription required)

The UK borrowed far more than expected in December, laying bare the scale of the challenge facing Rachel Reeves as she battles to restore confidence in her fiscal plans.
(Financial Times subscription required)

Rachel Reeves has raised the prospect of scrapping some of Britain’s regulatory bodies as the Labour government prioritises its mission to grow the economy. To kick things off she kicked out the interventionist head of the Competition and Markets Authority and replaced him with a former Amazon executive. There are 116 regulators it seems and the biggest include the FCA and the Environment Agency. It appears she wants to reduce the number and the overlaps.  Elsewhere, it’s been argued that the FCA is too big and the Environment Agency too small.
(Times subscription required)

Some potentially positive news. Winterfloods Trust picks did well in 2024 and here are 36 to choose from for 2025.

Triple Point, erstwhile manager of disastrous DGI9, is proposing a voluntary liquidation of another of its gems, Triple Point Energy Transition. Triple Point seems to have the reverse of the Midas Touch.
The portfolio has been sold down following a shareholder vote last year to wind down.
The value of the trust's assets is just under £50m.

Stuart Kirk of the FT thinks active ETFs are a bit of a con - although they are cheaper than actively managed OEICs and unit trusts.

The current spotlight on investment trusts may end up revitalising this sector of the stock market. Opportunity knocks?

The Treasury mandated Capital Markets Industry Taskforce finally gets a bit more representative of listed firms by adding small cap representation in the face of the ongoing exodus of listed companies.  It still doesn't address the fact that it fails to represent the demand side of the equation, i.e. the investors and their needs, and so remains a one-eyed lobbyist.

Lord Lee, ShareSoc Patron, gets a plug, again, as the first publicly declared ISA millionaire, in this piece looking at Hargreaves Lansdown's most successful millionaire investors, who range from 27 to 101 years old. Though the average age is falling every year as younger investors reap the rewards of ISA investing.

As Nate Anderson of Hindenburg hangs up his boots, the FT reviews who is still in the shorting game. It's a high-risk strategy that has had notable success as they revealed fraudulent activity at Wirecard, Nikola, Nordic Health, Alanis, Connaught and more. All of which had escaped the notice of all the regulators and where the shorts effectively acted as the enforcers. Some may criticise their activities, but they are merely betting on losers (on the back of their own research), rather than typical investors who are trying to bet on winners.

We regularly hear this, but at some point the doom mongers will be right. A few new reasons it might happen are outlined here.

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