- Saba has taken a 5% position in SDCL Efficiency Income Trust
- SDCL had already begun a process to look at strategic options to narrow its discount to net asset value, prior to Saba appearing on the shareholder register
- Saba might have failed in its aggressive campaign in early 2025 but it’s had subsequent success elsewhere with various trusts
Dan Coatsworth, investment analyst at AJ Bell, comments:
“Activist investor Saba is back to haunt the investment trust community. It has taken a 5% position in SDCL Efficiency Income Trust, one of many trusts in the renewable energy/infrastructure sector languishing on a big discount to the value of its assets.
“Saba hasn’t disclosed its intentions, but it’s not hard to guess. Its strategy all along has been to spot trusts going cheap and to find ways to narrow the discount and make a few quid along the way.
“There is a well-trodden path in the investment trust world for investors to spot stocks that could enjoy a re-rating, buying low and hoping something happens to push the shares up so they can sell at a higher price. Activist investors can be the catalyst to get things moving as they put pressure on the people overseeing the trust to get their act together and make changes.”
Why Saba is targeting SDCL
“Saba will be pushing on an open door with SDCL given the trust is already looking at strategic options.
“SDCL’s performance on the stock market has been miserable, with considerable value destruction for shareholders as the share price fell by two-thirds between July 2022 and May 2025. SDCL must have known all along that it was vulnerable to activist pressure.”
Why the investment trust industry is changing
“The investment trust industry is undergoing a radical shift, with consolidations galore. Saba can take credit for some of this change, even if it didn’t initially succeed with phase one of its plan to exploit the sector.
“Saba came in like a wrecking ball in early 2025, banging the drum that various trust boards and managers had to go. It targeted seven trusts and all of them successfully fought off the activist.
“However, the failed high-profile campaign made the industry realise that sustained underperformance would no longer be tolerated, hence the subsequent proliferation of manager changes, mergers, tender offers, share buybacks and other measures to please investors.
“Interestingly, Saba didn’t really go away after its initial defeat. It subsequently carried out two low-key campaigns to encourage various trusts to convert to an open-ended structure, and for certain others to undertake tender offers, many which yielded positive results.
“Being more considered in its approach rather than storming through the front door now seems to be Saba’s tactic.”
