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Saba Capital Management

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Saba Capital Management, L.P.
Company typePrivate
IndustryInvestment management
FoundedAugust 2009; 15 years ago (2009-08)
FounderBoaz Weinstein
Headquarters
New York City, United States
ProductsHedge funds
AUM$4.4 billion (August 2023)
Number of employees
41 (2023)
Websitewww.sabacapital.com
Footnotes / references
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Saba Capital Management (Saba) is a credit relative value focused hedge fund firm established in 2009. It also has strategies in tail hedge, closed-end funds and SPACs.

History

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Launch

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Boaz Weinstein was head of a credit proprietary trading group at Deutsche Bank and had gained a lot of experience trading credit default swaps (CDS). In 2006, Weinstein struck an agreement with Anshu Jain where they would move out the group in 2009. In preparation, Weinstein named the group Saba Principal Strategies. Saba is a Hebrew word meaning "grandfather" and is a tribute to Weinstein's grandfather, a survivor of the Warsaw Ghetto during World War II.[2][3]

In early 2009, Weinstein had left the bank along with 15 members of his team to spin-off the group as a new entity named Saba Capital Management based out of the Chrysler Building in Manhattan. Weinstein was also able to take all of the intellectual property, including trading systems and analytics that the group developed while at Deutsche Bank.[2][3][4]

Saba launched its flagship Capital Master Fund in August 2009 with $140–160 million.[2][3][4]

2009 to present

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In 2012, Saba attracted attention after it profited from the 2012 JPMorgan Chase trading loss on account of a failed investment in credit derivatives attributed to a trader at JPMorgan who was later nicknamed the "London Whale".[4]

In 2015, PSP Investments tried to redeem $500 million from Saba and believed it was shortchanged during the process. As a result, in the fall that year, it sued Saba accusing it of self-dealing and mis-marking illiquid fund assets to minimize the redemption. In March 2017, both parties agreed to a settlement with the joint statement that they had "resolved this matter as a commercial dispute involving a good faith disagreement over the valuation of two highly illiquid corporate bonds."[5]

In 2016, Saba profited substantially from capital structure arbitrage trades in Linn Energy and Chesapeake Energy when it successfully backed the bonds in those companies that were highly mispriced relative to the equity.[6]

From 2012 to 2014, Saba suffered from underperformance leading to some investors withdrawing their funds.[7][8] However it gained 3% in 2015 and 22% in 2016 which attracted new investors.[9] From 2012 to 2017, Saba had an office in London. It was speculated that Brexit might have been a factor in closing the office.[9]

Saba profited during the 2020 stock market crash where it bought inexpensive CDSs on junk-rated companies and sold CDSs on investment-grade companies.[10] For the year 2020, Saba's flagship fund returned 33% while its tail fund returned 99%. In 2021, Risk named Saba hedge fund of year due to its strong performance during the COVID-19 pandemic.[11]

At the end of 2021, Saba had become fourth-biggest SPAC hedge fund investor with $4.26 billion invested.[12] It along with Lighthouse Investment Partners had invested in Digital World Acquisition Corp. which they sold in October 2021 after news had emerged the company was merging with Donald Trump's new media venture. Shares of the company had surged 357%.[13]

In June 2023, Saba launched a lawsuit against 16 closed-end funds over control-share provisions. These funds were run by BlackRock, Franklin Resources, Tortoise Capital Advisors, Adams Funds and FS Investments. Weinstein himself took particular aim at Blackrock where he vocally stated that it was the worst company in the S&P 500 when it came to governance.[14][15]

In August 2023, Saba worked with Pershing Square Capital Management and Avenue Capital Group in an attempt to acquire Sculptor Capital Management.[16] However the bid at $13.50 a share was rejected stating the group failed to demonstrate that it could complete a transaction. Sculptor eventually agreed to be acquired by Rithm Capital.[17]

References

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  1. ^ "Form ADV" (PDF). SEC.
  2. ^ a b c "The Future Face of Hedge Funds". Institutional Investor. 2011-03-21. Retrieved 2023-11-16.
  3. ^ a b c "Boaz Weinstein Said to Raise $160 Million for Saba Hedge Fund". Bloomberg.com. 2009-06-01. Retrieved 2023-11-16.
  4. ^ a b c Ahmed, Azam (2012-05-28). "How Boaz Weinstein and Hedge Funds Outsmarted JPMorgan". CNBC. Retrieved 2023-11-16.
  5. ^ Gara, Antoine. "A $116B Pension Fund Is Walking Back Incendiary Claims Against Boaz Weinstein's Saba Capital". Forbes. Retrieved 2023-11-16.
  6. ^ Heller, Jamie (2016-05-12). "Boaz Weinstein Profiting on Beaten-Down Energy Bonds". Wall Street Journal. ISSN 0099-9660. Retrieved 2023-11-16.
  7. ^ "Boaz Loses for Second Year as European Bet Sours". Bloomberg.com. 2013-12-24. Retrieved 2023-11-16.
  8. ^ Copeland, Rob (2015-01-15). "Saba Capital's Main Fund Down to $736 Million". Wall Street Journal. ISSN 0099-9660. Retrieved 2023-11-16.
  9. ^ a b "Exclusive - Saba Capital, famed for 'London Whale' bet, to shut London office: sources". Reuters. 2017-07-05. Retrieved 2023-11-16.
  10. ^ "Boaz Weinstein Is Making Bank. He's Not Happy That You Know About It". Institutional Investor. 2020-06-17. Retrieved 2023-11-16.
  11. ^ "Hedge fund of the year: Saba Capital Management - Risk.net". www.risk.net. 2021-02-04. Retrieved 2023-11-16.
  12. ^ "As SPAC Bubble Burst, Hedge Funds Doubled Their Holdings". Institutional Investor. 2022-03-11. Retrieved 2023-11-16.
  13. ^ Li, Dan Mangan, Yun (2021-10-22). "Two hedge funds sell stakes in Trump SPAC firm DWAC after merger news, big stock price rise". CNBC. Retrieved 2024-02-11.{{cite web}}: CS1 maint: multiple names: authors list (link)
  14. ^ Pitcher, Jack. "BlackRock Clashes With Hedge-Fund Giant Over Control of Funds". WSJ. Retrieved 2023-11-16.
  15. ^ "Saba's Boaz Weinstein Sees Value in Closed-End Fund Arbitrage". Bloomberg.com. 2023-06-07. Retrieved 2023-11-16.
  16. ^ "Investor Boaz Weinstein leading rival bid for hedge fund Sculptor". www.ft.com. Retrieved 2023-11-16.
  17. ^ "Sale of Sculptor Capital on cusp of approval after hedge fund brawl". www.ft.com. Retrieved 2023-11-16.
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