Brace for an outbreak of Trumpist investor activism

If the new Trump era has a theme, it’s one of quixotic disruption with random consequences. In that spirit, stand by for more interventions from activist shareholders seeking to electrify sluggish businesses while making fast bucks on the way through.

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The first episode over here was the attack by the New York investor Boaz Weinstein on seven London-listed investment trusts, in which he acquired stakes and forced shareholder votes to replace board members, with the aim of taking the trusts’ assets under the management of his own firm, Saba Capital.

‘Go home! You’re selfish and wasteful,’ shouted one headline after Weinstein was emphatically defeated in all seven polls. But his response was to launch a new action against two of the same trusts plus two others, while posting videos of athletes who fought back to win. In the meantime, he still holds stakes the trust boards can’t ignore – and having spurred their share prices, he’s sitting on ‘greenmail’ profits.

So he’s not going home soon. But is he merely a blundering Trumpist? His tactics ‘look like those of a general who has not properly recced the ground’, says Jonathan Davis, author of The Investment Trusts Handbook. ‘But his targets will lose the battle in the end unless they convince remaining shareholders they’re worth saving. That will only happen if they admit the merit of his complaints about complacency and poor performance.’

And Jonathan Simpson-Dent – chairman of Edinburgh Worldwide, the last of the seven trusts to vote Weinstein down – almost agrees: ‘To stay relevant and viable, boards and managers need to excite shareholders with properly differentiated strategies… Me-too mandates and mediocre performance will not be tolerated.’