BlackRock-Boaz Weinstein Dispute Turns Even More Bitter

And today we’re looking at Boaz Weinstein’s push to remove BlackRock as a manager of a number of funds. And joining us now is Bloomberg’s Justina Lee. Justina, let’s set the stage here because so much of this is born out of the story where a few days ago BlackRock sent a message to thousands of clients saying your fund is under attack, with the idea here of Weinstein Saba going after a number of their funds. Explain the dispute here and how it got to the point that BlackRock is now warning their own clients about this. Yeah, maybe we can kind of start with what these products are. They’re a bit like a mutual fund, except that they’re run a bit like a company in that, you know, they’re also listed. They kind of also have these proxy battles. What’s going on here is for a while, Boaz Weinstein and his hedge fund has been trying to oust BlackRock as the manager of these products, saying that they’ve essentially given investors a really bad deal. And of course, BlackRock is fighting back and saying that Boaz is all about serving his own interests because kind of Boaz has a stake in these funds himself and kind of want to take them a particular direction. And you can kind of really see from Black Rock’s latest message that the battle’s heating up. The latest message says if Sabo were to succeed, it may seek to appoint itself as an investment advisor and fundamentally disrupt the fund’s objectives and strategies, all to enrich itself. It says in quotes. And of course, Weinstein’s fund has fought back as well. Weinstein himself, in an interview, said that they need to show that there’s a cost to illegally entrenching themselves to protect their management fees while doing terrible things to shareholders, and that the funds themselves, the Black Rock’s close in funds, have a track record of horrible performance. That’s according to Weinstein. How bitter has this dispute gotten? Yeah, really quite better. And I think, you know, they’ve even kind of gone to court over a lot of these proxy battles. And basically what like Saba’s case is, is that if you look at these funds, they’ve been trading at a discount to their asset value and he thinks you know that’s a sign of mismanagement. There are a lot of actions you can take. You know, for instance just turning the fund into an open-ended fund that you can take to kind of close this discount. And what kind of BlackRock is pointing to is that, you know there have been cases where Saba has taken over some of these closed end funds by winning these battles. And what they’ve done is kind of like completely changed the funds character. They’ve added crypto, they’ve added SPAC’s. And so I think you know it really is kind of turning pretty bitter. So really quickly here as well, this is not unique to BlackRock here just you know with the equity markets changing as they are to incorporate more of these closed end funds, ETFs, all sorts of types of fund structures in a shrinking public market. Is this the new activism? Yeah, I mean we kind of have seen this worldwide actually. I mean Boris Weinstein has even waged similar battles against UK closed end funds. And I think the issue here is we kind of got to a macro turning point right where interest rates were going up and this kind of has really endangered a lot of closed end funds. And at the same time as you point out, I mean ETFs have been the big trend here. And so I think closed end funds at the same time structurally is also facing an issue of you know what is their role in a world where everyone kind of can just easily pile it into an ETF here. And so I think there’s also question here about what is the future of this structure.