This Activist Battle Could Flip These 8.6%+ Payers to a Buy

Core Viewpoint - The article discusses an activist battle involving closed-end funds (CEFs) where a new investor is targeting Saba Capital Management's funds to eliminate discounts to net asset value (NAV), potentially increasing their prices and providing investment opportunities for shareholders [2][12]. Group 1: Activist Investors - Boaz Weinstein is a well-known activist investor who has previously targeted underperforming CEFs [1]. - Saba Capital Management, led by Weinstein, has shifted focus from CEFs to private-credit funds, highlighting the value of CEFs as stable dividend sources [3][4]. - GAMCO Investors, led by Mario Gabelli, is now targeting Saba's funds, aiming to boost their valuations similarly to how Saba has targeted other funds in the past [9][12]. Group 2: Fund Performance - Saba Capital Income & Opportunities Fund (BRW) has a yield of 15.7% but trades at a 15.5% discount, which has been widening [6]. - Saba Capital Income & Opportunities Fund II (SABA) yields 8.6% and has also seen its discount widen due to aggressive investments in cryptocurrencies [7][8]. - Both funds have underperformed compared to the S&P 500 and the VanEck BDC Income ETF, indicating potential issues in their management and investment strategies [5][6]. Group 3: Market Dynamics - The Gabelli Utility Fund (GUT) trades at a 77% premium to NAV, contrasting with Saba's funds, and has benefited from strong performance in utility stocks [10][11]. - Gabelli's strategy involves nominating David Schachter to the boards of Saba's funds, which could lead to a shift in investment strategy and potentially improve performance [12].