Boaz Weinstein’s Hedge Fund Takes Aim at Impax’s ‘Terrible’ Run

4k8g([5{gj([i0ib4qmg579y_media_dl_1.png Bloomberg

Article content

(Bloomberg) — As Boaz Weinstein’s hedge fund, Saba Capital Management, takes on one of the most high-profile environmental investment trusts in Britain, the standoff is morphing into a particularly brutal moment for ESG.

Article content

Saba made clear last month that it plans to oust the board of Impax Environmental Markets (IEM), after raising its stake to almost 30%. In so doing, it also took aim at Impax Asset Management, a juggernaut of sustainable investing that launched IEM in 2002 and has been running the portfolio ever since. 

Article content

Article content

Article content

The next step will likely be to take the mandate from Impax, whose performance running the trust’s portfolio has been “terrible,” says James Carthew, head of investment companies research at QuotedData. 

Article content

Article content

A spokesperson for Saba declined to comment. The company has previously said it intends to replace IEM’s board because the trust’s share price has lagged its benchmark by more than 75% over the past five years.

Article content

A representative for Impax said IEM’s investment case is currently “more compelling than ever before,” but declined to comment on the risk it might be removed as IEM’s investment manager.

Article content

Saba’s approach is part of a broader strategy to target UK investment trusts with share prices below the net asset value of the underlying assets. But its IEM campaign stands out, according to Carthew.

Article content

The hedge fund’s move “undermines” efforts to pursue sustainable strategies, “and removes that choice from the investors in the investment companies market,” he said. 

Article content

“At its heart, this is a battle between short-term profiteers with deep pockets and long-term investors with lesser means,” Carthew said.

Article content

Article content

Losing the IEM mandate would mark a significant blow for Impax, which has long been viewed as a flag-bearer of the sustainable investing movement. But the asset manager has struggled to navigate rising interest rates in recent years, while largely missing out on the surge in Big Tech valuations. Against that backdrop, its market value has slumped by more than 90% since its 2021 heyday.

Article content

The asset manager’s chief executive, Ian Simm, told investors last year that the worst was over after clients pulled $14 billion. He said back then that he expected the firm’s assets under management to stabilize.

Article content

Then in early April of this year, Impax revealed net outflows of £2 billion ($2.7 billion) for the quarter ending March 31. The firm now manages about £22 billion in assets, down from a peak £41.4 billion in December 2021. That’s despite a roughly 70% rebound in clean energy stocks over the past year.

Article content

Before Saba’s intervention in April, Impax was overseeing about £925 million in total net assets for IEM. The investment trust now holds roughly £200 million, after shareholders sold their stakes in connection with the tender offer triggered by Saba’s activism.