 | |
| Company type | Private |
|---|---|
| Industry | Investment management |
| Founded | August 2009 |
| Founder | Boaz Weinstein |
| Headquarters | |
| Products | Hedge funds |
| AUM | $4.4 billion (August 2023) |
Number of employees | 41 (2023) |
| Website | www |
| Footnotes /references [1] | |
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.
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]
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]
A hedge fund is a pooled investment fund that holds liquid assets and that makes use of complex trading and risk management techniques to improve investment performance and insulate returns from market risk. Among these portfolio techniques are short selling and the use of leverage and derivative instruments. In the United States, financial regulations require that hedge funds be marketed only to institutional investors and high-net-worth individuals.
Long-Term Capital Management L.P. (LTCM) was a highly leveraged hedge fund. In 1998, it received a $3.6 billion bailout from a group of 14 banks, in a deal brokered and put together by the Federal Reserve Bank of New York.
A credit default swap (CDS) is a financial swap agreement that the seller of the CDS will compensate the buyer in the event of a debt default or other credit event. That is, the seller of the CDS insures the buyer against some reference asset defaulting. The buyer of the CDS makes a series of payments to the seller and, in exchange, may expect to receive a payoff if the asset defaults.
D. E. Shaw & Co., L.P. is a multinational investment management firm founded in 1988 by David E. Shaw and based in New York City. The company is known for developing complicated mathematical models and computer programs to exploit anomalies in financial markets. As of December 1, 2023, D. E. Shaw has $60 billion in AUM, including alternative investments and long strategies.
The Bear Stearns Companies, Inc. was an American investment bank, securities trading, and brokerage firm that failed in 2008 as part of the global financial crisis and recession. After its closure it was subsequently sold to JPMorgan Chase. The company's main business areas before its failure were capital markets, investment banking, wealth management, and global clearing services, and it was heavily involved in the subprime mortgage crisis.
Event-driven investing or Event-driven trading is a hedge fund investment strategy that seeks to exploit pricing inefficiencies that may occur before or after a corporate event, such as an earnings call, bankruptcy, merger, acquisition, or spinoff. In more recent times market practitioners have expanded this definition to include additional events such as natural disasters and actions initiated by shareholder activists. However, merger arbitrage remains the best-known investment strategy within this group.
Proprietary trading occurs when a trader trades stocks, bonds, currencies, commodities, their derivatives, or other financial instruments with the firm's own money to make a profit for itself. Proprietary trading can create potential conflicts of interest such as insider trading and front running.
A private equity fund is a collective investment scheme used for making investments in various equity securities according to one of the investment strategies associated with private equity. Private equity funds are typically limited partnerships with a fixed term of 10 years. At inception, institutional investors make an unfunded commitment to the limited partnership, which is then drawn over the term of the fund. From the investors' point of view, funds can be traditional or asymmetric.
Citadel LLC is an American multinational hedge fund and financial services company. Founded in 1990 by Ken Griffin, it has more than $58 billion in assets under management as of January 2024. The company has over 2,800 employees, with corporate headquarters in Miami, Florida, and offices throughout North America, Asia, and Europe. Founder, CEO and Co-CIO Griffin owns approximately 85% of the firm. As of December 2022, Citadel is one of the most profitable hedge funds in the world, posting $74 billion in net gains since its inception in 1990, making it the most successful hedge fund in history, according to CNBC.
TPG Angelo Gordon is a global alternative investment manager founded in 1988 by John Angelo and Michael Gordon who together ran the arbitrage department of L.F. Rothschild in the 1980s. The firm focuses on four main investment disciplines: credit, real estate, private equity, and multi-strategy.
Sculptor Capital Management is an American global diversified alternative asset management firm. They are one of the largest institutional alternative asset managers in the world.
Magnetar Capital is a hedge fund based in Evanston, Illinois. The firm was founded in 2005 and invests in fixed-income, energy, quantitative, and event-driven strategies. The firm was actively involved in the collateralized debt obligation (CDO) market during the 2006–2007 period. In some articles critical of Magnetar Capital, the firm's arbitrage strategy for CDOs is described as the "Magnetar trade".
Paulson & Co. Inc. is a family office based in New York City, previously it was a hedge fund established by John Paulson in 1994. It specializing in "global merger, event arbitrage and credit strategies", the firm had a relatively low profile on Wall Street until its hugely successful bet against the subprime mortgage market in 2007. At one time the company had offices in London and Dublin.
Boaz Weinstein is an American hedge fund manager and founder of Saba Capital Management. He rose to prominence at Deutsche Bank in the early and mid 2000s with his credit default swap and capital structure arbitrage trading strategies. He then formed a proprietary trading group within Deutsche Bank. After leaving the bank in 2009, Weinstein started Saba Capital Management as a separate hedge fund. As of September 2022, Saba manages $4.8 billion in assets.
CQS is a London-based global multi-strategy credit-focused asset management firm. It launched its first credit strategy in 2000 and now manages a range of investment mandates. Specific investment capabilities include convertibles, asset backed securities, credit, loans, structured credit, and equities.
In April and May 2012, large trading losses occurred at JPMorgan's Chief Investment Office, based on transactions booked through its London branch. The unit was run by Chief Investment Officer Ina Drew, who later stepped down. A series of derivative transactions involving credit default swaps (CDS) were entered, reportedly as part of the bank's "hedging" strategy. Trader Bruno Iksil, nicknamed the London Whale, accumulated outsized CDS positions in the market. An estimated trading loss of $2 billion was announced. However, the loss amounted to more than $6 billion for JPMorgan Chase.
Michael Edward Platt is a British billionaire hedge fund manager. He is the co-founder and managing director of BlueCrest Capital Management, Europe's third-largest hedge-fund firm which he co-founded in 2000. He is Britain's wealthiest hedge fund manager according to the Forbes Real Time Billionaires List, with an estimated wealth of US$15.2 billion.
Assured Investment Management is an institutional asset management firm, with a heritage in credit strategies. The firm manages approximately $15 billion as of 2022.
Mudrick Capital Management is an investment firm specializing in special situations and event driven investing. The firm was founded by Jason Mudrick, its current Chief Investment Officer, in 2009. The firm is located in New York City and, as of June 2022, managed approximately $3.3 billion in assets.
Lighthouse Investment Partners (Lighthouse) is an American alternative investment management firm based in Palm Beach Gardens, Florida. The firm mainly takes a fund of funds approach that invests indirectly through other specialized investment managers.
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