By Svea Herbst-Bayliss
BOSTON, May 18 (Reuters) - Boaz Weinstein's hedge fund Saba
Capital has been pulling in new money this year even as many
rival investors are being asked to return cash to their clients.
The bulk of money went into Saba's newly launched portfolio
that invests in closed-end bond funds, a person familiar with
the firm said on Tuesday.
A spokesman for the firm declined to comment.
An anchor investor wrote a $70 million check in February
while other clients have put in $20 million, the person said.
This leaves the six-month old Saba Capital CEF Opportunities
fund with $100 million in assets.
Indeed all of Saba's portfolios have seen fresh demand this
year as returns are in the double digits. Assets have grown by
$400 million over the last 12 months, putting the firm's total
assets at $1.8 billion, the person said.
The inflows come at a time the hedge fund industry is facing
its biggest wave of redemptions since the financial crisis.
Research firm eVestment said on Wednesday that $17.7 billion in
assets have been pulled out of the $2.8 trillion industry in the
first quarter.
To be sure Saba's assets are still far below its roughly $6
billion peak, reached in 2012 after Weinstein, and other hedge
funds, took the opposite side of JP Morgan's so-called London
Whale Trade which cost the bank some $6 billion.
But after three down years, Weinstein's Saba Capital
performance looks to be making a comeback. In 2015, Saba gained
some 3 percent when the average fund was losing money and this
year returns are even better.
The new fund is up nearly 11 percent through early May while
the Saba Capital Master fund is up nearly 14 percent, the person
familiar with the performance said.
Weinstein, who spoke on a panel at the SkyBridge
Alternatives Conference in Las Vegas last week, said he is
seeing the best capital structure arbitrage opportunities since
2002. Specifically, Weinstein has been betting on battered
energy company bonds while also betting against their stock.
Weinstein also got some good news this week when a New York
Supreme Court judge threw out a Canadian pension fund's third
claim that Saba had breached its fiduciary duty. Canada's Public
Sector Pension Investment Board last year sued Saba, saying the
fund and Weinstein had marked down some assets after the pension
asked for money back.