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Neuberger Berman Takes a Victory Lap. Saba Says Not so Fast.

The two firms are battling over the results of a proxy fight at a Neuberger bond fund in which Saba is an activist investor.

Neuberger Berman is claiming a victory in its proxy fight over a closed end credit fund with dissident shareholder Saba Capital Management. But according to Saba founder Boaz Weinstein, whose firm owns a 19.1 percent stake in the fund, the results of the proxy vote aren’t so straightforward. 

Shareholders of its High Yield Strategies Fund voted at an annual meeting on October 3 on three measures Saba proposed: a new slate of directors, termination of Neuberger Berman’s leadership of the fund, and for Neuberger to consider a tender offer, according to an announcement published Tuesday by Neuberger Berman.

Through one of its strategies, Saba invests in closed-end funds that are trading at a discount to net asset value, then pursues measures like tender offers or board nominations to generate value, its website shows. The firm previously employed the strategy with three closed-end funds at Invesco, eventually declaring victory. It remains locked in a proxy fight with several BlackRock closed-end funds. 

Neuberger claimed victory in its announcement, declaring that preliminary results showed its shareholders  “resoundingly rejected” a “closed-end fund raider.”

“The rules were clear and the outcome is clear," said Alexander Samuelson, a spokesperson for Neuberger, in a statement to Institutional Investor. "Stockholders unaffiliated with the raiders voted more than 2 to 1 against Saba. On the two binding proposals, Saba was defeated and long-term interests of stockholders were protected.

In its proxy fight with Neuberger, more shareholders voted in favor of each of Saba’s proposals than voted against them, Saba countered in its own announcement on Tuesday.

However, because Saba lacked a majority of votes on both its slate of directors and its leadership termination proposals, neither will be put into place, Neuberger’s announcement stated. 

The tender offer, however, did receive enough votes — 62 percent of shareholders, announcements from Neuberger and Saba show.  

“If they want to ignore the will of shareholders and not tender, that’s their prerogative,” Weinstein said.  

Saba also took issue with Neuberger’s declaration of victory.  

“In an attempt to mislead the public, Neuberger has declared ‘resounding’ support from shareholders, if you don’t count the shareholders who voted against them,” the firm said in its announcement.  

[II Deep Dive: Boaz Weinstein’s Saba Ramps Up Activist Bets]

According to Neuberger, the fund’s board “will carefully review the final results of the approved non-binding proposal to consider conducting a tender offer.” 

For Weinstein, this isn’t enough.  

“They treated the shareholders like a four-letter word,” Weinstein said. “It's like someone saying ‘if you exclude my opponent's votes, I'll win in a landslide.’” 

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