Templeton Global Income Fund (GIM) management under pressure

ET91

So this battle I think has been brewing for a while. Things have escalated. Michael Hasenstab is the manager of the fund along with Calvin Ho. Morningstar recently downgraded Templeton Global Bond A (TPINX) to neutral. TPINX has $7.7 billions in assets; it used to have a lot more. I have owned GIM for a long time. Not sure what to say.

from the Proxy:

AN ACTIVIST HEDGE FUND, SABA CAPITAL MANAGEMENT, L.P. (“SABA”), IS TRYING TO TAKE OVER YOUR FUND, POTENTIALLY DEPRIVING YOU OF AN INVESTMENT VEHICLE. SABA HAS TAKEN A LARGE POSITION IN YOUR FUND AND IS ATTEMPTING TO TAKE COMPLETE CONTROL OF THE BOARD OF TRUSTEES OF THE FUND (THE “BOARD”) FOR ITS OWN BENEFIT
WITHOUT REGARD FOR OTHER SHAREHOLDERS. SABA ALSO ANNOUNCED ITS INTENTION TO PRESENT A
PROPOSAL TO FIRE THE FUND’S MANAGER AT THE MEETING, WHICH WE BELIEVE MAY LEAD TO SABA
NAMING ITSELF AS THE MANAGER, ADDING TO SABA’S GROWING LIST OF CONFLICTS.

I am sorry but I am not able to attach a link to the proxy.

yogibearbull

Owned but got out of GIM long time ago. Michael Hasenstab lost his golden touch long time ago. He seems to chase disasters without anything to show for them. His used-to-be giant global bond TPINX is a shadow of former self due to heavy redemptions (see M* Quote page). F-T is sticking with him but may be the CEF activist Saba can teach a lesson by firing Hasenstab/F-T from GIM.

rforno

Like YBB I also held GIM and TGBAX off/on for years during Hassenstab's 'golden time.' In addition to the Ukranian bonds that IIRC blew up in his face a few years ago (at the time he had a reputation for diving into risky areas and winning) I lost interest in the fund due to performance and b/c Hassenstab was entering 'rock-star' status in the media, which to me is an instant turnoff when it comes to investing.

On a side note, that Franklin statement you posted is shrill, whiny, fear-mongering, and imo inappropriately worded ... it's the kind of statement I'd expect to hear from an Elon Musk, frankly.

LewisBraham

Closed-end fund managers who don't like activists should try being more responsive to shareholders. That said, if Saba takes over, there's no guarantee it will do better by shareholders. It would be nice if traditional closed-end funds converted into a more interval fund like structure that provided periodic redemptions at full NAV instead of trapping shareholders in a discount. It also would help if more offered term structures with a specific end date when the fund is liquidated. Fees could also be much more reasonable, especially if you consider that closed-ends do not require ongoing marketing once they're issued unlike mutual funds or ETFs. They should be cheaper than mutual funds, but many are more expensive.

msf

Proxy statement (the SEC is [sometimes] your friend):
https://www.sec.gov/Archives/edgar/data/828803/000082880322000016/gim2022proxystatementfinal.htm

If Saba takes over, it will be interesting to compare the portfolios and returns of GIM and TGBAX going forward. Given such a sizeable change in GIM, such a comparison would be valid even though GIM was never a perfect clone of TGBAX.

LewisBraham

According to the proxy filing: "In contrast, the nominees nominated by Saba have limited (if any) experience with closed-end funds or global bond strategies." While it may be true regarding global bond strategies, Saba has invested in and been an activist in closed-end funds for many years. The idea that it doesn't have experience dealing with closed-end funds is misleading.

yogibearbull

Saba runs a FR/BL CEF BRW that trades at good discount.
https://www.cefconnect.com/fund/BRW

Saba also has an ETF CEFS that opportunistically owns CEFs at discounts. GIM is only a tiny weight now 0.60% (I think that it used to own more at one time). It doesn't list its own BRW. It has very high ER 2.90% but lot of it is from the underlying CEFs (1.10% management fees, rest from underlying CEFs + interest). I may just buy CEFS on the next big CEF selloff.
http://portfolios.morningstar.com/fund/holdings?t=CEFS&region=usa&culture=en-US
https://www.sabaetf.com/cefs

Observant1

Templeton Global Bond (TPINX) was one of the premier funds in the World Bond category years ago.
TPINX was different from most World Bond funds due to substantial emerging markets exposure and widespread currency bets. The fund generated top 1% / top 2% category returns for the respective 10 Yr and 15 Yr trailing periods as of 01-31-16. Michael Hasenstab (M* 2010 Fixed-Income Manager of the Year) started co-managing TPINX on 12/31/2001.

Templeton Global Income (GIM) was the CEF version of TPINX.
I purchased GIM in late 2013.
GIM was trading at an attractive discount and it had a lower expense ratio than TPINX.
Unfortunately, the discount widened and Mr. Hasenstab lost his mojo.
I sold the CEF approximately five years later booking a tiny profit.

wxman123

yogibearbull said:

Saba runs a FR/BL CEF BRW that trades at good discount.
https://www.cefconnect.com/fund/BRW

Saba also has an ETF CEFS that opportunistically owns CEFs at discounts. GIM is only a tiny weight now 0.60% (I think that it used to own more at one time). It doesn't list its own BRW. It has very high ER 2.90% but lot of it is from the underlying CEFs (1.10% management fees, rest from underlying CEFs + interest). I may just buy CEFS on the next big CEF selloff.
http://portfolios.morningstar.com/fund/holdings?t=CEFS&region=usa&culture=en-US
https://www.sabaetf.com/cefs

CEFS is best of type (ETF of CEF's). I also have small positions in Rareview's new offerings, RTAI compares favorably to xmpt but low AUM makes this is hard pick for serious money. RDFI not nearly as good as CEFS.