When I walk into Lilia, the industrial-style dining room is almost empty except for a few staff milling about — I can hear my boot heels hitting the stone floor. It’s a distinctly weird vibe for a buzzy Italian that has been one of Brooklyn’s hardest to score tables since it opened in 2016.
There is no time to ponder. Hedge fund magnate Boaz Weinstein is rising from the only occupied table to greet me. A rumpled-looking 51-year-old clad in a casual navy crewneck sweater over a T-shirt, he seems more like an average dad on the school run (as a separated father of three, he often does drop-offs and occasional pick-ups) than a feared Wall Street raider.
But his three-month-old campaign to shake up the UK investment trust industry has made him the City of London’s public enemy number one. The Guardian, the Telegraph and the Daily Mail have closed ranks against him, describing him as a “blackjack raider”, a “greedy intruder” and a “vulture”.
In December he landed in the UK with a bang, announcing that he had taken stakes in a clutch of closed-end funds and would be launching simultaneous campaigns to put his nominees in charge of seven of them. Despite his promises to close the gap between the funds’ share prices and the listed value of their underlying assets, shareholders in all seven overwhelmingly rejected his proposals. Unbowed, he opened a new line of attack on four, including two new funds.
“I love punching a bully in the nose. That’s what I think I’m doing with closed end funds,” he says. “I believe that by the end of this year we will have won almost all or all of these campaigns.”
We are meeting at Lilia because it is his family’s go-to place for birthdays and other celebrations and is co-owned by a former credit trader who used to work for Weinstein at Deutsche Bank.
“It dovetails with the arc of my career . . . There are very few people who want to reinvent themselves. If you’re doing something great, you stay in your lane and keep doing it,” he observes.
It turns out that Lilia is empty because it doesn’t normally serve lunch: “They opened it for us,” he says. This violates the usual Lunch rules, but much as he does in finance, Weinstein has acted first and explained later. He is already drinking espresso, so I order mint tea. The empty wine glasses on the table disappear.
A Brooklyn-born chess prodigy, Weinstein talked his way into a Goldman Sachs summer internship for graduate students while still a college freshman, took up credit trading and became one of Deutsche’s youngest ever managing directors at 27 after the two more senior members of his three-man desk quit, leaving him in charge.
“I was the shoeshine boy and MD of a group of one,” he says. When the 1998 Russian debt crisis hit, the group was well positioned and he was able to profit from the ensuing volatility.
“It was already part of my contrarian nature. When everyone is on one side of the market, there’s nowhere for it to really go,” he says. “To provide scarcity to the market, you have to go against the grain.”
Weinstein specialises in exploiting price gaps between different securities markets. In an obvious example, if a company’s bonds are cheap because traders fear it might go bust, but its stock price is sky-high, both positions cannot both be right. He uses an alphabet soup of complex derivatives to exploit the differences.
“I’m all about mispriced things,” Weinstein says. “I’m much happier finding something and profiting from it than being slightly better at analysing tech stocks [than other investors] . . . I have views about direction but I’m basically wrong half the time and I think almost everyone else is too.”
Menu
Lilia
567 Union Ave, Brooklyn, NY 11211
Mozzarella toast $18
Little gem salad $18
Mafaldine $28
Agnolotti $31
Lamb $39
Complimentary vanilla gelato, espresso and mint tea
Total (inc tax and service) $168.90
The server appears and explains that we will be sharing a smorgasbord of some of chef Missy Robbins’ best-known dishes, including the sheep’s milk cheese agnolotti with saffron that repeatedly earns raves in restaurant reviews.
“Not to look a gift horse in the mouth,” Weinstein says, half apologetically, “but the cacio e pepe rice balls that my daughters dream about, are they available at lunch?” Nervously, the server explains they are not. She also nods when I jump in to say, “You do know I have to pay for this? There has to be a bill.”
Weinstein’s early career as Deutsche’s trading wunderkind came to an abrupt halt in 2008 when his much-enlarged desk haemorrhaged more than $1.8bn in the upheavals after Lehman Brothers collapsed. Undaunted, he set out his stall as a hedge fund manager.
His fund, dubbed Saba after the Hebrew word for grandfather, moved into plush quarters in New York’s Chrysler Building that had been abandoned by a failed Icelandic bank. In 2012 it became internationally notorious when Weinstein noticed that an unknown trader, later dubbed “the London Whale”, was using huge sales and purchases to push prices around in the credit default swap market. He took the other side and ended up harpooning JPMorgan Chase, which lost more than $6bn in the fiasco.
“As a competitive chess player, losing about half of my games to people about my level was a good lesson [that] you are going to lose a lot,” he says, contrasting his experience in chess and later blackjack with “kids who got 100 per cent on every math test. They come to Wall Street and are not prepared for the inevitable losing periods.”
His mention of blackjack reminds me that every profile written about Weinstein mentions that he was once banned from playing the game at the Bellagio, the famed Las Vegas casino, so I ask him to elaborate.
“As a kid, I was always lightning quick at mental math,” he starts. Then, during his Goldman internship, a group of older traders took the 19-year-old Weinstein along with them on a trip to Atlantic City and showed him how to put his skills to work at the blackjack tables. Because the dealer uses a six-deck shoe for a series of games, a player who can remember what has already been played finds it successively easier to predict each hand’s odds of winning. Weinstein was hooked.
Casinos, not surprisingly, hate card counters and ban them whenever they sniff them out — thus the Bellagio incident. But every 18 months or so, Weinstein goes back to Vegas and tests himself. These days the hotels assign him a minder. He proudly shows me his most recent text from the casino at the Cosmopolitan in which the host explains he has done so well that he has been banned from the blackjack tables but remains more than welcome to keep on playing other games.
“I like the idea that for blackjack I can still do this thing,” Weinstein says. “There’s some sort of pleasure in knowing the future.”
We are sharing salad and mozzarella perched precariously atop garlic bread as Weinstein explains how he makes money.
According to Weinstein, about 40 per cent of Saba’s assets are devoted to a strategy called tail risk protection, which pays off for investors when markets go nuts. He did particularly well during the 2020 market ructions around the start of Covid, and he shows me on his phone how he got just 58 minutes of sleep on the night in January that Chinese artificial intelligence company DeepSeek sparked a tech stock meltdown. “DeepSeek equals no deep sleep,” he says. “When you’re a volatility trader, it’s feast or famine.”
But it is another trading strategy that has put Weinstein on a collision course with the City of London. This one involves closed-end funds, a small and sleepy corner of the securities markets. Unlike larger and more popular mutual and exchange traded funds, closed-end funds don’t grow or shrink to match investor demand. Instead they have a fixed number of shares whose prices go up or down depending on what investors think of the underlying assets. In practice, there is often a big gap between what the fund manager says the assets are worth, known as NAV, and where the shares are trading.
Weinstein scented an opportunity: if he bought the shares at a discount and found ways to close the gap, he could make an instant profit. So he has been cutting a swath through the closed-end fund market, demanding that fund managers buy back shares and pay supersized dividends. If they fight back, he files lawsuits over governance rules and launches proxy fights to take over the funds himself.
Over the past decade, he successfully took over two US funds and pressured others into doing buybacks, and during that period the strategy has averaged nearly 12 per cent annual returns. He has also taken on some of the biggest names in American finance including BlackRock, Franklin Templeton and Nuveen.
“I’m pushing back against the industry abusing the investor [who] didn’t know what they bought and is suffering from that discount,” he says.
Critics say he is a short-term opportunist with little interest in running conventional investment funds. The latter is true: the two US funds he took over have shifted from their original purpose to invest in his broader campaign against closed-end funds.
Weinstein freely admits he is in it for the money. In January, he cut a deal to end his multiyear battle with BlackRock that will see the $11.6tn asset manager buy back shares in two funds where Weinstein had large positions. In exchange, Weinstein agreed to leave not just those funds but 48 others alone for the next three years. Saba netted an instant profit of nearly 10 per cent; investors in the other 48 funds officially got nothing. “I’m not the regulator . . . I have a duty to my investors,” he says.
Over a shared pasta course that includes the famous agnolotti and mafaldine pasta ribbons sprinkled with pink peppercorns and parmesan, I raise another criticism that has been made about Saba’s closed-end campaign: although he has taken on dozens of funds, he has avoided one of the biggest ones around: Pershing Square, run by Bill Ackman, a prominent Wall Street tycoon and longtime friend.
Weinstein flatly denies he is playing favourites. “Everyone knows Ackman’s fund is impervious . . . Bill Ackman owns 23 per cent of it and he has the majority of the voting rights,” Weinstein says. “Were it not for those features, I would be totally happy to be an activist. He’s not that good of a friend.”
By the time we dig into the lamb steak, the restaurant has grown noisy as the rest of the staff arrive and start setting up for dinner. Our conversation has also started ranging more widely, from his general political views — “slightly conservative but not on social issues” — to how his status as the child of a Holocaust survivor affects the way he thinks about the Israel-Palestine conflict. He is critical of current prime minister Benjamin Netanyahu but sharply rejects those who see Israel as a coloniser.
He was so disappointed by the candidates in last November’s presidential election that he did not vote at all, but now he says he welcomes Elon Musk’s current efforts to disrupt the way the US government does business. “I am so thankful that really smart people are kicking up a dust storm on government bureaucracy,” he says.
Sean Feeney, the trader turned restaurant impresario behind Lilia, plops down at the table to check how we are doing. “The lamb was so nicely seasoned . . . but the cacio e pepe balls not being around, I’m going to have to come back for them,” Weinstein says.
For dessert, we are sharing what Feeney calls “our famous Italian job dessert”, soft-serve vanilla gelato with olive oil, sea salt, honey and fennel pollen. Originally a secret off-menu treat, it proved so popular that it has been moved into the regular line-up.
Pleasantly full, we return to Weinstein’s British campaign, which so far has been spectacularly unsuccessful. Faced with his splashy promises to close the gap between the share price and the value of the underlying assets, British finance rallied against Saba’s campaign to elect its own directors.
People in the industry said the move would gut board independence without necessarily improving performance, and complained that Weinstein was not providing enough information about what would happen to fees and investment strategy. Financial advisers urged their customers to vote against the proposals, and close to 98 per cent of them did so.
“Boy, they crushed me. I don’t think I got a fair hearing,” Weinstein says. He argues that closed-end funds are a small and shrinking product, especially when compared with the rapidly growing exchange traded fund market. “It’s a little bit like the buggy whip companies [at the dawn of the automotive age]. They still have power and they are closing ranks.”
Since UK investors do not seem to want to put him in charge, Weinstein plans to attack the valuation gap in a different way. He has filed proposals asking four funds to convert themselves into open-ended funds, which automatically trade at their asset values. “There is no argument that opening up the funds isn’t good for the shareholders,” he says.
We have been talking for nearly two and half hours, I have paid the bill and the restaurant is now gearing up for its real business of serving dinner. I ask Weinstein if he has any last words. Naturally he does.
“I would pay money to do my job. I enjoy it so much,” he says. “Even when I was losing money. I’ve had down years. The market is endlessly fascinating. It is a labour of love.”
Brooke Masters is the FT’s US managing editor
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