It’s not often you see an activist investor target another activist for poor performance but that’s what happening at Crystal Amber Fund (CRS:AIM).

On 25 June Crystal Amber revealed that Saba Capital Management, its largest shareholder holding over 25% of its shares, intended to vote against the company at November’s continuation vote.

A resolution passed in 2013 requires 75% of shareholder approval to continue trading. Failure to hit this number would mean the directors have to propose alternative arrangements which could end up with winding down the business.

There had been some speculation that Crystal Amber founder Richard Bernstein was in the process of selling off some of the company’s assets, but Saba’s surprising move is likely to speed up events in that direction.

Although the shares are higher than the 77p level they were trading at when Saba purchased its stake last October, they still trade a deep 17% discount to net asset value of 129p.

Shares in Crystal Amber gained 2% on 28 June as investors took the view that the discount would likely narrow as some of its assets attracted strategic buyers.

One holding which is likely to attract interest is banknotes maker De La Rue (DLAR) which represented 45% of Crystal Amber’s assets as of 31 May.

Crystal Amber is the company’s largest shareholder with an interest of 14%. French giant Oberthur Fiduciaire and German company Giesecke & Devrient are thought to be frontrunners in any negotiations to buy the De La Rue shares.

De La Rue rejected a 935p offer from Oberthur Fiducaire in 2010 which subsequently walked away after saying its board failed to engage in  meaningful discussions.

In 2018 De La Rue was left reeling when it lost a contract to make the new post-Brexit blue passports to Dutch-French competitor Gemalto.

Crystal Amber also owns a 22% stake in foreign exchange provider Equals Group (EQLS:AIM) and a 20.9% stake in intellectual property commercialisation company Allied Minds (ALM:AIM).

It also owns 14% of Hurricane Energy (HUR:AIM). On 28 June the high court ruled against a controversial debt restructuring plan for the oil company which would have wiped out shareholders, giving Hurricane a temporary respite.

One twist to the story emerging at Crystal Amber is that Sabre Capital has built up short positions in some of the fund’s largest holdings. Data from shottracker.co.uk show that it holds a 2.2% short interest in De La Rue and 1.2% in Allied Minds.

While shorting is usually done to make money from a falling share price, it can also be used to hedge exposure to long positions.

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