Elliot Associates, a hedge fund, began a proxy contest this Tuesday against fund managers at the Salomon Brothers Fund. Gramercy Investment Advisors, one of the investors in the fund, fully supports the move because, Gramercy says, Salomon has not been working strategically to increase share prices.
Due to change-of-control stipulations, the funds need the approval of shareholders before any management changes are made.
"Despite the fact that the fund's shares have traded at a significant discount to net asset value for years, the fund's board and management have taken no effective steps to eliminate the discount," Elliot charged in its proxy material, Reuters reports.
Elliot, Salomon Brothers Fund's largest shareholder, urges other shareholders to vote nay to the fund's new proposals at the next meeting, scheduled for Oct. 21. Elliot suggests that Salomon hold a large share buyback or open-end the fund, so that there is not a fixed number of shares.
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