Boaz Weinstein

Weinstein joined Deutsche Bank in January 1998, following several traders who moved over to the firm.[4][11] He became the only person at the bank trading credit default swaps (CDS), insurance policies that payout when borrowers default. Deutsche Bank was interested in expanding its operations in the CDS market having just acquired Bankers Trust, the firm that created credit default swaps in the early 1990s.[11]

During his first year at Deutsche Bank, Weinstein netted significant gains for the German bank during the chaos created by Russia defaulting on its loans and the collapse of Long-Term Capital Management,[12] a hedge fund that was heavily leveraged.[13] He was promoted to vice president of Deutsche Bank in 1999.[14] When Weinstein had begun working at Deutsche Bank, J.P. Morgan was the only other major bank trading in CDS and only a few trades a day occurred in the market. By a decade later, CDS trading had expanded into a multi-trillion-dollar market involving numerous major banks.[15]

Weinstein became one of the most successful traders in the derivatives market. His CDS trading flourished during the most volatile periods, including the 2000–01 California electricity crisis, 2001 Enron scandal, and 2002 WorldCom scandal. Weinstein took the opposite position when AOL Time Warner's stock dropped around the same period. Correctly wagering that the company would not default on its loans, he purchased bonds from the company while hedging his position by shorting the stock.[9][16] Known as capital structure arbitrage, this is one of Weinstein's main strategies to take advantage of discrepancies in the prices of the several types of securities available for trade on the same company. He made a similar trade in 2005 with General Motors by selling protection on the company's debt using a CDS and at the same time hedging his position by shorting the company's shares.[17] The GM trade for a period appeared to go wrong when the company's stock unexpectedly rose while the CDS plummeted, indicating a loss on both sides. The positions rebounded the following year netting Deutsche Bank a profit on the trade.[18]

In 2001, at the age of 27, Weinstein was promoted to become one of the youngest managing directors in Deutsche Bank's history.[6][14] By this point, he was managing an internal hedge fund within Deutsche Bank with about $30 billion in positions, and also managing the flow trading desk.[19] His proprietary trading group, which he named Saba in 2007, gained around $900 million in 2006 and $600 million in 2007.[20] Saba reportedly lost as much as $1.8 billion in 2008, Weinstein's only losing year out of his eleven years at Deutsche Bank.[21] By January 2009, it had regained about $600 million.[20]

In April 2009, Weinstein hired 15 members of his former team to form Saba Capital Management, a credit-focused hedge fund based out of the Chrysler Building in Manhattan.[22][23] He had left Deutsche Bank two months before,[24] and his former employer had agreed to the move years in advance and to become one of Saba's main brokers.[6] Saba is a Hebrew word meaning "grandfather" and is a tribute to Weinstein's grandfather, a survivor of the Warsaw Ghetto during World War II.[6][25]

Saba began trading with $140–160 million in funds.[25][22] By November 2010, the firm had raised $1.8 billion in funds with which to trade and was up 10% that year.[25] In March 2011, Saba was listed as the fastest growing hedge fund in 2010 by Absolute Return + Alpha.[26] Weinstein was also included in Fortune's 40 Under 40 list in 2010 and 2011.[27][28]

In 2012, Weinstein profited from a notable loss incurred by JPMorgan Chase on account of a failed investment in credit derivatives attributed to a trader at JPMorgan who was later nicknamed the "London Whale".[2][29] The trader, Bruno Iksil, was selling billions of dollars worth of notes for the Investment Grade Series 9 10-year Index CDS.[29] Noticing in November 2011 that the price index was lower than Saba's models indicated, Weinstein began buying CDSs on the index although he did not know at the time that the seller was at JPMorgan. In February 2012, Weinstein recommended to a conference of hedge fund managers that they should also keep buying as the seller was continuing to sell. In the end, JPMorgan had reportedly lost $6.2 billion.[29][3] Weinstein's gains for Saba's clients were estimated between $200 million and $300 million and Saba's assets under management reached a new high of $5.6 billion.[4]

After underperformance in 2012–2014 led some investors to withdraw their funds,[30][31] Saba attracted new investors and gained 3% in 2015 and 22% in 2016.[2] Weinstein's investment strategy proved fruitful again during the chaos created by the 2020 stock market crash.[4] Saba Capital Management was declared Hedge Fund of the Year by Risk.Net's Risk Awards in 2021,[32] the 2020 winner of the best Multi-Strategy Credit Fund by AltCredit’s U.S. Performance Awards and the 2020 winner of the Best Credit Fund Over $1 Billion by HFM’s U.S. Performance Awards.[33] In 2022, Saba was the winner of the Best Credit Relative Value Fund over 500m by HFM's U.S. Performance Awards.[34] In 2023, Saba was named both Credit-Focused Hedge Fund Manager of the Year and Activist Hedge Fund Manager of the Year by Institutional Investor’s 20th Annual Hedge Fund Industry Awards [35]