SCHEDULE 13D/A: Saba Capital Increases Stake in Ellsworth Growth and Income Fund to 11.25%

Saba Capital Management, L.P. and its affiliates have significantly increased their beneficial ownership in Ellsworth Growth and Income Fund Ltd., now holding 11.25% of common shares.

Summary

• Saba Capital Management, L.P., Saba Capital Management GP, LLC, and Boaz R. Weinstein (collectively, the "Reporting Persons") have filed an Amendment No. 5 to Schedule 13D.
• The filing reports their aggregate beneficial ownership in Ellsworth Growth and Income Fund Ltd. (the "Issuer") to be 1,534,334 Common Shares.
• This represents 11.25% of the Issuer's common stock outstanding, calculated based on 13,641,412 shares as of September 30, 2024.
• The Reporting Persons acquired these shares using subscription proceeds from investors, capital appreciation, and margin account borrowings.
• A total of approximately $12,605,169 was paid to acquire the reported Common Shares.
• Transactions within the 60 days prior to April 4, 2025, include open market purchases: 34,285 shares at $9.05 on April 1, 2025; 7,041 shares at $9.05 on April 2, 2025; 33,476 shares at $8.88 on April 3, 2025; and 55,545 shares at $8.59 on April 4, 2025.

Sentiment

Score: 7

Explanation: The sentiment is moderately positive. While a 13D filing is primarily factual, the significant increase in beneficial ownership by an activist investor like Saba Capital often signals a belief in undervalued assets or potential for shareholder value creation, which can be seen as a positive signal for the Issuer's stock. The use of margin, while a risk, also indicates conviction.

Positives

• Saba Capital's increased stake to 11.25% could signal confidence in Ellsworth Growth and Income Fund Ltd.'s value or future prospects.
• The significant investment of approximately $12.6 million demonstrates a substantial commitment from the Reporting Persons.

Negatives

• The use of margin account borrowings for share acquisition introduces leverage, which can amplify losses if the stock price declines.

Risks

• The positions held in margin accounts are pledged as collateral security, meaning a decline in the value of these securities could lead to margin calls.
• The inability to determine the exact amount of margin used for the Common Shares means the specific leverage applied to this investment is not fully transparent.

Future Outlook

This Schedule 13D filing primarily reports past and current beneficial ownership and does not contain explicit forward-looking statements or guidance from the Issuer or the Reporting Persons regarding future performance or strategic plans beyond the intent to hold or potentially increase their stake.

Industry Context

This filing indicates an increased activist stake by Saba Capital Management, a firm known for its focus on closed-end funds. Such filings often precede or accompany efforts to influence corporate governance, capital allocation, or strategic direction within the targeted fund, aiming to narrow discounts to Net Asset Value (NAV) or improve shareholder returns. This is a common strategy in the closed-end fund industry.

Comparison to Industry Standards

• Saba Capital Management, L.P. is a prominent activist investor in the closed-end fund space, often taking significant stakes (typically above 5%) to advocate for shareholder-friendly actions such as tender offers, share repurchases, or fund liquidations. Their 11.25% stake in Ellsworth Growth and Income Fund Ltd. is consistent with their typical approach of building a substantial position to exert influence.
• Compared to other activist campaigns in the closed-end fund sector, an 11.25% stake is a strong position, often sufficient to engage with management and the board, or even propose board nominees. For example, Saba Capital has previously engaged with funds like BlackRock Enhanced Global Dividend Trust (BDJ) and Nuveen Floating Rate Income Fund (JFR) with similar or larger stakes to push for changes.

Legal Proceedings

• The Reporting Persons have not been convicted in a criminal proceeding (excluding traffic violations or similar misdemeanors) during the last five years.
• The Reporting Persons have not been a party to a civil proceeding of a judicial or administrative body of competent jurisdiction that resulted in a judgment, decree, or final order enjoining future violations of, prohibiting, or mandating activities subject to Federal or State securities laws, or finding any violation with respect to such laws, during the last five years.

Stakeholder Impact

• Shareholders: The increased stake by an activist investor like Saba Capital could lead to pressure on management to implement changes that may enhance shareholder value, such as share repurchases, increased dividends, or other capital structure adjustments.
• Management/Board: The significant ownership stake may lead to increased scrutiny and potential engagement from Saba Capital regarding the fund's operations, governance, and strategic direction.

Next Steps

• The Reporting Persons have the right to receive dividends and proceeds from sales of the Common Shares.
• While not explicitly stated as next steps, Saba Capital's history suggests potential future engagement with Ellsworth Growth and Income Fund Ltd.'s management or board regarding corporate governance, capital allocation, or other strategic initiatives.

Key Dates

Recommendation

Keywords

Ellsworth Growth and Income Fund, Saba Capital Management, Boaz R. Weinstein, Schedule 13D, Beneficial Ownership, Investment Fund, Common Shares, SEC Filing, Activist Investor, Closed-End Fund