SCHEDULE: Saba Capital Boosts Stake in Highland Opportunities Fund to 8.3%

Saba Capital Management, L.P. and its affiliates have increased their beneficial ownership in Highland Opportunities and Income Fund to 8.3% through recent open market purchases.

Summary

• Saba Capital Management, L.P., Saba Capital Management GP, LLC, and Boaz R. Weinstein (the "Reporting Persons") have filed an Amendment No. 3 to Schedule 13D regarding their stake in Highland Opportunities and Income Fund.
• The Reporting Persons collectively beneficially own 4,594,550 Common Shares of Highland Opportunities and Income Fund.
• This ownership represents 8.3% of the outstanding common stock, calculated based on 55,350,790 shares outstanding as of June 30, 2025, as disclosed in the company's N-CSRS filed on September 8, 2025.
• Approximately $24,380,371 was paid to acquire the Common Shares reported in this filing.
• Funds for the purchases were derived from subscription proceeds from investors, capital appreciation, and margin account borrowings made in the ordinary course of business.
• The filing states that the purpose of the transaction is "Not Applicable," indicating a passive investment or a change in ownership threshold.
• Between December 11, 2025, and December 29, 2025, Saba Capital made open market purchases totaling 564,212 Common Shares at prices ranging from $5.92 to $6.11 per share.

Sentiment

Score: 7

Explanation: The increased stake by a known activist investor like Saba Capital is generally viewed positively by the market as it often signals potential future actions to unlock shareholder value, such as advocating for share buybacks, tender offers, or changes in fund management. While the filing itself is purely factual, the context of the investor suggests a positive undertone for existing shareholders.

Positives

• A significant institutional investor, Saba Capital, has increased its stake, potentially signaling confidence in the fund's value.
• The increased ownership by an activist investor like Saba Capital could lead to future actions aimed at enhancing shareholder value.

Risks

• The filing does not explicitly mention risks related to the issuer's operations or financial health; it is a disclosure of ownership.
• Investment in common shares carries inherent market risks.
• Margin account borrowings were used for some purchases, which can amplify both gains and losses.

Future Outlook

The filing does not provide any forward-looking statements or guidance from the issuer or the reporting persons regarding the future performance or strategic direction of Highland Opportunities and Income Fund.

Industry Context

Saba Capital Management is a prominent activist hedge fund known for taking significant stakes in closed-end funds and advocating for changes to narrow discounts to net asset value (NAV) or other shareholder-friendly initiatives. This increased stake in Highland Opportunities and Income Fund aligns with Saba Capital's historical investment strategy within the closed-end fund sector.

Comparison to Industry Standards

• This filing is a disclosure of beneficial ownership by an activist investor, not a performance report. Therefore, a direct comparison to industry standards for financial results or operational performance is not applicable.
• Saba Capital's strategy of accumulating significant stakes in closed-end funds to influence governance or capital allocation is a recognized activist investment approach within the financial industry, often seen with other activist funds like Bulldog Investors or Karpus Management.

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, or 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: Potential for increased shareholder value if Saba Capital successfully advocates for changes. Increased liquidity if Saba Capital eventually sells its stake.
• Management/Board: May face pressure from Saba Capital to implement changes or address perceived undervaluation.
• Employees/Customers/Suppliers/Creditors: No direct immediate impact is indicated by this ownership disclosure.

Next Steps

• The Reporting Persons may continue to acquire additional shares or engage in discussions with the issuer's management or board regarding potential strategies to enhance shareholder value.
• The issuer may need to consider the implications of a significant activist stake on its corporate governance and strategic planning.

Key Dates

Recommendation

While the increased stake by Saba Capital, a known activist investor, could signal future efforts to unlock value, the filing itself is a disclosure of ownership and does not provide new fundamental information about the issuer's operations or financial performance. Investors should hold to observe Saba Capital's future actions and the issuer's response, as these developments will determine the actual impact on shareholder value. A 'buy' recommendation would require more specific activist demands or a clear path to value creation, which is not detailed here.

Keywords

Saba Capital Management, Highland Opportunities and Income Fund, HLIO, Schedule 13D, beneficial ownership, activist investor, common shares, investment fund, equity stake