DEFA14A: Neuberger Berman Defends Board Nominees Against Saba Capital Challenge

Neuberger Berman urges shareholders to support its incumbent director nominees for the Neuberger Berman Municipal Fund Inc. (NBH) and Neuberger Berman Next Generation Connectivity Fund Inc. (NBXG), arguing against Saba Capital's nominee.

Summary

• Neuberger Berman is actively defending its incumbent director nominees for NBH and NBXG against a challenge from Saba Capital.
• The document argues that Saba Capital has a history of actions detrimental to closed-end fund (CEF) stockholders, prioritizing short-term gains over long-term value.
• Neuberger Berman highlights the experience and independence of its director nominees, emphasizing their commitment to acting in the best interests of all stockholders.
• The presentation outlines the oversight structure of the Neuberger Berman closed-end funds, including the roles of various committees.
• It details actions taken by the boards to enhance investor value, such as distribution rate increases, managed distribution plans, and fund mergers.
• NBXG's performance is reviewed, noting the impact of market conditions and the fund's underweighting of mega-cap stocks.
• NBH's performance is also reviewed, highlighting the positive impact of broader investment guidelines and a recent increase in its monthly distribution rate by 43.5%.
• The document contrasts Neuberger Berman's long-term investment approach with Saba Capital's alleged short-term tactics.

Sentiment

Score: 7

Explanation: The document presents a strong defense of Neuberger Berman's board nominees and a critical view of Saba Capital's actions. The tone is assertive and confident, aiming to reassure shareholders and garner support for the incumbent directors. The positive aspects of the funds' performance and management are emphasized.

Positives

• Neuberger Berman has a long history of investing for clients, spanning over 80 years.
• The firm has a stable and deep team of investment professionals.
• NBH's recent distribution increase aims to enhance its competitiveness and attract investor demand.
• NBXG's cumulative total return since inception has outpaced peers.
• Neuberger Berman differentiates between operating companies and investment companies when assessing corporate governance.
• NBH has lower management fees compared to its peers.

Negatives

• Saba Capital's involvement in CEFs is portrayed negatively, with accusations of prioritizing short-term gains and implementing riskier strategies.
• NBH's total expenses are higher than peer averages due to higher investment-related expenses (cost of leverage).
• NBXG's mandate-driven underweight to mega-caps has been a headwind.
• NBXG's NAV was negatively impacted by rate hikes between May 2021 and May 2022.

Risks

• The document highlights the risk of allowing Saba Capital to influence the funds, citing potential harm to long-term stockholders.
• Market volatility and changes in interest rates could impact the performance of both NBH and NBXG.
• The document mentions the risk of relying on short-term fixes that do not permanently reduce trading discounts.
• There is a risk that replacing existing directors could impair the board's balance of skills.

Future Outlook

The document expresses confidence in the incumbent directors' ability to continue delivering value to stockholders and overseeing the funds effectively.

Management Comments

• Neuberger Berman and the Funds Board continue to be focused on delivering value to stockholders.
• The distribution rate increase is an effort to enhance the Funds competitiveness in the secondary market and increase demand for the Funds common stock in the secondary market, which may result in a narrowing in the discount between the market price of the Funds common stock and its net asset value per share.

Industry Context

The document positions Neuberger Berman as a responsible steward of capital, contrasting its approach with Saba Capital's activist tactics, which are portrayed as potentially disruptive to the closed-end fund industry.

Comparison to Industry Standards

• NBXG's fees are stated to be in line with peer averages.
• NBH's management and other non-investment-related expenses are competitive and lower than Peer Group average.
• The document compares NBH's NAV yield to other municipal CEFs, noting its improvement after the distribution increase.
• NBXG is compared to BlackRock Innovation & Growth Trust (BIGZ) and BlackRock Science and Technology Trust II (BSTZ) for performance.

Management Changes

Stakeholder Impact

• The outcome of the proxy vote will directly impact shareholders of NBH and NBXG.
• The document suggests that Saba Capital's actions could negatively impact long-term stockholders.
• The board's actions are aimed at enhancing value for all stockholders.

Next Steps

• Shareholders will vote on the election of directors at the upcoming meeting.
• The board will continue to monitor the funds' performance and consider actions to enhance shareholder value.

Key Dates

Keywords

Neuberger Berman, Saba Capital, Closed-End Funds, Director Nominees, Proxy Statement, NBH, NBXG, Corporate Governance, Investment Management, Shareholder Value