Concerned Investor Issues Letter to Angel Oak Financial Strategies Income Term Trust (FINS) Shareholders Regarding the Need to Vote AGAINST a New Investment Advisory Agreement at Special Meeting
Announces intent to vote AGAINST a new investment advisory agreement with
incumbent investment adviser
FINS share price has declined by over 35% since inception (2019) and adviser Angel
Dear Fellow FINS Shareholders -
Just two months ago, shareholders voted for change at the 2025 FINS Annual Meeting and DID NOT APPROVE an identical new investment advisory agreement to the one before shareholders at the upcoming Special Meeting. Additionally, two incumbent Trustees recommended by the
I am voting AGAINST the new investment advisory agreement and AGAINST any potential adjournment of the Special Meeting and encourage all shareholders to join me.
I am voting AGAINST the new investment advisory agreement primarily for the following reasons:
1. The Board has a fiduciary responsibility to engage the best investment advisor for FINS at competitive investment advisory fees – it appears the Board, with the same four independent Trustees since inception, has never run a competitive selection process for the FINS investment adviser. Additionally, given the outcome of the Trustee election at the Annual Meeting, only two of six Trustees are both independent and duly elected by shareholders. How can shareholders trust that the Board is acting in their best interest, identifying the best investment adviser for FINS, when two-thirds of the Board is either unelected or an employee of Angel Oak?
2. FINS poor financial performance under Angel Oak – Angel Oak has been the investment adviser to FINS since inception, while the share price is down over 35%2 since inception. Additionally, shareholders have not been able to realize the full Net Asset Value ("NAV") of their shares in over 5 years since
FINS has also underperformed on total shareholder returns relative to a group of peer closed-end funds, especially over 3- and 5-years where FINS has significantly underperformed (see table below). Additionally, FINS traded at a discount to NAV that was more than double the peer closed-end fund median discount to NAV as of
FINS Closed-End Fund Peer Performance Analysis ( |
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Annualized Total Shareholder Returns (%) |
Discount to |
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1 year |
3 year |
5 year |
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FINS Peers – NAV |
10.23 |
8.38 |
5.84 |
(2.59) |
FINS Peers – Market Price |
15.17 |
10.59 |
5.76 |
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FINS – NAV |
10.11 |
3.38 |
2.39 |
(5.87) |
FINS – Market Price |
15.85 |
6.05 |
3.68 |
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FINS vs. Peers – NAV |
(0.12) |
(5.00) |
(3.45) |
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FINS vs. Peers – Market Price |
0.69 |
(4.54) |
(2.08) |
3. Angel Oak enrichment at expense of shareholders – FINS has paid Angel Oak more in investment advisory fees than cumulative net income generated for shareholders over the past 3- and 5- fiscal years, respectively.
FINS Cumulative Advisory Fees Paid and Net Income |
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($MM) |
FY 2023-2025 |
FY 2021-2025 |
FINS Investment Advisory Fees Paid5 |
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FINS Cumulative Net Income5 |
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Additionally, Angel Oak is compensated based on managed assets and receives more fees when FINS has higher levels of financial leverage. I believe Angel Oak has inappropriately maintained FINS financial leverage through the interest rate cycle and yield curve inversions to enrich themselves, at the expense of shareholders.
4. Anti-shareholder actions by the Board and Angel Oak – I contend that the Board has been acting in the best interest of Angel Oak for some time, not in the best interests of shareholders. Numerous entrenchment governance provisions including the staggered board structure, unitary board, majority vote requirement without a plurality carveout for contested elections and lack of a resignation requirement for incumbent Trustees that are not elected seek to silence shareholders and prevent us from exercising our rights. The Board's decision not to hold a Trustee election at the Special Meeting but instead permit unelected Trustees to recommend Angel Oak receive a new investment advisory agreement is another example of such actions.
Sincerely,
Concerned investor and advocate for FINS Shareholders
About
THIS IS NOT A SOLICITATION OF AUTHORITY TO VOTE YOUR PROXY. DO NOT SEND MR. MONTANO YOUR PROXY CARD.
1 Per 2025 Annual Meeting certified results (LINK)
2 FINS inception
3 Median FINS market price discount to NAV
4 Source: FINS and peer closed-end fund fact sheets as of
5 Source: S&P Capital IQ Pro and FINS annual reports (2021-2025).
Contact:
info@westpotomaccap.com
SOURCE