Saba Capital’s Sudden Sell‑off of Ellsworth Shares Raises Red Flags for Income‑Seeking Investors

Saba Capital’s Recent Selling Spree Raises Questions About Ellsworth’s Outlook Ellsworth Growth and Income Fund Ltd. (NYSE AM: EGIF) saw its largest block of shares sold by Saba Capital Management, L.P. in two consecutive filings on February 17–18, 2026. The investor liquidated 20,663 shares at roughly $12.18 per share, reducing its stake from 1.63 million to 1.60 million shares. While the transaction size is modest relative to the fund’s market cap of $114 million, the timing is noteworthy—just days after the fund announced a distribution on February 11 and amid a narrow trading band that has been largely stagnant for the past year.

What Does This Mean for Investors? Saba Capital’s sell‑off is part of a broader pattern of disposals that began in early February, with cumulative sales of about 55,000 shares over six days. The average sale price has hovered around $12.00, well below the current market price of $21.67, indicating a potential short‑term bearish stance or a desire to lock in gains before a possible correction. For shareholders, the implications are mixed: a reduced insider holding can erode confidence if viewed as a signal of declining fundamentals, yet the fund’s distribution policy and stable earnings (P/E 4.95) suggest that the management team may still view the stock as undervalued. Analysts will likely watch whether the sell‑offs precede a broader market pullback or simply reflect portfolio rebalancing by a large institutional investor.

Saba Capital’s Historical Trading Patterns Saba Capital Management, L.P. has a history of opportunistic selling in the Ellsworth universe. From February 6 to February 13, 2026, the firm sold a total of 52,694 shares, averaging $12.08 per share, a figure that remains significantly below the 52‑week high of $22.60. The firm’s recent trades are consistent with a “cash‑in” strategy, often executed in clusters during periods of market consolidation. Historically, Saba Capital’s sales have not been accompanied by any corporate actions or public statements, suggesting a purely quantitative approach rather than a strategic shift in the fund’s outlook.

Implications for Ellsworth’s Future If Saba Capital continues to offload shares, it could signal a re‑evaluation of the fund’s long‑term prospects, particularly as the management team navigates the evolving regulatory landscape for closed‑ended funds and convertible securities. Conversely, the fund’s steady distribution schedule and relatively low P/E ratio may still appeal to income‑seeking investors, potentially cushioning the impact of insider selling. Market participants should monitor subsequent filings for any change in the fund’s net asset value and distribution policy, as these factors will play a crucial role in determining whether the recent sell‑offs represent a short‑term adjustment or a harbinger of deeper structural changes.