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

Rhea-AI Summary

Trevor Montano, a concerned shareholder of Angel Oak Financial Strategies Income Term Trust (NYSE: FINS), has issued a letter urging fellow shareholders to vote AGAINST a new investment advisory agreement with Angel Oak Capital Advisors, LLC at an upcoming Special Meeting. The letter highlights significant concerns, including FINS' share price decline of over 35% since inception in 2019 and poor performance relative to peers.

Key issues include the fund's underperformance in 3- and 5-year returns, Angel Oak receiving more in advisory fees ($20.0M) than net income generated ($9.0M) over FY 2023-2025, and governance concerns regarding unelected trustees. The fund has traded at a persistent discount to NAV since February 2020, with a median discount of 9.4%, more than double the peer median.

Positive

• None.

Negative

• Share price declined over 35% since inception in 2019
• Fund has traded at a discount to NAV every day since February 2020, with 9.4% median discount
• Significant underperformance vs peers over 3- and 5-year periods
• Advisory fees ($20.0M) exceeded net income ($9.0M) in FY 2023-2025
• Two unelected trustees remain on board despite receiving only 36% of votes
• Lack of competitive selection process for investment adviser since inception

Insights

Corporate Governance Analyst

An activist investor's campaign against FINS' advisory agreement highlights severe fund underperformance and governance concerns.

This shareholder activism campaign represents a significant challenge to Angel Oak Capital Advisors' continued management of the FINS closed-end fund. Investor Trevor Montano has detailed a compelling case against renewing the investment advisory agreement, based on several critical factors.

The governance concerns are substantial. Two incumbent trustees failed to receive majority approval at the 2025 Annual Meeting (receiving only 36% of votes) yet remain on the board due to specific governance provisions. These unelected trustees now represent half of the independent trustees supporting the new advisory agreement, creating a legitimacy crisis for the board's decisions.

The fund's performance under Angel Oak's management has been objectively poor. Since inception in 2019, FINS has lost over 35% of its share price value. The fund has traded at a persistent discount to NAV for over five years (since February 2020), with a median discount of 9.4%. When compared to peer closed-end funds, FINS has significantly underperformed, particularly over 3-year and 5-year periods, with a 3-year market price return 4.54% below peers and a 5-year return 2.08% below peers.

Perhaps most damning is the fee structure relative to performance. Angel Oak has received more in advisory fees ($20.0 million over 3 years and $30.6 million over 5 years) than the fund has generated in net income ($9.0 million over 3 years and $23.1 million over 5 years). This suggests the advisor has been enriched while shareholders have suffered losses.

This activism campaign highlights how fund governance structures can entrench underperforming managers. The staggered board structure, majority vote requirements without plurality carveouts for contested elections, and lack of resignation requirements for unelected trustees all serve to protect management at shareholders' expense. The upcoming special meeting vote represents a crucial inflection point for FINS shareholders to potentially force accountability.

Announces intent to vote AGAINST a new investment advisory agreement with
incumbent investment adviser Angel Oak Capital Advisors, LLC

FINS share price has declined by over 35% since inception (2019) and adviser Angel
Oak Capital Advisors, LLC should be held accountable

WASHINGTON, Aug. 26, 2025 /PRNewswire/ -- Trevor Montano ("Mr. Montano" or "I") today issued the letter below to shareholders of Angel Oak Financial Strategies Income Term Trust (NYSE: FINS) ("FINS" or the "Fund") outlining the reasons why shareholders should join Mr. Montano (a shareholder) in voting AGAINST a new investment advisory agreement with adviser Angel Oak Capital Advisors, LLC ("Angel Oak") at the upcoming Special Meeting of Shareholders (the "Special Meeting"). Angel Oak's decisions have led to poor investment performance on an absolute and relative basis, and Angel Oak should be held accountable.

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 Board of Trustees ("Board"), Keith M. Schappert and Andrea N. Mullins each received only 36%¹ of the outstanding share vote at the Annual Meeting and were not duly elected to serve (majority requirement). However, FINS permits them to remain as Trustees until their replacement(s) are duly elected.  These Trustees represent half of the independent Trustees on the Board, and they are supporting the new investment advisory agreement despite their unelected status and recommendations I shared with the Board to hold another Trustee election to allow the shareholders to properly elect independent Trustees. A web of governance provisions and Board actions have led to Trustee and Angel Oak entrenchment and a trampling of shareholder rights.  The lack of accountability at both the Board and Angel Oak has led to poor financial performance on both an absolute basis and relative to peer closed-end funds.

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 February 27, 2020, as the shares have traded at a discount to NAV every day since, with a median discount of 9.4%³.

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 June 30, 2025.

FINS Closed-End Fund Peer Performance Analysis (June 30, 2025)4
	Annualized Total Shareholder Returns (%)			Discount to NAV (%)
	1 year	3 year	5 year
FINS Peers – NAV	10.23	8.38	5.84	(2.59)
FINS Peers – Market Price	15.17	10.59	5.76
FINS – NAV	10.11	3.38	2.39	(5.87)
FINS – Market Price	15.85	6.05	3.68
FINS vs. Peers – NAV	(0.12)	(5.00)	(3.45)
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
($MM)	FY 2023-2025	FY 2021-2025
FINS Investment Advisory Fees Paid5	$20.0	$30.6
FINS Cumulative Net Income5	$9.0	$23.1

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,

Trevor Montano
Concerned investor and advocate for FINS Shareholders

About Trevor Montano
Trevor Montano is a private investor focused on financial services, business services, financial technology and energy companies. He formerly served as the Chief Investment Officer at the U.S. Department of the Treasury and has 25 years of experience investing in, structuring, and underwriting, U.S. Bank capital instruments including subordinated debt, convertible debt, trust preferred securities, preferred shares and other forms of debt and equity regulatory capital securities. He is also a member of the Board of Directors at Blue Ridge Bancshares.

THIS IS NOT A SOLICITATION OF AUTHORITY TO VOTE YOUR PROXY. DO NOT SEND MR. MONTANO YOUR PROXY CARD. MR. MONTANO IS NOT ASKING FOR YOUR PROXY CARD AND WILL NOT ACCEPT PROXY CARDS IF SENT. HE IS NOT ABLE TO VOTE YOUR PROXY, NOR DOES THIS COMMUNICATION CONTEMPLATE SUCH AN EVENT.

¹ Per 2025 Annual Meeting certified results (LINK)
² FINS inception 5/29/2019 (market price $20.00/share) through June 30, 2025 (market price $12.98/share)
³ Median FINS market price discount to NAV February 27, 2020 through June 30, 2025
⁴ Source: FINS and peer closed-end fund fact sheets as of June 30, 2025. FINS closed-end fund peers identified by Mr. Montano are tickers: FPF, LDP, JPI and NPFD. Figures may not compute exactly due to rounding.
⁵ Source: S&P Capital IQ Pro and FINS annual reports (2021-2025). 

Contact: 
West Potomac Capital LLC
info@westpotomaccap.com

View original content:https://www.prnewswire.com/news-releases/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-302539290.html

SOURCE West Potomac Capital LLC

FAQ

What are the main reasons for voting against FINS's new investment advisory agreement?

The main reasons include poor financial performance (35% share price decline since 2019), excessive advisory fees compared to net income, governance issues with unelected trustees, and lack of competitive adviser selection process.

How has FINS performed compared to its peer closed-end funds?

FINS has significantly underperformed peers, with 3-year NAV returns of 3.38% vs peer 8.38% and 5-year NAV returns of 2.39% vs peer 5.84% as of June 30, 2025.

What is the current discount to NAV for FINS shares?

FINS shares trade at a 5.87% discount to NAV as of June 30, 2025, which is more than double the peer median discount of 2.59%.

How much has Angel Oak Capital Advisors earned in fees compared to FINS's net income?

Angel Oak earned $20.0M in advisory fees compared to $9.0M in net income for FY 2023-2025, and $30.6M in fees vs $23.1M net income for FY 2021-2025.

What governance issues are highlighted in the letter to FINS shareholders?

Key governance issues include two unelected trustees remaining on the board despite receiving only 36% of votes, staggered board structure, and lack of resignation requirements for unelected incumbent trustees.