1pm Share Discussion Threads

[cfro] 28/5/2014 16:09

Excellent article Owenksi, thanks for that.

Shares going to punch into new highs here.....?

Ive certainly been upping my stake recently.

[owenski] 28/5/2014 16:03

I copied the below from Dave Bowler RECI thread, whether the float or its targets are as successful as hoped remains to be seen, and I notice potential default targets are mentioned at over 3%, if memory serves me OPM's defaults are very low at less than 1%, which illustrates the quality of their loan book.

But, the article does illustrate the appetite for the P2P sector, or in other words, non mainstream bank lending for SME's. As I read it, I wonder whether some of the new IPO funds end up taking a chunk here. The article also serves to demonstrate why OPM type businesses are in a good place still with more to come.

Regards

.............................................................
Copied

Here's an idea which may be of interest-its a new Peer to Peer Lending Investment Trust called P2P and floats on Friday.Its yield should be 8% in a year's time if all goes to plan.95% of its £200m raised will be lent via Funding Circle ,Zopa etc in the U.K.and other platforms in Europe and the U.S.


P2P will be taking minority stakes in their favoured Peer to Peer lenders-both by equity options (given in exchange for volume) and by purchases of stakes.They have earmarked 5% of the funds raised -i.e.about £10m of the £200m raised to do that.
I have heard that the issue was oversubscribed by about 15%.




Midas Stockbrokers view;

"retail banks are dinosaurs" Bill Gates

"Banking is very digitisable... Lending Club's peer to peer model is changing personal lending" Peter Sands, CEO of Standard Chartered.

P2P Global Investments ("P has announced its intention to apply for admission of its ordinary shares ("Shares") to the premium listing segment of the Official List of the UK Listing Authority and to trading on the main market for listed securities of the LoP")ndon Stock Exchange (together, "Admission").

I am sure you are all aware that banks are valued at multiples of book value (roe –g/coe-g). Most banks earn a return on equity of between 10 per cent and 15 per cent and trade on 1.2x to 1.8x book value. So imagine you were offered a peer to peer fund with a forecast return on equity of >10 per cent at 1x book... with a forecast dividend yield of over 8 per cent. Beyond the aforementioned, the fund is being managed by the blue chip house Marshall Wace.

We are pleased to announce that Midas Investment Management Limited have been appointed as an intermediary for the forthcoming of P2P Global Investments which we think is an attractive offer for the following reasons:

· Compelling economics - floating at ~1x book with a forecast ROE of ~10 per cent on modest leverage ratios.

· Structure - expected to be ISA & SIPP eligible, expected 0 per cent corporation tax, diversified by platform, geography and loan type.

· Attractive yield - potential dividend yield of ~8 per cent in 2015, superior to listed comparable debt investment funds (average of debt fund group ~5 per cent yield).

· Strong historical performance of P2P lending - historic low volatility of returns, strong risk/reward metrics (Sharpe ratio), average industry yields of >8 per cent net of loan losses.

· Potential for alpha generation - based on beneficial fee agreements with platforms and proprietary loan selection technology.

· Low volatility of loans - expected annual loans losses of ~3.2 per cent.

· Precedent - these type of funds have done very well in the USA especially the Eaglewood fund which returned 16.2 per cent last year.

· Access to Lending Club for non USA citizens - arguably Lending Club is the platform providing the best returns yet only USA citizens can access it.

Banking sector implications

The lending function of developed market retail banking is going to change and the peer to peer platforms and vehicles are the players that should benefit. Please re-read what Peter Sands has said above. We advise clients to consider selling all their banking shares (excluding Standard Chartered and HSBC) and repositioning into these industry changing catalyst. There are two reasons the banks are in trouble:

1. P2P platforms have a cost base ~60 per cent lower than banks; and

2. The interest spread banks charge is ~4.2 per cent whereas P2P's has a spread of ~2.0 per cent.

People will start to understand that depositing money with banks and borrowing from the banks is not the best value for money route. Liberum estimate that by 2024 US and UK P2P platforms will increase to £292bn which is roughly 20 per cent of all lending. How will the banks then cover their fixed costs?

Our conclusion

This is a game changing, sector smashing investment. We think this investment is a far superior, risk adjusted investment proposition to buying life insurance or bank shares and we also see it as a very compelling alternative to depositing your money at the bank. After all, how are the risks dissimilar? Yet the returns are stratospherically different.

[saucepan] 27/5/2014 15:06

Added a few more today in the hope and expectation that the chart is shaping up for breakout.

The recent low seems to have confirmed that previous resistance is now support.

[greenroom78] 27/5/2014 15:02

Yes, strong move and hopefully will take out that last high and continue on trend.

[cfro] 27/5/2014 13:34

Heading up today. Lovely looking chart..

[owenski] 23/5/2014 17:46

Good to see OPM win the award

"These awards are deserved recognition of the Company's outstanding financial performance over the past two years, which has seen the business more than double in size, with a loan book now approaching GBP20million. This has been driven by the executive team, Maria Hampton and Helen Walker, supported by the entire staff and I am delighted to see their own hard work recognised by the judging panel, jointly winning "Executive Director of The Year"."

If I recall, they've won other awards also, to do with employee training??

[neurolodger] 15/5/2014 07:01

Got in after a publication in IC

[cfro] 14/5/2014 16:07

Yes, i am also back in here today.

The continuous strong and reassuring statements that the company has released over the last few months seems to have completely gone over my head for some reason. :-/

It was thanks to you Saucepan that got me to have a closer look today. :-)

[saucepan] 14/5/2014 15:54

Thanks, owenski.

I added a few more today.

[owenski] 14/5/2014 14:42

I've noticed Henderson's have been reducing their holding.

For those that dont know, Hendersons have been a principal backer of OPM via providing funds in return for a stake in the business.

So I wondered if they intended to sell out or what their position is.

The good thing is I had a reply from Maria Hampton CEO, and it was a pleasant and plain English reply, I like companies that bother to communicate with PI's.

In essence, no problem with Hendersons, they remain supporters of OPM, they are in effect top slicing having been in from very low share price levels. No need for concern.

Just in case anyone is interested.

Regards

[peladon] 06/5/2014 11:22

Yes, a share that rewards patience ��

[saucepan] 06/5/2014 11:18

Breakout developing well :-)

[owenski] 03/5/2014 10:32

Agreed Jamielein.

I've been building a position when stock's been available, hard to pick it up without paying a premium otherwise. Prospects look compelling here, M.Cap still only circa 20m when one considers the growing loan book, plowing back of profits to increase loan book and new funding lines secured. Without quoting figures offhand, peg ratio is attractive also.

Ticks a lot of boxes for me anyhow.

[jamielein] 03/5/2014 10:08

Welcome Greenroom,

Interesting to see a few trades above the offer price in the last couple of days.

I've been holding here for some time but did top up on the last RNS, and again after I thought that the overhang had cleared.

The reason I topped up after the last RNS was the wording in the statement:


"The Board is also pleased to report that trading during the first quarter of calendar 2014 has been very positive"

"The funding will allow us to satisfy the continuing strong demand for finance from the SME sector"

and

"Against a backdrop of continued strong trading..."


It sounds very positive and if their growth can continue at similar rates, then these should have further to go.

[greenroom78] 03/5/2014 09:27

I bought my first lot yesterday morning after spotting this on the breakout list, chart does look good for another move IMO.

I note the last trade of the day was 25k @72p.

[saucepan] 02/5/2014 14:29

Added a few more yesterday, too :-)

A breakout looks on the cards after a textbook consolidation.

[jamielein] 01/5/2014 09:07

There were the usual 7978 shares available yesterday for 65p, but they're not available today. It's actually difficult to buy today.

There were also some large trades reported on 28th April at 62.5p. Looks like the overhang has cleared, so I've added a few.

[frenchfry] 30/4/2014 10:52

Signs of onwards and upwards again after a nice pause to shake out any lingering profit-takers.

[jamielein] 15/4/2014 14:27

Strangely you can buy under the mid price and sell over the mid price.

I took the opportunity to move some shares into my ISA for free, and also added a small number.

There must be some stock available as 7978 shares cost 65.6p but 7979 costs 71p.

[davidosh] 10/4/2014 20:29

I think we were tipped in the Investors Chronicle today. All looking good here.

[owenski] 10/4/2014 13:28

Looks like a bit of buying via Charles Stanley Nominee accounts. Also vol. very high today

[owenski] 09/4/2014 09:56

Non dilutive increases in the loan book, thus also at some stage increasing the asset value on top of profitable business trading, OPM looks attractive and good value to me, not to worried if they dilute as they have done to Hendersons, the pie just gets bigger :-)

[wotreally] 09/4/2014 08:35

Nice positive "all systems go" RNS.

Like the SME £15K to £25K increase.... as per

The Board is also pleased to report that trading during the first quarter of calendar 2014 has been very positive. Furthermore due to the success of the recently introduced business loan product, the amount available for individual loans is to be increased from GBP15,000 to GBP25,000.

[owenski] 09/4/2014 07:09

From today's RNS

"The Board is also pleased to report that trading during the first quarter of calendar 2014 has been very positive".

"Against a backdrop of continued strong trading we are delighted to be announcing both new and increased funding facilities which are testament to the quality of the business being underwritten, the strong results being consistently delivered by the Company and its growing reputation within the market place. These additional facilities are a further enabling step towards the Company achieving its growth ambitions whilst continuing to focus on its core strength of providing much needed finance to SMEs."

Was wondering when the next block funding would occur

[frenchfry] 24/2/2014 10:10

standby, testing new highs! We're on the march again.