P2p Global Investments Share Discussion Threads

[plexi] 22/2/2016 16:01

Have heard from a reliable but discreet source ( "those familiar with the situation" as the FT might say) that an institution recently parted company with a manager and is now selling down his positions - believed to be about 5% of P2P.

There was a 2 X 125k lots traded at the end of last week. I'd imagine an RNS might be due soon. If this situation is correct then it's just a question of picking the bottom and picking up a well run income asset at a bargain price.

[anley] 22/2/2016 12:11

In fact I sold out straight after TURNER spoke.........I don't think he knew what he was taliking about and even if he does for me he is a yesterday man.

I do have deposits at RateSetter but there offeing is different to the P2P platform. I sent the Zero Hedge article to them from comment and I got the feeling that they were uncomfortable because they do not do what P2P and others do which is to invest in to other p2p type lending areas..........if you get my drift.

I see the price is down again this morning and that makes this who issue an interesing one...............2 big shareholders - Invesco and Woodford controlling the company...........what is going to happen next?

Watch this space!

[rl34870] 22/2/2016 11:45

I suppose the overriding conclusion here is that as with most areas of the stockmarket, the institutions have the greatest influence on the share price. At these levels I see small shareholders like you and me selling on the basis of "out of sight out of mind". Anyone disagree?

[jimbo55] 21/2/2016 14:21

The best way to get your head around P2P loans is to sign up with a platform such as Funding Circle (on which this trust lends) and start lending yourself. I assure you, you will gain a far more thorough insight into the process.

Any default on a P2P platform is no different to defaulting on a bank loan in terms of your credit file. The process is the same, along with that of going down the road of a CVA and then into bankruptcy.

[rl34870] 19/2/2016 10:28

arroon666 Info was gleaned from Cantor Fitzgerald investment trust analyst in December edition of What Investment magazine.
Will be interesting to read end of month commentary which will comment on price falls and justification. I have an account with Funding Circle( SME loans rather than peer to peer), real time data is available and there is no sign of increased defaults.I agree with specuinvestor, there is no sign of increased defaults but the market has probably been spooked by Turner( promoted his new book) Would be interesting to get a tabulation from the company showing default rates and the impact of returns ie what the current share price would equate to in default rates. Ratesetter give this information on their website.

[anley] 19/2/2016 09:26

so now down to 843p.............from a high of 1150p.......so is the market telling us to beware?

[aroon666] 17/2/2016 23:31

I not sure I totally agree with the outlook for default rates. Bear markets in stocks typically lead to recessions just over half the time about 8 months later. Ignoring what is happening in stock markets (and property markets outside of the UK) is not wise I feel. Recession = job losses = default rates higher. Unemployment is a lagging indicator - will take time to show up in the
data. Stocks, PMI's, confidence indicators are much more real time.

rl34870 - is there anywhere to read more about the stuff you posted - the type of loans they invest in, the credit selection system. Aside from wondering about the provisions they make for future defaults, does anyone know if p2p credit extension goes on a borrowers credit file/history to reduce risk borrowers from simply going on a credit binge after borrowing from a p2p platform? Also like the zerohedge article suggests whats to stop borrowers consolidating debt from credit cards/overdrafts and then simply maxing out on those again in times of stress?

[anley] 17/2/2016 13:54

Good point...........but the fees are too high in today's investment management world.

[rl34870] 17/2/2016 13:08

Of course the annual management charge and performance fees are based on the net asset value and not the share price so the Managers have little incentive to manage the discount ( presumably).

[specuvestor] 17/2/2016 10:42

I concur with rl34870. There is no sign of increasing default rates. The vast majority of their loans are to prime homeowners with excellent credit records. Sentiment started to turn with the collapse of the platform Trustbuddy. However, P2P Global has less than 3% of its assets invested directly in platforms. Also discounts in all Investment Trusts has widened recently with the general market turmoil. I still believe that P2P lending(as opposed to Crowdfunding) has a place in a diversified income portfolio.

[rl34870] 17/2/2016 09:54

P2P have developed a proprietary credit selection system where every single loan is individually assessed. The leverage they employ enables them to achieve the same returns by investing in higher quality loans ( ie with fewer expected defaults). Hence Liberum describe the fund as low risk. This seems to be at odds with our current narrative of expected defaults being significantly higher than originally anticipated which a discount of 15% is pointing to.
Their January commentary alluded to the fact that the fund should be more sensitive to wage growth and unemployment rates rather than stock market prices. The outlook for these does not appear to have changed.
Similarly Ranger was trading at a premium of about 4% in early January and is now on a discount of about 15%. How can that change be justified?

[aroon666] 17/2/2016 00:42

I think that's the point - the market is expecting higher default rates and this is represented in the discount to NAV. I cant seem to find much data on what default rate the fund managers expect versus how much each p2p platform actually puts away into their provision funds each year. 3% per annum does sound on the low side over an economic cycle to me if that is the size of provisioning. Though Zopa performed fine over 2008/2009.


That investmentweek article is interesting:

"Meanwhile, other risks highlighted by J.P.Morgan Cazenove's analysis of P2PGI include the relatively high gearing levels that can be employed across the portfolio (for P2PGI this is capped at 150% of NAV). The group believes if defaults outweigh the gross portfolio annual return and cost of leverage, there "would be a negative impact on the company's capital value"." Perhaps this is a reason for P2P trading at a wider discount?

"NAV is often negatively impacted by the fact the trust has to amortise the debt when it first invests in the platform loans...." Anyone know what his means?

[rl34870] 16/2/2016 20:16

I have been following P2P Global, Ranger Direct Lending and VPC Specialty. Whilst VPC has risen about 2% in the last fortnight, P2P and Ranger have both dropped about 9%. This does seem strange for similar funds even though the actual areas they invest in are all different. The Ranger fund is unhedged (apart from a sum witheld to make the quarterly divs) and if the January NAV uplift is around 0.6% then this trust will be trading on a discount of around 15%.

How do market makers set their prices? The price falls appear to have happened without any significant volume traded. Do institutional investors offload stock to market makers to create an overhang. If not then surely the prices will recover when the companies publish their NAV,s at the end of the month. These values are effectively a real time valuation of the aggregate of every single loan transaction. If the market is anticipating higher default rates in the future then presumably this will be reflected in the discount, not in the NAV.

[trustman] 16/2/2016 11:33

The other side of the coin is that Invesco funds have increased to 29.47%.
Seller may be ongoing and they cant take more.
Reason for weakness......look at the prices of the banking sector.
I hope impairment not deteriorating much at this stage, worry may be longer term in terms of access to funds. T

[aroon666] 15/2/2016 18:42

Think we are clutching at straws. We all know that selling £10m (1-2% mkt cap) of stock doesn't make its share price collapse another 7-8%. I asked investor relations a few questions but they don't speak to retail investors directly unfortunately. I think the most likely explanation is the reassessment of potential default rates. If anyone has any data of what the projected default rate is assumed by the fund manager, what the current default rate is and the size of the provision funds that build up each year would be happy to hear about it.

[anley] 15/2/2016 14:43

Interesting and thanks for those posts.

YES there has been a seller of around 1m shares a week or so ago. Not sure who but the broker should know.

[specuvestor] 15/2/2016 14:03

I spoke to Simon Champ of Eaglewood, one of the fund managers that manages the portfolio for P2P Global. He was presenting on behalf of P2P Global at the Shares Investor evening last Thursday. When asked about the fall in the share price he responded by saying that a fund manager had left one of the institutional investors, I think he mentioned Artemis, and that Artemis were selling down. I have heard that sort of speil before from directors/fund managers and dont hold much store by it. Does anybody know if Artemis have been selling?
With regards to the disappointing discount to NAV, I note that Ranger Direct Lending are in double figures(-10%)but others in the same sector such as VPC and GLI Alternative Finance are on small discounts. The sector average according to winterflood is -5.4%.

[aroon666] 15/2/2016 12:54

I doubt they will go back to NAV any time soon. The fact that they are still 13% below NAV with a 5% rally in the FTSE just shows how poor the market views this as an investment. Im wondering if anyone has any idea why?

I'm beginning to think that the long run default rates that P2P global assume are lower than what the market thinks. I believe they use about 3% a year as a projected default rate but i think they are already running at that at the moment which means in a recession things would get much worse ie 10-20% default rate. Otherwise Im not sure what else it could be.

[anley] 15/2/2016 10:50

Does the public understand this new industry?
Does the stock market understand P2P Global who buy in their portfolio from third parties - see their website.

I think not but provided the brokers can give truthful monthly updates and this is matched with the expected yiels then the shares will go back to the old highs.

That is my view with the shares at 885p........

[aroon666] 14/2/2016 20:50

Does anyone know why these shares have fallen so far (13%) below NAV since January? I realise there been a lot of negative news around the industry in general (TrustBiddy, Rebus, the Turner interview) etc but nothing that concerning. Given how far the FTSE has fallen I could understand it trading a few % below NAV but at 13% seems there are some underlying issues. A third of P2PC is still in cash so not sure what these issues might be. Dividends and NAV seem fine.

[anley] 11/2/2016 14:07

An interesting article to show what some USA minds think about P2P.......

www.zerohedge.com/news/2016-02-06/p2p-cracks-start-show-lendingclub-write-offs-double-forecasts

I wonder if Turner knew about this?

[anley] 11/2/2016 13:23

Now I see INVESCO have bought 500,000 shares to take their holding to just over 29%..........then we have Woodford as well with a big holding.

My conclusion is that the fund managers know a great deal about the P2P industry as opposed to one ex City "turnip" and an ill informed BBC journalist who did not bother to Google P2P to see what the business was all about.

The price today is 905p............and the industry needs to get its PR act together.

[specuvestor] 11/2/2016 13:04

I also heard Aidare Turner's interview on the Today Programme. The typical BBC Gurdianista journalist Simon Jacks was equally ill informed. What turnips they both were. Firstly Turner made no differentiation between equity crowd funding (High Risk) & bog standard P2P lending(low to medium risk.) Nor did he distinguish between unsecured SME lending or secured lending against property. Simon Jacks even complained that P2P providers could actually advertise on buses,trains & railway stations!! Does he not see the adverts by Jupiter,Fidelity,M&G and all the other fund managers marketing their funds? Does he really think that Stocks & Shares, Unit trusts etc are somehow much less risky than P2P lending? Has he not seen whats been happening on the markets recently.
If he wanted to say something sensible he could have said that P2P should be approached as part of a diversified portfolio.Instead he chose to be negative. This guy was in charge of the Financial Services Authority for a number of years.
What a Turnip.

[anley] 10/2/2016 18:11

Not the best of days for the P2P industry especially from a spent forth who made the silly remarks reported on Radio 4 this morning and in the above post for which I thank the member.