Queen's Walk Investment Share Discussion Threads

[rat attack] 17/8/2010 12:20

Some thoughts from confused!!

- I dont see the relevance of American Capital as its assets are required to be supported by govt guarantee, therefore completely different risk profile to CMBS and RMBS and little guide to future QWIL valuation.

- Ordinary shares and preference shares have to considered seperately as different compenents of the capital structure.

- Is an 8% preference dividend a satisfactory return for this company and its risk profile? Based purely on other prefs I would say not, with a required yield of 10-12% being more appropriate which would bring market price down from £1 par to a range of 80-67p.

- What is NAV? Based on €3.73 per share quoted for March 2010 + uninvested funds raised now from the open offer and after deducting the preference shares I think it is only €1.61 per share. However, I recognise that with the deeply discounted CMBS and RMBS prices around at present newly acquired assets can quickly enhance the NAV figure, but might be difficult to justify on a mark to market basis in current environment.

- Assuming no initial enhancement in NAV, ie shares trade @ 65% NAV, then post open offer I calculate an ordinary share price of €1.06 and a preference share price of €0.91 (ie 75p which equates to 10.66% yield). Obviously some additional premium value may be ascribed to the ordinary share price to take account of the potential use of the open offer monies.

Thoughts anyone?

[envirovision] 17/8/2010 11:32

Depends what you paid for your shares. Look at it like this I paid average 2 so for every two shares i pay an extra 2 or its like paying 3 per share ok.

So for 3 per share I get fixed prefs paying 10% PA worth around Euro 1.5 and the shares i am left with which i suspect may trade around 2 and have a nav just over 3. They are a little unclear about the expected dividend amount on the ords, however going forward in time, the dividends returns on the ords could be quite good imo. If im right about the ord share price, well the discount to nav is still around 35% and as they state what they are trying to achieve is a good reduction in the discount to nav. So they need an uplift in the ord share price from 2 long term, hence another reason to suspect the dividend on ords could have fairly good prospects. Clearly the nav on the underlaying investments purchased closes with time and the nav appreciates in any case.

As an example American Capitals ipo was 20 and the current price is 27 having been as high 32 (the fund is highly leveraged whilst returns linked to interest rates).

I dont think the new company here wants such high leveraged risks?

[davidosh] 17/8/2010 10:46

What are the general thoughts on the change of investment direction ?

[timanglin] 17/8/2010 09:57

Thank you envirovision, and thanks for your other helpful posts on other boards.

[envirovision] 17/8/2010 09:24

£1 in sterling per pref share

[timanglin] 17/8/2010 09:21

i dont seem to see the nominal value of the preference shares, which are planned to give approx. 8% in sterling terms. Have I not read this correctly?

[envirovision] 17/8/2010 08:36

Similar funds launched in the USA to this new proposed one have done quite well, for example American Capital Agency has seen its share price double and toboot is now currently paying nearly 19% in divis

[madmix] 17/8/2010 08:33

Effectively 10p dividend per ord via the prefs, which have a notional value of £1.

So the ords will continue to trade in Euros, but the prefs in Pounds?

[horndean eagle] 17/8/2010 08:33

Initial thoughts are a bit of a mixed bag. With net cash they had ample opportunity to pursue their new strategy through borrowings. Existing holders are not being diluted by the new offer. New share structure should hopefully bring about a smaller discount than we have currently. The prefs will be worth circa 1.25 euros a share. The rump will be worth circa 1.15 euros versus a pro forma NAV of circa 1.85 euros. NAV on the ords should rise as surplus income will accrue there and I would therefore expect NAV to narrow sharply in due course.

[zangdook] 17/8/2010 08:27

Effectively 10p dividend per ord via the prefs, which have a notional value of £1.

[madmix] 17/8/2010 08:21

In terms of the dividend yield going forward; as I understand it, for every share held on 17 September, we would receive 1.25 preference shares paying 8% each (i.e. effectively a 10% dividend in total). We may also receive a variable amount of dividend on the ordinary shares.

Previously, the dividend yield was 13.3% (based on 32c annual dividend and 240c share price). Will be interesting to see if they can maintain this level going forward by paying a small amount on the ords.

[typo56] 17/8/2010 08:05

1 for 2 open offer @ €2.00. Ex-entitlement this morning. Expect a bit of a dip.

[envirovision] 27/7/2010 15:03

oh er misses, the Basel blimf seems to be going down well today with a broad range of banks, life insurance and debt investors and instruments up (not least QWIL):

The Basel Committee announced that it will allow certain assets such as minority stakes in other capital firms to be regarded as capital, and went onto propose a leverage ratio for the first time. At the same time, the panel introduced new restrictions on how much lenders can borrow to rein in on risk-taking

Read more: DailyFX - Euro Rallies to the Highest Level Since May, Basel Committee Introduces New Banking Restrictions

[holts] 26/7/2010 18:28

blimey , selftrade reckon they may credit my divi tomorrow , ho hum.

[envirovision] 23/7/2010 17:47

I wonder if QWIL could make it to a 8% Yeild that would put it on a share price of around EU4.



In spite of the rather alarming inflation figures that have recently come through - RPI at 5.4 per cent - low headline interest rates are here to stay for some time. With this in mind, gilt yields of around 3 per cent may be as good as it gets for the next few years, which means at current prices there should be more capital upside from holding 10-year UK gilts. Also, based on this assumption, investment-grade corporate bonds will offer yields of perhaps 4.5 per cent to 5.5 per cent. Hopefully, there will be a few bargains to be had with higher yields than this, but 5 per cent looks to be the aiming point for a portfolio of decent quality corporate bonds.

[envirovision] 23/7/2010 17:24

Regarding todays EU bank stress test data. All Portuguese banks passed. Out of 91 banks tested in the EU, 7 failed in total of which the majority were in Spain.

[envirovision] 23/7/2010 15:31

Yes its there today, I'm with TD Waterhouse. Paid gross in euros, lovely stuff bought some Gagfah with it.

[holts] 23/7/2010 15:21

anyone had the divi today ?

[papy02] 22/7/2010 17:24

Many thanks Cerrito for your replies to my 308.
(I was wondering if it was something I said, or if I'd just droned everyone to sleep ;-)
For me this still falls into the "if you don't understand it don't invest in it" box, but will keep watching and maybe take a small position if any weakness.

[cerrito] 20/7/2010 22:15

One thing that was interesting to me in the IMS was that they anticipate quarterly cash flows as E4m whereas as of last September they were talking about E5/E6m a quarter...and indeed the forecast for Q1 10 had been E4.5m. Part of this is due to shrinkage of balance sheet I suppose. My first thought was that perhaps they are buying assets of a longer maturity structure but page 43 of the March 31 10 annual report has a maturity information which shows that E78m of the E91.5m of investments at that date had a maturity 5 years plus ie it was already pretty long term..
Remember that at E8c quarterly dividend costs are E2.1m.
The other thing that struck my attention was how little I at least know about all the ABS they are buying...a question for the next conference call. They have told us that there is a North European bias ie so we see Holland now the 4th largest country exposure at 12% at June 30 10. That does not tell us much..there is plenty of dross in Northern Europe. Note that the total cost of ABS at June 30 10 was E26.1m out of total investment at March 30 of E81m. Do others have a better feel for the ramifications on the portfolio?.
Finally told us that had sold Gate 05-2 as well as -06-1 which we had known about.
Reading the footnotes of the annual report was interesting. Page 51 breaks down the very good profit of the investment grade bond portfolio(which gave a profit of E3.9m in the year to March 10 on reportable assets of E14m); this compares to E6.6m in the residual portfolio on assets of E80.8m, hit by the write downs including that of setante in Italy.
Page 52 tells us that last FY there were E5.8m principal pay ups in the residual portfolio. Not a term I have heard before..seems like a committed draw down but first I have heard of this.
Page 44 has some sensitivity work on changes in the NAV with different discount rates.
Good description of the FX hedges they have for their £ portfolio.
My take on some points raised by Papy02 in his 308
No idea about nominal shares...should I care? Do not know
Cheyne have a controlling interest in QWIL and my memory of the last RNS is that it is 55%
As the annual report shows Cheyne have not had incentive payments in the last two F Years.
No withholding tax
No ideas what will happen to fees when the Cheyne agreement comes to an end..would not have thought there would be big changes.
Prefer to get a better feel for these new ABS before i buy more.

[envirovision] 20/7/2010 10:02

No leverage left at all on the balance sheet. All the ABS bonds rated BB+ or better.

Queens Walk seems to be evolving into a safer solid investment by the day.

NAV is now 3.73 whilst the discount to NAV is an eye watering 40%.

[nickcduk] 20/7/2010 07:53

Bullish statement. Cashflow coming in way ahead of forecasts....again.

[envirovision] 15/7/2010 13:46

Getting hard to buy these in decent qty now