Sme Loan Fd Share Discussion Threads

[orinocor] 07/2/2017 11:52

January monthly factsheet

[orinocor] 26/1/2017 11:32

just topped up with idea of tendering at NAV in March
next monthly ex-div date is 2nd Feb with payment on 3rd

[orinocor] 26/1/2017 11:31

Ha here is confirmation. The discount is 6.7% just now and NAV is 100.42p will be able to tender at 100.42p in March

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Next oldest of these funds is SME Loan fund (SMEF). It has just passed its first birthday, generating a creditable 6.1% NAV return over the last 12 months. Loans to businesses make up 100% of SMEF’s portfolio and 82% of its lending is secured. Its currency exposure is hedged, it is not geared and, unlike most of its peers, it is not trying to boost returns by investing in platforms (a nice idea but a very different risk proposition).

I recently stepped down from the board of GLI Finance anymore and have no holding in SMEF, so I am not as biased as I might have been, but I like SMEF’s steady approach.

It is trading on a 5% discount but there’s an opportunity next year for investors to cash in part of their holding at a price close to asset value so this discount ought to narrow. SMEF also has relatively low management fees – 0.75% on the first £100 million of assets and 0.5% on the balance and no performance fee.


hxxp://citywire.co.uk/wealth-manager/news/trust-insider-the-winning-mandates-of-p2p/a957074

[orinocor] 26/1/2017 09:16

makinbuks
If you are right then Smef shareholders will be able to tender their shares in March at NAV which is 100.42p.

[makinbuks] 20/1/2017 16:12

Isn't the dealing value NAV less costs? In ACD for example the deduction from NAV is 0.05%

[professor pettigrew] 12/1/2017 22:01

Looks a very interesting proposition this. Thanks for uncovering it orinocor.

[orinocor] 12/1/2017 21:47

I'm not sure you can infer much at this stage. The NAV was 100p at launch in October 2015 and its 101p now 16 months later and all the while smef has been paying a 0.6p monthly dividend.

[yieldsearch] 12/1/2017 21:26

From the Nov 2016 factsheet:
"The “clean” NAV fell slightly from 101.24p to 100.93p due to a loan impairment that was accounted for during the month.
Across the AltFi sector, there is evidence of a growing number of defaults. Whilst loan impairments are always a feature of the sector, the Manager operates a strict manual credit underwriting process to minimise these, however the risk can
never be entirely removed."


From the dec 2016 factsheet
Loan impairments during the past two months within The SME Loan Fund are higher than experienced during the first twelve months following launch but should not be unexpected. A NAV total return of 0.09% this month was achieved after prudent application of new impairments totaling 0.67% of NAV. The Fund continues to have one of the lowest impairment rates within the sector.


I hope to be be wrong but it seems that impairment are starting to show up, i guess at the maturity of the underlying loans.
Amberton and SMEF could at least provide the deliquencies, pool credit rating migration, loan default, net loss rate so investors can actually assess the net net coupon they will eventually get. the type of information you can find on direct peer to peer website focusing on sme loans. and they could also tell which entity originated these loans, i believe they are buying those from third party p2p lender?

The dividend looks great currently but the NAV will reduce further if the impairment are increasing in the future. I would rather stick with a paragon type company tbh, the incremental dividend yield here seems likely to be eaten by impairments.

[orinocor] 12/1/2017 15:22

monthly divi declared.

[orinocor] 11/1/2017 17:15

The December fact-sheet has just been RNSed

[orinocor] 10/1/2017 10:40

I still can't find a definition for the "Dealing Value". Anyone know what it is?

[orinocor] 09/1/2017 11:43

Outlook

The Company is well positioned with a solid track record and an attractive dividend yield. The Board will attempt to increase the Company’s assets over the coming year against a background of a sector that is growing at an extraordinary rate. Returns to Shareholders, as always, are the most important metric but we believe that a larger investment portfolio would lead to better risk adjusted returns and a lower expense ratio. The Board is confident that further progress can and will be made in the year ahead.

[orinocor] 09/1/2017 11:33

"In March 2017 the first tender offer becomes available where Shareholders may tender all or part of their shareholding at the Dealing Value. "

What is the Dealing Value?

[orinocor] 09/1/2017 11:31

This bit is interesting. The current discount is 8%

Discount

During the recent period the Company’s Ordinary Shares traded at an average price of 98.42p and at 89.75p at 30 June 2016 – a discount of 11.4% to its NAV. At 30 September 2016, the NAV and share price had risen to 101.30p and 96.00p respectively – a discount of 5.2% to NAV. The Board would ideally wish the Company’s share to trade closer to par and will consider any means at its disposal so that the discount does not remain at an inappropriate level. One of the mechanisms for managing this process is the periodic tender offers. In March 2017 the first tender offer becomes available where Shareholders may tender all or part of their shareholding at the Dealing Value. Moreover, SMEF’s maturity profile is short and cash is constantly being generated to allow the Directors latitude to exercise other means to close the discount if the Board deems it appropriate and in shareholders’ best interest.

[orinocor] 09/1/2017 11:30

Growth and Corporate Activity

The Board aims to establish the Company as one of the leading funds in the AltFi sector and to grow current assets significantly in the years ahead. In the short term this is likely to be achieved by small, ongoing issues of shares to new or existing investors. Once the Fund has added to its existing performance record and demonstrated the ability of the Investment Manager to generate a consistently high yield on the shares, a larger fund raise may be possible. At all times the Board will take into account the interests of existing Shareholders before increasing the share capital of the Company.

The Company came into existence largely as a result of a spin-out of GLIF. This company held a portfolio of investments in platforms that match borrowers and lenders together, with a portfolio of loans that had been arranged through these platforms. Your Group’s portfolio was seeded with a significant number, but not all, of these loans. Hence the two companies now have clearly different investment strategies. GLIF invests primarily into the equity of the platforms and seeks to achieve capital growth as the value of these platforms rises while SMEF aims to
produce a high ongoing yield for its investors with limited capital growth.

In March 2016 the Somerston Group made a significant investment into SMEF by buying 15 million Ordinary Shares from GLIF. It is the wish of the Boards of SMEF, GLIF and Somerston that SMEF is a truly independent company. Recent name changes, referred to in more detail below, seek to reinforce this evolution. SMEF is investing in loans originated by platforms that our Investment Manager considers to have a high level of credit experience, that undertake significant due diligence and originate loans that are amply secured and attractively priced. We also require these platforms to be open and transparent with us in all their dealings. The platforms we use are constantly reviewed and the Board believes that it is in Shareholders’ interests to contain the number of platforms used, by concentrating investments in loans originated via platforms that come up to our expectations. At a general meeting held on 3 August 2016, the investment policy of the Group was amended to allow greater exposure to high quality, alternative finance loans.

[orinocor] 09/1/2017 11:14

GLIF holds shares in SMEF. I bought GLIF at under 20p and its now 26.5p so this sector is be recovering. P2P has also risen.

[orinocor] 09/1/2017 11:09

How risky is SMEF's 7.7% yield? I'm heartened by the fact most of the investments are secured.

Security

Funds invested by the Company will be secured, as and when required, over a range of assets including property, intellectual property or other specific assets, personal guarantees or via credit insurance. Loans will be unsecured only in the case of short-term, low ticket size lending, where the perceived level of risk in respect of the particular asset is low.

[orinocor] 08/1/2017 15:34

this is a good addition to a diversified income portfolio

[orinocor] 08/1/2017 14:50

hxxp://thesmeloanfund.com/

for further research

[orinocor] 05/1/2017 14:44

This stock is so off the radar it does not even have a discussion thread.

Unusually, but very welcome, a 0.6p dividend is paid every month.
12 * 0.6p is 7.2p which is a 7.7% yield @ 93.25p

Discount to net asset value is 6%

hxxp://thesmeloanfund.com/


Investment objective

The investment objective of the Company, together with its subsidiary, GLI Alternative Finance Guernsey Limited (together the "Group"), is to provide Shareholders with attractive risk adjusted returns through investment, principally via a portfolio of Investee Platforms, in a range of SME loan assets, diversified by way of asset class, geography and duration. The Group may invest directly or indirectly into available opportunities, including by making investments in, or acquiring interests held by, third party alternative lending Platforms and other lending related opportunities as identified by the Investment Manager, Amberton Asset Management Limited, in accordance with the Group's investment policy.