Abrdn Diversified Income... Share Discussion Threads

[chucko1] 09/1/2024 15:17

But it is not Private Equity per se. It is Private Funds where the assets within the funds are generally solid income producers. Even though I cannot say for sure what are the dependable yields of these funds, by a process of elimination, they must be close to the portfolio average as I know the yields of the other things! (or at least have a close idea as to what they are).

As for the yields on the liquid bonds, being 11% or so of the portfolio, the raw yields are quite high, but we do not know the extent to which they are hedged into the base currency, so the effective yield is guesswork. The way to find out, I suppose, is to inspect the annual report for the line items relating to hedging or derivatives and see if anything can be deduced from that. But that is a project for tomorrow.

[mwj1959] 09/1/2024 15:02

I would have thought that there would be quite a variation in income from the various asset classes. PE will be yielding nothing, while EMD, listed alternatives, private credit and structured credit will all be generating high yields. Most of the latter will be classed as liquid assets, so will go during the first realisation, leaving a portfolio with, I suspect, a lower yield than the current one. How different is the question and I guess this is a Q for the company to answer in due course.

[chucko1] 09/1/2024 13:09

The different classes of assets do not appear to have notably different yields. In the first wave of liquidation would be the Gilt and bond funds, which would have a notably lower yield than the portfolio average.

Offsetting this "benefit" would the be the greater detraction for higher per asset running costs, but I have not looked at it in such microscopic detail as yet.

[mwj1959] 09/1/2024 12:22

The Q I have is what sort of yield ADIG will have post the realisation of the liquid assets in H1? Any thoughts? Without a competitive yield to keep investors interested I suspect there will be a wall of selling post the initial realisation payout.

[spectoacc] 06/1/2024 15:47

Lol @tiltonboy.

I bought Langbar for the first time a few hours before suspension - what a mug. Believed the bank proof.

Agree ADIG, seems a good investment from here - Opportunity Cost the main reason for not.

[tiltonboy] 06/1/2024 11:47

I'm relatively comfortable in ADIG knowing half of my current investment will be coming back in the coming months. I'm waiting for the annual report to have a look at the Private Market stuff and take a view on anything that might be flaky. With conditions improving will we see any positive surprises in Tranches 2 & 3?

[tiltonboy] 06/1/2024 11:42

Langbar was the most obvious fraud but still fooled many.

I got fooled by In-House Group, but by pure fluke spotted a lie and got out. They advertised a hotel they had on their books as agent up for sale....what are the chances that a shareholder would spot that the hotel was in actual fact one in Costa do Sauipe in Brazil where I had previously stayed...lol..

[spectoacc] 06/1/2024 07:23

"The only defence we have as investors is to be moderately diversified no matter how confident we may be about any particular line item."

Yes, that's true. Patisserie Valerie, seemingly a one-man fraud spotted by no one, the perfect example.

But analysts etc in general are part of the problem. Was a few lone voices on both Carillion and Autonomy. The hilarity with AU. was HP were written to by one of them (Paul Morland I think?) pointing out the state of the accounts, particularly revenue recognition, after they bid/before completion.

HP when ahead anyway, then had the cheek to sue Autonomy. Sorry, but if you've been warned first...

Hedge funds/shorters tend to do the job of auditors and spot what doesn't look right. With very few misses, and a lot of hits. NMC Health another cracker.

And I've barely got on to AIM, eg Quindell :)

@Thrug - difficult to believe Dan McCrum of the FT was threatened by BaFin. They brought criminal charges. That in a nutshell is why never to trust the markets.

Apologies for OT.

[thrugelmir] 06/1/2024 00:10

Worth reading up on Wirecard to grasp the complexity of corporate fraud. Fascinating insight. Majority of retail investors play the stock markets. They've not the slightest clue of the real world of business. Been too easy for far to long to invest without the slightest thought.

[spectoacc] 05/1/2024 15:58

Ha another good example ;)

[essentialinvestor] 05/1/2024 15:52

* apologies, it's MADE I had in mind,
edited the last post.

[spectoacc] 05/1/2024 15:28

Much that went on with HOME was indeed extraordinary. To pick some favourites:

- They successfully raised more cash, many times;
- Knight Frank did the bunkum valuations - allegedly without ever going inside any of the properties;
- MNG take a bow: they continued to buy AFTER the easily confirmed allegations had been made;
- The hidden gifting of 12 months rent to the lessee, from HOME's purchase proceeds;
- The Board, continuing to issue RNS denials of what a group of posters on ADVFN could easily see was true from 15 mins of Googling.


I've been inside a couple of HOME properties - strewth. Suspect some of the CIC/charity lessees existed only on paper, with zero management/CapEx.

Amazing how (alleged) fraud can be hiding in plain sight (eg Patisserie Valerie), and how "wait a minute, look at this, it's bunkum" fraud like Autonomy, Carillion etc can still attract buyers (using OPM of course) and go on for years.

If I've a nose for them, it's only thanks to losing on the likes of Camkids, Naibu (both China AIM frauds), Langbar (a classic) and several more.

But does amaze me how little research big institutional investors (and investment trusts) actually do, preferring to trust management, auditors, valuers. ie those behind/missing every fraud & scam ever.

[essentialinvestor] 05/1/2024 15:16

MADE valued at £1 bn briefly, extraordinary.

[spectoacc] 04/1/2024 19:16

Many = most. Just about anything late-era ZIRP, or bandwagon.

HOME springs to mind too, as does performance of CSH (albeit taken out) & SOHO (I hold).

Some have performed reasonably, and been marked down, but most have been cr*p.

[riverman77] 04/1/2024 18:16

To be fair the IT sector needed a good clear out, with a lot sub scale funds and many of the recent listings being real dross (SONG and DGI9 immediately spring to mind). Hopefully after all the wind downs and mergers the sector will be in a much stronger position.

[chucko1] 04/1/2024 18:00

Totally agree that the set of opportunities is likely to grow significantly. I especially like GABI and VSL of the current crop as they have short durations and acceptable transparency of current portfolio. They really ought not be wound down, but people are so sick and tired of the excessive discounts they just want a quick fix. I do not agree, but if winding the trust up is "the will of the people", I may as well take advantage out of it as opposed to being puritanically opposed.

One wonders what will be left of the UK Trust Menu within a few years!?

[riverman77] 04/1/2024 17:25

There are several good wind down opportunities, but not had the chance to look at them in detail. I seriously think there could be a good opportunity to start a new fund just to invest in a basket of these, although unlikely it would ever get off the ground.

[mwj1959] 04/1/2024 17:20

I suspect the trust wind down opportunity set is only going to get larger in 24 if there isn't a meaningful narrowing of discounts. Problem is that most of the vulnerable have exposure to illiquid assets, so any return of capital is likely to be protracted in most instances. But I guess with most of them paying a decent yield investors are being paid to wait.

[chucko1] 03/1/2024 14:20

R77, I see it as a good opportunity, but not a great one. We are in agreement on that. But these wind downs have a life of their own and in certain market conditions can be oversold. This is why I make some effort to model it so that I am ready if and when that opportunity arises.

As you say, it might take a long time. But on the other hand, there is then a long time for the market to misprice this along the way, as often occurs with asset backed funds when the overall market is getting walloped.

At this stage, I have a lot more in GABI and in VSL. Less in SLFX as it has already paid back over 70pps in capital (having been easily able to buy in size at 35p). Also a chunk in RECI, which although not in wind down, has a short duration which is therefore moderately similar.

[riverman77] 03/1/2024 14:05

Thanks for the detailed analysis Chucko. I agree with all your figures, although I still can't get particularly excited about this - it will take years to sell everything and think there are better opportunities out there right now.

[essentialinvestor] 03/1/2024 13:30

Trust wind up also arguably means the buy backs created some 'value' because of the share count reduction.

[spectoacc] 02/1/2024 16:23

2.5% by end of December 2023 abrdn said - came from their team of economists. Hilarious.

Mind, if the market is saying 5 rate cuts by next December, that's miles out too IMO.

I love macro. I don't love ADIG, but hold in reasonable size. As you say, it's what's in the price (& Opportunity Cost).