Axiom European Financial... Share Discussion Threads

[cc2014] 06/8/2021 12:02

96.3p to buy now and the MM seem happy to accept orders for limitless quantity if you want to sell.

The discount is now down to 6% which I expect to continue to close.

Happy days.

[cwa1] 05/8/2021 16:00

Boystown

Don't want to say TOO much on here as off topic...but RMII is a smallish punt in a significantly larger portfolio as it offered excellent yield, a small discount to NAV to allow for minor hiccups and fairly confident recent directorspeak. It's clear that there are risks involved as CC2014 has alluded to and it could get mullered in a wider market tank. I just hope that the rewards are commensurate and will allow for a modest holding within the larger portfolio.

My risk profile is not ultra high either but I occasionally allow myself to walk on the wild side a little bit to ensure I'm still actually alive :-))

BIPS does seem well offered and there does seem a willing seller out there.

Apologies to all for the brief off topic

[cc2014] 05/8/2021 15:31

Good luck Boystown. I think the moment on EJFI has passed from an unbelievably low price to just a low one. EJFI is XD as well today by 2.675p and hasn't fallen. Indeed someone has paid 3p over bid to get only £5k of stock which shows what the MM have available.

I just bought some more BIPS at 185.785. There's clearly a fight going on with the bulls and bears on BIPS and there are a number of sell icebergs sitting there blocking the price going up. They keep getting hit though so hopefully eventually they will be exhausted. I have plenty of BIPS from the IPE days from much lower down so I'll just flip these for something over 190p and keep my core holding.

[boystown] 05/8/2021 15:04

Thanks again CC2014. I kind of thought you'd say something along those lines and the simple truth is there's always greater risk for bigger yields.

Anyway, I've taken a small position only as part of a wider income generating portfolio. I still haven't bought any BIPS or EJFI yet though and the prospect of a wider sell-off worries me in that I always try to keep a reasonable amount of powder dry for such eventualities which come around fairly regularly. OTOH, all this inflation pump-priming needs to find homes...

[cc2014] 05/8/2021 14:19

Hi Boystown,

Maybe it would be helpful to give you a bit of my views on things generally first. I consider the market generally to be puffed up beyond reasonable valuations through printing money.

At some point I think there will be a retrace although I have no idea on the timescale and it could be over a year away or next week. The question I continually ask myself is what will happen on a general retrace. My guess is that when we move "risk off" there will be a move out of equities into high quality debt, but that the low quality debt will sell off.

Of course if the market really tanks it's all going to sell off.

I've looked at RMII/RMDL many times and in my mind it's in the low quality debt pile especially given the Covid situation. I'm not really a fan anyway. The sectors it's lent to look risky to me, I don't like PIK and there's something in my gut that bugs me about the directors which I can't rationally evidence but nevertheless nags at me. Of course, you aren't going to get a 7.2% yield without some risk so maybe the things I don't like are all in the price and I'm being harsh. Not for me at the current share price but my risk appetite is lower than most on advfn.

[boystown] 05/8/2021 13:19

CWA1 / CC2014, I have a few of these (Axiom) and have BIPS on the watchlist, hoping for a bit of a pullback on market sentiment. Do you have any views on RM Infrastructure Income RMII at the current price(I see that you hold some from the thread CWA1)?

There's a small NAV discount (c.6%) and an excellent yield (7.2%). They invest in "accommodation, healthcare and education combined with environmental services such as energy efficiency, clean energy and waste management",
see: hxxps://rm-funds.co.uk/rm-infrastructure-income/

Obviously, I'm attracted by the yield, but they seem to have a lot of "cylinders" to keep firing via their p/f, so weakness in one area could / should be offset by strength in another?

[cwa1] 05/8/2021 10:54

Strangely enough I took a few BIPS at 185.6p recently, so very similar to yourself. Hopefully decent medium term value there

[cc2014] 05/8/2021 10:25

MM's seem to be running out of stock. 95.5p to buy now and they are accepting orders for significant size to sell.

Just took a few BIPS at 185.9. Bizarre run of trades there at 10:20

[cwa1] 05/8/2021 09:04

Yes, there seems no discount to the buying price of yesterday, even after going XD. Suits me fine as I have all I want now. Pay day 27/8, so nice and quick payment of the dividend as well

[cc2014] 05/8/2021 08:57

XD today for 1.5p but not all the MM's seem to have noticed, so that's the spread covered on my recent purchases.

[cc2014] 03/8/2021 10:04

It appears no "cheap" stock availalble this morning at 92.8 and buy price is now 94.74.

Not before time - it's taken an age to shift the price and fingers crossed it's not just the MM playing games with the price drifting back down as the day goes by.

It's XD this week so it would be nice if it doesn't fall back the whole 1.5p dividend.

[hindsight] 23/7/2021 17:04

Brought a few, the discount in effect covers the fees
Just have to hope the central bankers continue to come to the rescue in any future crisis

[cwa1] 23/7/2021 14:24

Just taken a small slice of AXI at 92.48p, thanks for flagging it up here and elsewhere CC2014. The Edison note was worth a look IMO. Naturally the purchase is completely on my own recognisance :-)

Slightly concerned about how big an "overhang" there may be as you can buy as many as you want at below mid and sell very few...but it looks like decent value and I can wait.

Got plenty of cash left over to have a few more if the share price drifts back bit

Good fortune

[cc2014] 23/7/2021 09:34

I have been adding here. Current buy price 92.5p. NAV 103.5. 10.6% discount to NAV.

From the pattern of trades, perhaps people more expert than me can comment but it looks their is one seller who is settling up with the MM at the end of the day with a trade after the market has closed.

It's been going on all month and it seems like they are prepared to sell for around 92.3p with buyers typically paying 0.2p higher.

By volume 99.9% of trades are buys apart from the one seller.

I assume eventually the seller will finish and then we will drift back to the year high


It's interesting because it looks to me like there's been a decent sized seller on HDIV and BIPS too, but not NCYF and SMIF. Perhaps NCYF's got soaked up easier due to it's large market cap. I think the seller is about done on HDIV. The fund bought back 1m shares itself on HDIV so that probably put a dent in it. BIPS I cannot read but it's kind of floating at a natural discount to NAV anyway.

[cc2014] 07/7/2021 09:21

A useful article.

[yieldsearch] 24/6/2020 13:29

David Stevenson

[tomps2] 28/6/2019 11:29

AXI presentation at Mello Trusts & Funds

5 mins abridged version

Good overview of subordinated debt and what's happened to the banks since 2008.

[davebowler] 09/10/2017 14:50

Liberum;
Axiom European Financial Debt (Mkt Cap £60m)
11.6% NAV return to date in 2017

Event
Axiom European Financial Debt's NAV at 30 September 2017 was 101.6p which represents a NAV total return of 1.8% in the month. NAV TR in 2017 to date is 11.6%.

Subordinated financials continued to strengthen in September as newsflow was broadly positive across the sector. Several banks are making progress with NPL strategies and a number of banks raised equity helping to improve coverage ratios. Rating agencies have also upgraded bank issuers on the back of these improvements.

The fund's performance in September benefited from calls announced on two bonds and sold its position after the price moved above 100. Ahead of the Catalonia referendum, Axiom switched its exposure to Spanish domestic banks like Bankia AT1s. The fund has also increased its exposure to Provident Financial seniors and invested selectively across discounted bonds issued by French and Austrian banks. In the mid-cap origination strategy, the fund has reduced exposure to holdings that have performed well since investment.

Liberum view
Axiom has generated a NAV return of +14.0% over the past 12 months and this has been achieved despite a 3.5-4.0% impact from the Banco Popular resolution. The outlook for the banking sector continues to improve with strengthening capital ratios and reducing NPLs and provisions. Axiom trades on a 3.5% discount to NAV and the shares offer a 6.1% dividend yield.

[davebowler] 14/8/2017 10:43

Fund name: Axiom European Financial Debt Fund Limited
NAV Date: 4 August 2017
NAV: 101.07 pence

[davebowler] 11/8/2017 10:15

Liberum;
Interims highlight strong performance in 2017

Event
Axiom European Financial Debt's interim report for the six months to 30 June 2017 has highlighted a NAV return of 7.2% in H1 2017. NAV per share has risen a further 2.2% to 101.1p in the period to 4 August 2017 giving a NAV return of 9.5% to date in 2017.

Performance in the period has been aided by improved profitability in the banking sector, political risk reduction following the French election result and the resolution of issues with some of the riskier banks in Europe. Several legacy instruments have been called in 2017 and the manager expects this trend to continue. The market has also been supportive for new issues and further attractive opportunities are expected over the medium term.

Liberum view
Axiom's NAV performance over the past 12 months is +13.0% and this has been achieved despite a 3.5-4.0% impact from the Banco Popular resolution. Outlook and sentiment remain positive for the banking sector as evidenced by recent rating upgrades for several institutions, successful IPOs and progress with bad loan disposals in Italy. Axiom trades on a 4.6% discount to NAV and the shares offer a 6.3% dividend yield.

[davebowler] 09/8/2017 10:33

Liberum;
Axiom European Financial Debt (Mkt Cap £58m)
1.9% return in July

Event
Axiom European Financial Debt's NAV rose 1.9% in July to 100.7p per share. NAV total return in 2017 to date is 9.1%.

NAV performance in the month benefited from tightening credit spreads as evidenced by the Itraxx Senior Financial Index spread of 50 bps compared to 52 bps for the Itraxx Main Index. A range of factors influenced market performance including the resolution of the Venetian banks, the approval of the Monte dei Paschi recapitalisation and the continued postponement of Basel IV on RWA floors.

Earnings season has been broadly positive for the banking sector. Macro data has been relatively strong to date in 2017 and asset quality is improving. High beta instruments (particularly AT1s) benefited most during the month.

The fund's exposure to the restructuring strategy has reduced to 10% (16% in June) due to the sale of its positions in Monte dei Paschi following recapitalisation and a reduction in its exposure to Vicenxa. Axiom trades on a 4.3% discount to NAV (ex-dividend) and the shares offer a 6.3% dividend yield.

Private Equity

[davebowler] 09/5/2017 12:43

Liberum;
Axiom European Financial Debt (Mkt Cap £62m)
New placing programme

Event
Axiom European Financial Debt published a prospectus yesterday related to the creation of a new placing programme which will allow the company to issue up to 500 million new shares over the period to 7 May 2018.

We also note the company reported a NAV of 100.8p as at 2 May 2017 which represents an increase of 0.73% in the first two business days in May. NAV total return in 2017 to date is 7.6% and the return over the period since the credit market sell-off in Q1 2016 is 21.2%.

[davebowler] 10/4/2017 10:35

Liberum;




Specialist Finance

Axiom European Financial Debt (Mkt Cap £55m)
4.8% NAV TR in Q1 2017

Event
Axiom European Financial Debt's NAV grew 1.1% over March and the NAV return in Q1 was +4.8%. This positive return continues the strong performance in the second half of 2016.

Credit markets experienced another strong month, reflected in a number of positive developments- Deutsche Bank raised €8bn, while the (reduced) precautionary recapitalisation for Monte dei Paschi was approved and the UK's Co-op bank launched a sale process. March was an active month for primary issuance with c.$20bn of senior holding companies were launched, nine T2s, five AT1s, including the first Portuguese, and the first restricted T1 issued by an insurer.

The fund benefited from a number of calls in February and this is expected to continue as Axiom holds two RBS T1s and the Bank of Ireland T1 that are approaching their call. Through March the fund deployed c.£1.6m of cash, taking cash down to 2% of NAV (February: 4.6% of NAV). The fund participated in a new Santander UK AT1 issue and bought some Spanish tier 2's for the liquid relative value strategy. In the less liquid relative value bucket the fund increased its holding of fixed-to-fixed perpetuals and bought legacy tier 1's by smaller UK issuers. In the restructuring bucket the fund is no longer exposed to Co-Operative Bank, but retains exposure to Monte Paschi (1.9%), Popular (3.4%) and Novo Banco (0.5%). Axiom also participated in the new Caixa Geral AT1 issue.

Liberum view
Axiom has performed strongly since the credit market sell-off in Q1 2016 (+13.5% NAV return over 12 months). The outlook for 2017 remains positive as regulators have provided greater clarity on the mechanics of capital buffers. AT1 instruments have benefited from stronger capital ratios and bank profitability. Ongoing redemption of legacy instruments is likely to continue as their contribution to regulatory capital declines. The fund currently trades at 2.4% premium to NAV.

Specialist Equity

[davebowler] 20/3/2017 11:13

Liberum;

Specialist Finance

Axiom European Financial Debt (Mkt Cap £59m)
16% 12-month NAV TR

Event
Axiom's annual report for 2016 has highlighted a NAV total return of 2.9% over the year. NAV performance was much stronger in the second half of the year and this has continued into 2017 with a NAV return in 2017 to date of 4.7%.

Shortly after listing in November 2015, market volatility led to significant markdowns across the portfolio in January and February 2016. The Additional Tier 1 (AT1) market suffered most during this period which fell to an all-time low on 11 February. The manager kept the weighting to AT1s high in Q2 2016 to benefit from the market rebound in this segment before reducing the allocation in line with the target portfolio. The company's NAV has recovered strongly since February 2016 with a NAV return of 16.3% over the next 12 months.

Investments in liquid relative value assets comprise 31% of NAV followed by less liquid relative value (24%), special situations (18%), restructuring (11%) and midcap origination (4.7%).


Liberum view
Axiom has performed strongly since the credit market sell-off in Q1 2016. The outlook for 2017 remains positive as regulators have provided greater clarity on the mechanics of capital buffers. Capital ratios and profitability of banks have also continued to improve steadily giving greater confidence on the payment of coupons on AT1s. Legacy instruments are also likely to benefit from ongoing redemptions as their contribution to regulatory capital declines. The shares currently trade on a 1.6% discount to NAV and offer a prospective 6.7% dividend yield.

[davebowler] 09/2/2017 10:26

Liberum;
Axiom European Financial Debt (Mkt Cap £56m)
January performance maintains strong run

Event
Axiom European Financial Debt's NAV rose 2.67% in January to 97.75p per share (December: 95.21p per share). We calculate a NAV return of 9.7% since 30 June 2016.

The portfolio benefited from the rebound of the banking sector in January as regulatory forbearance has lowered near-term capital requirements and strong Q4 earnings season for the banks. The primary market was active with new issuance across a number of instruments including Additional Tier 1s, Tier 2s and Tier 3s. A number of legacy Tier 1s were called-up at the first call date.

The fund's cash weighting declined from 11% to 1% during the month as new investments were made across various new issues (Intesa, StanChart and Rabobank) and French AT1s. The fund sold its position in Monte dei Paschi seniors at 98.25 (3.7% above December acquisition price) and acquired Deutsche Bank AT1s as the litigation issue was resolved.

Liberum view
Axiom's NAV performance has improved significantly with the 10% return since June 2016 c.4 percentage points ahead of the Merrill Lynch Financials High Yield Index over the same period. The outlook for 2017 remains positive as banks' balance sheets and capital ratios have continued to improve and credit spreads are tightening. Axiom currently trades on a 3.7% discount to NAV and the shares offer a 6.5% prospective dividend yield.