Carador Eur Share Discussion Threads

[dendria] 20/6/2012 18:31

I think we're fully invested after this placing.

[jonwig] 20/6/2012 14:28

dendria - yes, unfortunately the news feed is for 'CIF' (RIP?).
However, I have a cunning plan!

I had the impression they had finished with big new issues - clearly not; but dilution isn't a problem the way they structure them.

Next divi announcement in about four weeks.

[dendria] 20/6/2012 12:53

Today's RNS (Wed 20/06/12) confirms new C Shares to take further advantage of the CLO market.

'...the Directors have determined to issue new C shares of up to approximately $125 million, through a placing which is expected to close towards the end of July 2012.'

I assume we don't get the RNS in the heading anymore as we stayed with CIF (as opposed to CIFU)?

[jonwig] 26/5/2012 12:49

The C shares have converted to USD shares, and the € ones will do, giving a total of 419.1m shares at the end of May.

Given that the C shares got a lower dividend (1.0c) than the ords (3.3c) is there a chance that the divi won't be held next time?

Net income in the last three full quarters was ($m) 17.5, 24.6, 30.1 and for April was 27% up on the corresponding month (Jan) in Q1.
So let's say a zero rise for the quarter, giving $30m divided between 419m shares gives us 7c/sh. About a third of that is diverted to capital, so we should still get at least a maintained divi for Q2....

... if, that is, the first month of the quarter produces the lowest income, the third the highest which seems to be the pattern.

If the increase in net income goes pro rata we could be looking at 4p or more, but I'd rather not think about that!

[solarno lopez] 26/5/2012 10:33

Agreed keep the old thread going with the smaller chart

[dendria] 26/5/2012 10:08

Hi jonwig - I was just going to ask what you were going to do post-May but you beat me to it. I would be happy to keep this thread with the smaller CIFU charts.

[jonwig] 26/5/2012 09:11

CIF won't exist after 29 May, it will be CIFU alone, following the compulsory conversion.

I can start a new thread, or stick with this one, simply removing the old CIF chart and living with the smaller CIFU charts.
I'd prefer the latter, as it makes it easier to refer back through the posts for anyone who wants to.

[jonwig] 12/5/2012 07:11

I'd forgotten (or never knew) that David Stevenson had covered Carador in the FT last July:



He makes the very valid point that the CLOs are floating-rate and an increase in rates will increase the fund's income.

But he doesn't qualify that with 'up to a point' ... so long as companies' aren't overstretched and can't pay!

[rat attack] 09/5/2012 10:59

jonwig - appreciate what you are saying. By my back of the hand calculations I make the yield to redemption 14.3% given premium price to existing NAV. This would give price of $1.23 @ yield of 10%. Still a possible healthy re-rate!

[jonwig] 09/5/2012 08:38

rat attack - yes, that's the running yield you quote. I'm working out the yield to redemption which includes the capital gain/loss. (I'm also making some conservative - I hope - assumptions on the NAV in 2019. Actually it won't wind up in one go, I think the schedule is between 2017 and 2021.)

solarno - from p72 of the 2010 prospectus:

UK resident individual Shareholders will be liable to income tax on any dividends received from the Company. Such Shareholders should be entitled to claim a non-repayable dividend tax credit equal to one ninth of the amount of the dividend received. Shareholders who are bodies corporate resident in the United Kingdom for tax purposes may be able to rely on legislation introduced by the Finance Act 2009 with effect from 1 July 2009, which exempts certain classes of dividends from UK corporation tax. The UK income tax charge in respect of dividends for United Kingdom resident individual Shareholders who
are liable to UK income tax, other than higher and additional rate taxpayers, will be at the dividend ordinary rate of 10 per cent. A higher rate taxpayer will be liable to ... [more]

So you shouldn't have any additional tax to pay at basic rate.

[solarno lopez] 09/5/2012 08:19

Aplogies guys as I have just been alerted to this stock which appears to be worth a second look.

Once the dividend is received into the uk is there any tax deductions i.e we would receive a dividend of 13.2c but what would we actually recieve in our hands in sterling terms ?

I think I am asking is the yield of 15% a gross or net dividend when we receieve it

[rat attack] 09/5/2012 08:15

jonwig - incidentally with a quarterly div of 3.3c, therefore an annual div of 13.2c, a 10% yield would give a share price of $1.32!!

Incidentally I bought my first tranche yesterday!! Maybe its the $ denomination that puts people off - certainly found TD exchange rate suspect, and of course will be same with ongoing div payments and this, together with fx risk could play havoc with underlying sterling value! So can understand why not too popular! Also CLO structure is not best understood!

[jonwig] 09/5/2012 07:47

Edison are doing a good job of presenting the company to investors (for which they charge!) but it doesn't seem to be having much impact on the share price.

We're told the portfolio of CLOs is getting less risky , which I believe, so a yield to redemption of around 15% or more seems a massive undervaluation.

What would be a fair valuation? 10%? That suggests a share price of at least $1.13. (Assuming static NAV and divi, and wind-up in 2019.)

[dendria] 08/5/2012 18:34

Updated research note out today from Edison:

[dendria] 30/4/2012 19:28

Thanks jonwig - I'm reassured.

[jonwig] 30/4/2012 17:42

dendria - the C-shares route is pretty well established with a lot of funds. The idea is that conversion won't be 1:1, but will depend on the respective asset values.
So no dilution.

[dendria] 30/4/2012 17:23

jonwig

A $175M placing would be a near 50% expansion - presumably the price of the new C shares will be based on the NAV of the existing shares at the time and they will convert over once invested – there is no dilution issue?

[dendria] 30/4/2012 12:06

From Carador website - news:

Liberum Capital, 25 April 2012, "Carador Income Fund plc - March portfolio update, NAV per share of $0.8608",
"Liberum View: The decline in the weighted average annualised cash on cash distributions from the income notes as percentage of the latest valuation to 37.8% (Feb'12: 38.6%) is attributable to a slight increase in the valuation of the income note portfolio. Cash receipts during the quarter covered net income 1.51x, which provides some comfort over the sustainability of the current dividend. Carador continues to actively manage its portfolio and in our view the disposal of its remaining EUR exposure is positive. This leaves the fund entirely focused on US Corporate Credit, where the market is significantly deeper and more liquid, CLO investor sentiment is more positive and underlying issuers are currently benefiting from a more encouraging economic outlook. That these investments were disposed of at a 5% premium to their previous carrying value is an incremental positive and helps to validate the portfolio's valuation. The portfolio remains diversified across 1,654 issuers (the largest of which accounts for only 1% of NAV) and the floating rate CLO debt (which accounts for 38% of the portfolio) provides LIBOR linked income. Year to date the shares are up 11% and have returned 19.4% (including the re-investment of dividends). CIFU now trades at a 5.5% premium to NAV, which in our view is reflective of the 14.5% forward dividend yield and transparency of the company's disclosure."

[jonwig] 27/4/2012 07:12

Annual Report:



Further placing (maybe up to $175m) due June - but whether there'll be an open offer to existing holders, I doubt.

[dendria] 24/4/2012 19:25

I'll be more than happy with a dividend similar to the last couple of quarters.

[jonwig] 24/4/2012 17:44

Net income up nearly 30% in the quarter - outstandingly good, but I don't expect the dividend to be increased in the same proportion.

[dendria] 24/4/2012 17:01

RNS Number : 9009B
24 April 2012
Net Asset Value on 30 March 2012:

Share class NAV Monthly
performance
------------ ---------- ------------
USD Shares USD 0.8608 +2.02%
------------ ---------- ------------
EUR Shares EUR 0.6564 +1.98%
------------ ---------- ------------

[dendria] 18/4/2012 18:29

It took until today to receive mine with IWeb - but good things come to those who wait...

[jonwig] 18/4/2012 10:00

dendria - it was paid on 26/03 - they issued a correction. I got mine not long after (broker TD Direct).