Carador Income Share Discussion Threads

[badtime] 02/12/2013 11:46

Not happy share price recently

[rat attack] 22/11/2013 19:31

Risk is increasing as move down the capital structure on existing, but conversely income will improve on existing CLOs. Also depends on pricing of new CLOs, which I believe to be below that of redemptions so increased risk and decreased income on like for like basis. Lets see what comes out of the wash at next update or two, should be further clarity. Getting hit on fx at present with £ @ 1.62!! That could change of course as QE comes off, although no short term increase in interest rates anticipated in US yet

[dendria] 22/11/2013 18:35

A sustainable $10c pa dividend paid quarterly with stable NAV would be good news to me. I still see this as relatively low risk (given default rates) and non-volatile but USD/GBP exchange needs to be taken into account.

[joan of arc] 22/11/2013 17:26

So is that good or bad news going forward?

[dendria] 22/11/2013 16:45

Latest analyst comments just out on CIFU website (Oct 13 Report too):

N+1 Singer, 21 November 2013, "Carador Income Fund - Restructuring Gathers Pace"
With 9 transactions in the month the anticipated restructuring of the portfolio is now well underway. With one redemption and 6 sales a total (by value) of US$26.8m pre crisis and US$20.9m post crisis Mezz was realised at an average of over 98% of par. One new and one add on equity positions were purchased for a combined US$21.2m and will supplement cashflows from Q1 2014. Following the receipt of US$9.5m of cashflows net of costs and the payment of US$18.5m of dividends then the cash holding rose US$17.3m to US$19.6m leaving scope for further activity.


Dexion Capital, 21 November 2013, "Carador Income - October 2013 NAV"
Carador's monthly performance has continued to normalise after the volatility seen for most of the year. However, the 0.51% return is still lower than the anticipated long-term run-rate of returns, including the dividend target of 10% per annum.


Liberum Capital, 21 November 2013, "Carador Income Fund - October NAV total return +0.5%"
Carador's total return YTD of 2.66% has underperformed the wider market due to the reasoning we have highlighted in previous commentary where CLO income notes saw a valuation correction in H1 2013. The company expects a significant increase in the number of calls of pre-financial crisis CLO's, as the AAA tranches become substantially amortised (more than 50% amortisation). Should this occur, we expect CIFU to recycle the capital into new primary CLO's, where levels of issuance ($73bn in the US YTD Vs $44bn for the whole of 2012) are materially ahead of the prior year.

[dendria] 04/11/2013 15:33

It's just come in (IWeb).

[jonwig] 04/11/2013 14:15

TD has paid on 01/11, checked over weekend.

Payments in foreign currency typically take a few days longer ... I've a USD holding where it takes two weeks.

[wirralowl] 04/11/2013 13:46

idealing paid out promptly again on 1/11.

[the monkster] 04/11/2013 13:13

pay date was 31 oct !!!! - who are you guys with????. whoever it is is not doing a proper job !!!!

[dendria] 04/11/2013 13:08

Not yet (IWeb).

[bodlan] 04/11/2013 12:30

Anyone got their dividend yet?

[atholl91] 04/11/2013 12:22

Thanks RA will keep an eye on this.

[rat attack] 01/11/2013 14:19

If anyone is interested in aircraft leasing DNA3 may be of interest. Just received a small maiden dividend this week, which should ramp up to 7.5% in due course. Company leases A380 to Emirates. DYOR as always!!

[dendria] 29/10/2013 07:23

Thanks Pejaten - I had the withholding tax position confirmed by Volta last week & bought a small amount.

[pejaten] 29/10/2013 00:57

I hold Volta, as well as Carador. Dividend is indeed paid twice a year but not that the yield stated by Liberum is incorrect as they have just cut dividend guidance. Dividend this year is 10% of current market price, not clear about next year. Guernsey registered company and I have never suffered any withholding tax.

[dendria] 22/10/2013 08:25

Does anyone hold Volta Finance and what is the withholding tax position? (Volta Finance is incorporated in Guernsey and listed on Eurolist by Euronext Amsterdam). Good yield but looks like only half-yearly distributions.

[dendria] 22/10/2013 08:05

A couple of analyst updates from the CIFU website:

N+1 Singer, 21 October 2013, "September NAV and Q3 Cashflows - Corporate"

The September NAV rose 0.3% to US$0.9636 in the month driven by the valuation of Mezz positions with equity (including cashflows received) flat. Distributable cashflows for Q3 were in line with expectations at US$3.16¢ per share. The Q3 dividend of US$3.40¢ has already been announced with the shares ex on 25 October. The slight shortfall is made up from the Q1 underpayment. One sale and one redemption of two post crisis Mezz positions have delivered IRRs of 21.3% and 27.5% - double or more the anticipated returns at the time of purchase - indicating the potential returns a pre-eminent manager can achieve.


Liberum Capital, 21 October 2013, "CIFU - September NAV +0.3%"

The recent realignment of the dividend is sensible given management's decision to focus on primary CLO investments going forward (with an expected IRR on primary CLO equity positions of 12%-14%). This should lead to stable quarterly distributions from 2014 onwards as the existing portfolio's ability to maintain the level of distributions seen in 2012 & H1 2013 is diminishing as CLOs pass their reinvestment period. CIFU trades on a 3.3% premium to NAV and the shares offer a 10.1% prospective dividend yield. We continue to like the shares on the basis of the manager's strong track record and positive fundamentals for the asset class but prefer peer Volta Finance on valuation grounds (11.2% dividend yield, 10.5% discount to NAV) and our expectations that recent near term NAV outperformance will be maintained in the short term.

[dendria] 21/10/2013 08:02

Sept NAV $0.9636 (+0.29%) but net income down to $0.0316 (-5.39%).

[ibarty] 08/10/2013 13:28

I guess this announcement is to bring clarity before the additional equity issue touched on in the announcement.. I like the new strategy, at least we know where we stand.

[danieldruff2] 08/10/2013 08:59

Yes I thought 2.5c a quarter was inevitable though I anticipated it would be slowly wound down to that level rather than a quick chop. Still it improves the chances of a little NAV appreciation. At least it is now clear what this is going to look like going forward.

[jonwig] 08/10/2013 08:54

I'm relaxed about an annual 10c dividend, which ought to be quite sustainable.

Spreads have narrowed so much that new investments are made on a lot lower yield basis.

[dendria] 08/10/2013 07:53

Div declared 3.4c USD (1 July 2013 to 30 September 2013).
Ex-dividend date will be 23 October 2013; payable on 31 October 2013.

More importantly the annual div target from Jan 2014 will be around 10c USD (ie 2.5c USD quarterly). Equates to a prospective dividend yield of about 10.20%.

[danieldruff2] 02/10/2013 08:42

Their August monthly report is out as well, on the website.

[dendria] 02/10/2013 07:50

A couple of research items from CIFU website just out - both play on stability:


Liberum Capital, 20 September 2013, "CIFU - Stable Portfolio Prices"
As we have previously highlighted, the prospective 13.8% dividend yield remains attractive and higher than peers Volta Finance (11.0%) and GLI Finance (9.4%), although we expect this to come down over the medium term as primary CLO investments will not provide the same level of IRR as the existing equity investments in the portfolio have done in recent years.


Dexion Capital, 20 September 2013, "Carador Income - August 2013 NAV"
The summer continued to be quiet for returns for Carador, with the monthly return of 0.11% following July's monthly return of -0.03%. However, we would expect performance to improve going into the year-end now that the market appears to have fully stabilised. With a fully invested portfolio, potentially significantly higher returns and a listed track record, the circa 2% premium on the ordinary shares looks attractive relative to listed credit investment company peers.

[jonwig] 30/9/2013 08:34

FT: "CLO issuance hits highest level since before financial crisis"



Spreads on notes will be reducing, and so - eventually - will CIFU's income. Whether enough to set dividends below 3c/quarter I don't know.