Carador Income Share Discussion Threads

[skyship] 23/5/2015 17:47

dendria - thnx for adding the stats to my more simplistic post...

[dendria] 23/5/2015 15:19

NAV performance over 5 years is 200%+. The only issue over the last 2-3 years has been the transition from CLO 1.0 to 2.0 - I think this is being managed very well. Obviously £/$ has to be taken into account. CIFU is my largest holding and having been in from nearly the beginning, I'll be in for free in around 12 months time (by a rough calculation). A sustainable double digit yield mostly now invested in CLO 2.0 - what more could you ask?!

[skyship] 23/5/2015 14:09

Sorry Joan, but your comment really doesn't make much sense.

Agreed, CIFU has been a poor performer for the past couple of years.

However, surely the past share price performance was a direct reflection of poor asset returns. If that performance is now on the mend, then the share price will undoubtedly reflect the repositioning of their portfolio and the anticipated returns that seem ready to flow.

Time to increase allocation here methinks...

[joan of arc] 23/5/2015 12:40

The reason why this won't get rerated in a hurry is because the share price and NAV have just been going down in line with the dividend payment for the last couple of years. So during that time my net return has been practically zilch. All in all this has been a pretty lousy investment.

[dendria] 22/5/2015 12:18

Analyst comment on Apr 15 NAV:

Liberum Capital, 22 May 2015, “2.1% April 2015 NAV TR”

The recent uptick in CIFU's performance could lead to a slight re-rating (CIFU trades on a marginal 1.4% discount to NAV) but NAV returns will require a sustained period of improved performance in order to lead to a re-rating in line with London-listed peers (average 3.8% premium to NAV) in our view. The shares are beginning to look more attractive with a headline dividend yield of 11.5% (mainly due to a higher payout ratio as a % of NAV than peers).

Dexion Capital, 22 May 2015, “Carador Income – April 2015 NAV”

The NAV as at 30 April 2015 was $0.8823 per share, up 2.07% in April and up 3.78% year-to-date. The S&P/LSTA Leveraged Loan Index gained 0.92% during the month and up 3.06% year-to-date, the strongest gain for the period since 2012. In Europe, the S&P ELLI was up 0.82% and up 2.95% year-to-date.

[dendria] 22/5/2015 07:47

Apr 15 NAV = $0.8823 (-0.74% change; +2.07% monthly performance).

[skyship] 22/5/2015 07:45

22 May 2015
NAV at 0.8823 v. 0.8889; so nearly made good that recent dividend:
==================================================================


Net Asset Value

As at the close of business on 30 April 2015, the unaudited net asset value per US Dollar Share of Carador Income Fund plc ("Carador") was as follows:

Share class NAV Change in Monthly Monthly performance
NAV
US Dollar Shares USD 0.8823 -0.74% +2.07%


Dividends were declared on 23 April 2015 of USD 0.0250 per US Dollar Share in respect of the period from 1 January 2015 to 31 March 2015 and were paid on 6 May 2015.

[davebowler] 18/5/2015 10:14

Liberum;


Volta Finance (BUY, TP €7.65)
ABS gains drive NAV uplift

Event
Volta's NAV at 30 April 2015 was €8.13 per share which represents a NAV total return of 1.7% in the month after adjusting for dividends paid.

NAV performance was driven by stronger credit markets as well as the gain from selling two non-conforming residual positions. The portfolio performance breakdown per asset class was CLO equity +2.8%, CLO debt +1.7%, Cash corporate credit -0.1%, synthetic corporate credit +0.5% and ABS +27.2%. The assumptions used to value the remaining UK non-conforming residual positions have been amended to reflect the valuation uplift achieved on realisation. These assets account for 4.8% of GAV and are the only assets in the portfolio that are valued on a mark to model basis.

Three assets were acquired in the month for a total of €12.0m. The acquisitions included the B and the BB tranche of a recently issued USD CLO and the equity tranche of a European CLO. The sale of the non-conforming residual positions generated €12.2m and two USD CLO equity tranches were called which produced a further €1.9m.

The new investment policy was approved by shareholders at an EGM on 6th May 2015 and Volta is able to proceed with the Main Market listing. Admission is expected on 29 May 2015.

Liberum view
Volta'a NAV performance in the month was achieved despite FX headwinds (USD depreciated by 4.4% against the Euro in the month) and we calculate the NAV return in local currency was c3.5% in the month. NAV total return for the first four months of 2015 is +10%.

The non-conforming residual positions are from UK mortgage ABS transactions. During 2009 and 2010, the residual positions stopped paying cash flows due to the build-up of arrears on the underlying loans. Since then, the investments have been highly cash-generative with payments received in the six months to January 2015 representing just over 20% of the July 2014 valuation.

Volta trades on a 14% discount to NAV compared to an average 3% premium for peers. This discount to peers is unwarranted in our view given Volta's impressive track record and we expect the listing on the Main Market of the LSE (due to occur on 29 May 2015) to act as a catalyst for a share re-rating.

[davebowler] 07/5/2015 09:50

Liberum;
Volta Finance (BUY, TP €7.65)
Investment policy changes approved

Event
At yesterday's EGM, the resolution to amend the company's investment policy was passed by shareholders. Changes to the investment policy were required in order to comply with the eligibility criteria for listing on the official list of the UKLA. The approved changes remove the board's discretion on investment limits in different asset classes and individual assets.

Liberum view
The listing of VTA's shares is now expected to take place before the end of the month. We believe this will act as a catalyst for an improvement in the share rating given the discount VTA trades at in comparison to London listed peers. VTA's 11.1% discount to NAV is 14 percentage points wider than the peer group average (3% premium).

[flying pig] 01/5/2015 20:10

Tetragon also doing well at big discount to NAV. (see website)
Sensible yield and probable UK listing. Some upside with dividend income.

[deadly] 30/4/2015 14:09

Results and XD today:

"The Company has delivered a 2014 total NAV return to shareholders of 6.3%. Some highlights include:

• Declared dividend income of US$0.10 per share equivalent to a historic dividend yield of 11.2% based on the 31 December 2014 share price1;

• Strong relative performance, outperforming the Credit Suisse Leveraged Loan Index by 4.2% and the Credit Suisse High Yield Bond Index by 4.4%;

• A very active year of portfolio investment with over US$317 million invested in new opportunities and US$222 million sold as the portfolio transitioned out of lower yielding pre-financial crisis CLOs3;

[dendria] 23/4/2015 18:42

Analyst comment on Mar 15 NAV:

Liberum Capital, 23 April 2015, "NAV progression in March"
CIFU trades on a marginal 1.3% discount to NAV as the share rating has slipped slightly following a period of muted returns. NAV returns have improved in recent months in combination with stronger credit markets and the performance should also benefit from a higher weighting to CLO 2.0 positions.

Dexion Capital, 23 April 2015, "Carador Income - March 2015 NAV"
The NAV as at 31 March 2015 was $0.8889 per share, up 0.97% in March and up 1.68% year-to-date. The S&P/LSTA Leveraged Loan Index gained 0.37% during the month, and in Europe the market was also well-supported, with the S&P ELLI up 0.82%.

[dendria] 23/4/2015 07:15

Mar 15 NAV = $0.8889 (+0.97% change; +0.97% monthly performance).

$2.5c dividend payable 6 May 2015 (ex-div 30 Apr 2015).

[davebowler] 08/4/2015 13:48

VTA now xd has shrugged off the post dividend drop very quickly and is back to its level before the dividend was paid.

[dendria] 28/3/2015 10:38

VTA - the latest dividend has been announced: €0.31 ex-div 1 Apr 15, paid 7 Apr 15. This gives an annual yield of around 8.5% based on €7.30 offer price. VTA pays semi-annual dividends. I would prefer quarterly payments but can't quibble.

[joan of arc] 26/3/2015 15:05

Thanks Dendria. What divi are you expecting from them?

[dendria] 26/3/2015 12:20

Currently you can buy VTA on the Amsderdam exchange. The discount has already narrowed considerably since Jan/Feb 15. If the discount continues to narrow there won't be much of a discount by the time of the LSE listing. I topped up late last year in advance of the LSE listing but I didn't expect the discount to close so quickly.

[joan of arc] 26/3/2015 10:41

So how does one buy them ahead of the listing?

[davebowler] 26/3/2015 09:46

Liberum here contrasts CIFU in graph form (not shown) with Volta;
Volta Finance (BUY, TP €7.65)
YTD NAV rise of 5%

Event
Volta's GAV at Feb-15 was €8.05 per share reflecting an increase of 1.3% in the month (Jan-15: €7.95 restated - previously estimated at €7.92). NAV total return in 2015 to date is +5.0%.

The positive performance was driven by stronger credit markets and further appreciation of the USD against Euro (USD exposure was 43.5% at the end of Jan-15). The portfolio performance breakdown per asset class was CLO equity +4.0%, CLO debt +1.9%, Cash corporate credit -0.3%, synthetic corporate credit +1.4% and ABS +0.3%.

No assets were sold in the month and Volta invested €4.7m in two CLO tranches (B and equity tranche of a new USD CLO). The combined return on these investments is expected to be c10% pa.

As previously announced, Volta has entered into a repurchase agreement with Societe Generale. The facility size is $30m and the proceeds will mainly be used to purchase CLO debt tranches. In future, Volta will produce monthly NAV estimates as the fund is now using leverage.

Liberum view
Volta's impressive GAV performance continues with an uplift of 5.0% in 2015 to date. We estimate the FX gains added 0.35% of the 1.3% increase in the month. The new repo facility will be used to leverage the most stable assets in the portfolio which should help to increase the net return to shareholders.



The expected listing on the London Stock Exchange has been reiterated for May 2015 and we expect the share rating to improve as the date approaches. Volta trades on an average 11% discount to NAV compared to an average 3% premium for peers. Our €7.65 TP implies 15% total shareholder return with upside from NAV performance in excess of our estimates.

[wirralowl] 20/3/2015 12:42

Thanks dendria, good to see both brokers sounding pretty positive on the prospects for CIFU going forward now.

[dendria] 20/3/2015 12:12

Analyst comment on Feb 15 NAV:

N+1 Singer, 20 March 2015, “Loan market fundamental improve”

Retail investors have been a major factor in the US leverage loan market since 2012 with massive inflows initially driving the market higher. 2014 saw steady outflows with February 2015 being the first neutral flow of funds month seen since the recovery began. This allowed loan pricing to improve with the S&P/LSTA Index returning 1.41% in the month. This fed through into CLO 1.0 valuations in particular as the final expected liquidation value of the portfolios improved. Hence the NAV rose 0.94% in the month to US$88.04¢.

Liberum Capital, 20 March 2015, “Positive performance in February”

CIFU trades on a marginal 0.6% discount to NAV and the headline dividend yield of 11.4% appears attractive. Overall NAV TR over the past 2 years has however not matched expectations ( 6.0% in 2014 and 3.8% in 2013 assuming no reinvestment of dividends) given the composition of the portfolio. Returns should improve going forward with a high weighting to CLO 2.0 positions.

Dexion Capital, 20 March 2015, “Carador Income – February 2015 NAV”

The NAV as at 27 February 2015 was $0.8804 per share, up 0.94% in February and up 0.70% year-to-date (total return). The S&P/LSTA Leveraged Loan Index gained 1.41% during the month, the best performance since January 2012. The European market was also well-supported, with the S&P ELLI up 1.22%.

[dendria] 20/3/2015 07:47

Feb 15 NAV = $0.8804 (+0.94% change; +0.94% monthly performance).

Currently 1 GBP = 1.476 USD.

[dendria] 20/2/2015 19:01

The other analyst comments on Jan 15 NAV:

N+1 Singer, 20 February 2015, “Amortisation policy amended”
The latest monthly update continued the trends seen over the last few months – stable NAV with growing cashflows as the portfolio transition continues to bed down. QoQ January gross income note cashflows were up 50% as eight positions made their first contribution. The fund has amended its amortisation policy by significantly shorting the assumed life of the CLO. This has approximately doubled underlying amortisation leaving net income note cashflows up 27%. Distributable income per share was up 28% to US$2.59¢ meaning that the quarterly dividend is already covered. The change in amortisation policy does not affect total return expectations merely transferring return from declared income to capital.


Dexion Capital, 20 February 2015, “Carador Income – January 2015 NAV”
The NAV as at 30 January 2015 was $0.8722 per share, down 0.23% in January (total return). The S&P/LSTA Leveraged Loan Index gained 0.33% during the month, with the energy sector being a drag (down 4.02%). The US primary loan market saw just $5.5bn of new institutional loans during the month (the lowest since September 2011). CLO issuance was also lacklustre, with only $5.2bn of new deals coming to market; the slow start was, the managers believe, due to a number of factors including concerns as to how CLO managers will address the impending US risk retention requirements, and strong secondary income note supply as broader based credit investors took advantage of new opportunities, for example in stressed oil and gas names.

[davebowler] 20/2/2015 14:09

I think its a mistake to wait to buy in May when they are on the LSE as the movement towards NAV will have happened by then, in my opinion.

[dendria] 20/2/2015 11:50

I've held VTA with IWeb for some time with no problem, including top-ups. Re. gross dividends - VTA is incorporated in Guernsey.