Cqs New City High Yield Share Discussion Threads

[speedsgh] 08/10/2019 11:29

Annual Financial Report for the year ended 30 June 2019 -

As at 30/6/19 NCYF were still holding £3.16m worth of PizzaExpress Financing 8.625% 01/08/2022, representing 1.2% of total investments (31/12/18 £2.82m/1.2%; 30/6/18 £5.14m 2.0%).

Pizza Express lining up for painful debt restructuring -

[cc2014] 07/10/2019 13:59

So, I did in the end in relation to post 310 I did manage to buy a few more at a decent price but I have since sold them for a decent gain. Those from lower down I still hold.

I'm a bit puzzled though. The premium to NAV is 8.7% which is crazy, but which I guess reflects the exemplary long term performance of the fund manager.

I too note they have bought some NRR equity and although we don't know what price they paid, given the timing of the monthly update they must surely be sitting on a decent profit of at least 10%. maybe alot more in a month. For all we know they've already sold them on. this is what we pay an active fund manager to do.

[guitarsolo] 07/10/2019 13:30

So basically another 12 months on and I'll play the same game I usually play over on II! Guess the EPS.

Just re-read Franco's Aug 2019 update.....geopolitical problems still persist; Trump, Brexit, Italy.....wasn't that what we said a year ago?!

NCYF has taken equity positions in NRR and VSL (two companies I also invest in). I don't know the price they bought in at but both have been trading well below NAV and have seen 10-20% bounces in the last couple of months. Fingers crossed they bought in low.

Last year's EPS were 4.54p supporting a dividend of 4.42p for FY17, which was increased to 4.45p in the 12 months just gone.

So, finger in the air, I'm going to hope for EPS of 4.65p which would give Franco some room to increase the dividend and maintain his impressive record. But again I expect any divi increase to be minimal (i.e. 3 x 1.01p and a final of 1.45p). They need to build up the delta between the divi and the EPS, even if they do have a year's worth of dividends in reserve.

As to how they do that, well over to you Franco, that's what we pay you for!

Guitarsolo - still sitting on what I've got. Not intending to add in this political environment.

[petewy] 20/6/2019 15:06

Yeah made a profit good divi .., and still moaning.

[cc2014] 20/6/2019 12:16

I'm a bit frustrated. I've been watching this for weeks waiting for a fall of a penny or so to buy and yesterday it looked like that might happen. Now it's clearly not going to.


All my purchases in Dec and Jan at around 57p or below looking good but I would have much preferred to buy some more at a low price.

Oh well, I'll just have to find something else

[my retirement fund] 20/6/2019 11:50

Not sure if it us exuberance but this looks a good exit point for some of my interests

[jonwig] 29/5/2019 10:52

The share price is at a premium to NAV, so it's a sound strategy to issue new shares at NAV. (At a discount, they could do a buyback.)

There's a limit to the number they can issue, which is voted on at each AGM. I haven't checked the details of how many, but in theory shareholders could vote it down.

[cc2014] 29/5/2019 10:48

Due to global and Brexit uncertainty money is being pulled out of funds and therefore funds are selling equities to pay their investors back.

Most of the money is being parked in cash or invested overseas but some of the money is being invested in UK bonds as a perceived safe haven (but see jonwig's post 304 about too much stress equals bond defaults so a safe haven may not be as safe as some think especially since this is a high yield bond fund).

So, there's lots of demand for bonds and the premium to NAV is high. The premium to NAV is unwarranted in my opinion and doesn't reflect risk appropriately but the market does not agree. So, NCYF keeps issuing new shares at a huge premium to NAV which the market is happily soaking up. As a consequence the fund grows in size and the fund managers make more money. For existing shareholders there is an economies of scale argument which means over time NCYF should be able to reduce their percentage management fee. We will see on that.

As long as people keep buying shares at a significant premium to NAV, NCYF will keep issuing them, until it's issued the maximum amount it's allowed to in a year.


As an aside I assume IFA's are happy to recommend NCYF to their customers as the headline dividend yield looks attractive, but they do not do enough research to understand the risks around the investments in NCYF's portfolio. I suspect those who have been recently paying 60p ish are going to find they've paid too much.

[zeppo] 29/5/2019 10:25

What is the purpose of numerous Equity issues?

Is it a bad sign or not?

'On 16 May 2019 the Company issued 1,000,000 ordinary shares of no par value from its blocklisting facility at a price of 59.4 per share.

The Company's issued share capital now consists of 420,051,858 ordinary shares and there are no shares held in treasury. Therefore, the total number of shares with voting rights in the Company is 420,051,858.

The above figure may be used by shareholders as the denominator for the calculations by which they will determine if they are required to notify their interest, or a change to their interest, in the Company under the FCA's Disclosure and Transparency Rules.'

[jonwig] 22/3/2019 20:14

Trouble is, if you buy equities for a decent and rising yield (whether UK or wider) you're assuming economic conditions will support that scenario. You're disregarding the possibility that the world will suffer a significant recession which will erode dividend-paying ability and capital values.

In such a recession, interest rates will fall, inflation will fall. These conditions favour bonds.

The weak point of my argument above is that a severe recession can lead to bond defaults as well, so corporate bonds are vulnerable. But to counter this, if a company defaults on its debt, what has happened to its equity?

Holding NCYF you need to trust that the managers have a good eye for safety margins. There's a case for holding this as part of a portfolio, and I think it's a lot better than a high yielding open-ended corporate bond fund where redemptions of units can cause havoc.

[lord gnome] 22/3/2019 19:34

Good point shalder. When this current madness finally ends it will be time to re-evaluate, but not until. With stocks such as Aviva offering an almost identical dividend yield and arguably a far higher upside in normal times (whatever they are) I can see sense in making a switch - but we are not quite there yet.

[shalder] 22/3/2019 17:30

Good summary of the position CC2014. Personally I have just switched out of this into UK income ITs which at today's levels can easily provide near to 5% yield and rising, plus they mostly have high revenue reserves to underpin dividends. That plus potential capital gains when the current madness easaes off make them a better bet than NCYF where difficult to see much price upside, especially as they are currently trading at a significant premium to nav.

[tim 3] 22/3/2019 15:39

Thanks again.As usual the quality of options on these less busy boards is excellent.Think I will leave them be for now.

[cc2014] 22/3/2019 09:35

Thanks Jonwig. As ever you are on the ball with the details. Something I need to work harder on.

[jonwig] 22/3/2019 09:00

CC2014 - last annual dividends (4.45p) cost £18.2m whilst last half-year revenue was £9.75m, suggesting an annual £19.5m. Gearing helps, of course.

[cc2014] 22/3/2019 08:51

It's not really paying 7.7% is it as the underlying investments don't produce that return so we have capital erosion. Having said that I'm happy enough that even with capital erosion there is a decent enough return here.

My view is as follows:
1. If no-deal Brexit then holding any UK asset whether equity or bond isn't going to look too clever
2. If soft Brexit or A50 revoke then we will see capital inflows to both equities and bonds. But some bondholders will switch into equities so I'm not sure what the net flow into something like NCYF will be. Over time interest rates will rise and we may well see NAV fall for a period whilst NCYF replaces expiring bonds with low yields with new ones with higher yields.

I think if you aren't bothered about a secure income flow, it's probably time to switch into equities right now as the equity market in the UK is at a 30 year low compared to it's peer group. If a secure income flow is important to you then NCYF is as good as place as any right now.

[tim 3] 22/3/2019 08:32

Thanks guys, no it doesn't have to be this or cty I don't see interest rates going up any time soon.I have about 10% of my portfolio in here and think it might be a little high particularly looking at its some of the falls recently so may just reduce a bit cheers.

[lord gnome] 22/3/2019 08:14

I'm here for income, so as long as it keeps churning out the regular quarterly dividends I will be happy. Interest rates are likely to stay low for a long time to come and a yield of 7.7% for anyone buying today is a good deal.

[jonwig] 22/3/2019 06:26

tim - must it be this or CTY? I reckon there's room for both.

If you think interest rates will stay low "for ever" and a global recession is likely, a bond fund such as this should at least deliver the dividend, if not the capital growth.

I reckon it's better than an open-ended bond fund as it won't be squeezed by unit redemptions.

[tim 3] 21/3/2019 23:38

Any views on the longer term outlook here has it changed much?

Not done great on these and notice the NAV has dropped (although its bounced a bit recently)

Down slightly and considering switching into one of the bug investment trusts like cty.

Any views? thanks in advance.

[neilyb675] 25/1/2019 09:44

Top 10 Holdings (%)1

Punch Taverns 7.75% 30/12/2025 3.84
CYBG 8% Variable Perpetual 3.32
Shawbrook Group 7.875% Variable Perpetual 3.12
Perform Group Financing 8.5% 15/11/2020 3.05
Galaxy Finco Ltd 7.875% 15/11/2021 3.00
Rea Finance 8.75% 31/08/2020 2.73
Wittur Intl 8.5% 15/02/2023 2.37
Onesavings Bank Plc 9.125% Variable Perpertual 2.34
Barclays Bank 7% Variable Perpetual 2.33
Euronav Luxembourg SA 7.5% 31/05/2022 2.29

Top 10 Holdings Represent 28.39

[neilyb675] 25/1/2019 09:42

most recent fact sheet

[jong] 24/1/2019 14:34

XD accounts for 1p drop.

[andyj] 24/1/2019 14:33

Anyone know the reason for the big drop today?