Duke Capital Share Discussion Threads

[riverman77] 30/8/2018 17:24

Thanks both

[simoore89] 30/8/2018 17:10

They also get senior security on assets

[nurdin] 30/8/2018 15:55

riverman..unlike investment trusts,Duke do not take any equity in the companies they provide loans to.This is part of the reason why they are able to get such high rate of returns on their loans.Their assets comprise mainly of the cash on their balance sheet and the value of their loan book.So yes they are trading at significant premium to their assets,but you get pretty decent and growing yield on your investment in return ..for a long time, depending, of course, on the performance of the borrowing companies.

[riverman77] 30/8/2018 14:51

Does anyone have an estimate of the current nav per share? I presume this is trading at quite a hefty premium (which would normally put me off, although this looks potentially interesting).

[toadhall1] 30/8/2018 13:58

Looks good

[davr0s] 30/8/2018 12:27

Why do you think the trades are sellers?

[igbertsponk] 30/8/2018 11:17

3m traded already. Wonder who the sellers are - surely none of the recent institutions are selling at 44p when they bought at 42p?

[dsct] 30/8/2018 10:43

@toadhall1

In addition to my previous post, I've added the royalty income for the 3 months preceding the divi payment date and the divi amount.

Oct 17 - 0.5p on 45m shares
Jan 18 - 0.5p on 97m shares - income £340k, Divi £484k
Apr 18 - 0.6p on 97m shares - income £535k, Divi £581k
Jul 18 - 0.7p on 97m shares - income £902k, Divi £678k
Oct 18 - ? on 198m shares - income 1,128k, Divi (at 0.7p) £1,385k

If these figures are correct, it shows DUKE have, in the past, paid more in quarterly divis than their royalty income, so perhaps they'll keep the next at 0.7p.

If they do have to reduce it, I can imagine poor reporting will headline "Duke slashes quarterly divi", which won't do the shareprice any favours ! I presume Duke understand this possibility, so hope they'll keep at the same level.

[nurdin] 30/8/2018 10:39

Nice analysis there dsct....

[toadhall1] 30/8/2018 10:28

Nice analysis. Just see you made a similar point to me about the next div as I was typing.

[toadhall1] 30/8/2018 10:25

Yes watching this closely. Nice one to gradually build a long term position in. Guess there might be limited dividend increases in the short term given the near doubling of number of shares and not all capital employed yet.

[dsct] 30/8/2018 10:19

@nurdin - One of the reasons I invested in DUKE was the few (but very informative) posts here.

I've added this new investment to my spreadsheet. DUKE is one of the easiest companies to (try and) calculate ! (I think).

For each month, I have an opening cash, less expenses (£100k pm), Plus income from partners (£451k from Sept.), less investments, less divis, to give a monthly closing cash balance.

From my figures, I anticipate the Y/E finals to show £9.6m in cash. Since then they've invested £18.5m (£2m Lynx, £6.5m Brownhills, £10m InterHealth) and received £42m from issued equity. The Sept.18 cash balance should be approx £33m.

I'm quite surprised that the divis have increased, even though the shares in issue has doubled once, and doubled again more recently:
Oct 17 - 0.5p on 45m shares
Jan 18 - 0.5p on 97m shares
Apr 18 - 0.6p on 97m shares
Jul 18 - 0.7p on 97m shares
Oct 18 - ? on 198m shares

[the fat controller] 30/8/2018 08:48

I think this is a slow burner.
Great news today, but its only the implementation of their stated business plan. 13% return pa for 30 years? We should be excited.
However, I suspect that it'll take time for the market to digest.
Dividend time will show the market the cash generative qualities of a deal like this.
GLA TFC

[simoore89] 30/8/2018 08:17

Yeh I think the same.. volume is so low. I think once the divi gets to double digits it will get some more interest! Currently got 45m to dish out so once that is gone hopefully won't be too long after that...

[nurdin] 30/8/2018 08:10

This looks an excellent investment to me...surprisingly little comment here.No price action either..

[creditcrunchies] 26/8/2018 20:24

"Headquartered in Guernsey" flashes the amber light for me been burnt before by a company registered there, blamed the falling share price on short sellers then delisted the stock where they became worthless. Certainly keep my eye out on these to see if my gut is proved wrong, personally tempted on the the current yield and positive soundbites - but I've heard those before also.

[piedro] 23/8/2018 07:50

I've been watching Temarca Cruises
- they have one vessel on the Danube
and another sort of risk

Record Low Danube Hinders Shipping in Hungary
August 22, 2018

[melody9999] 08/8/2018 12:43

So I have taken a slug this am at just under 45p.

[melody9999] 08/8/2018 12:10

Substantial risk to all companies in the event of a global recession.

DUKE are bringing the concept from the US / Canada - so tried and tested. I also believe their partner selection criteria is robust.

Must be encouraging that Blackrock have 10% ie 20M share or £8.8M invested.

[stevie blunder] 17/7/2018 14:58

I think there must be a substantial risk to Duke in the event of a global recession.
The nearest comparator I can think of is Intermediate Capital. They specialise in Mezanine finance, ie something between straight debt and equity, very much like Duke IMO. They did well for years but were hammered by the financial crisis. ( I have bought and sold them 3 times over the years and luckily wasn't holding them in 2008)

In terms of company specific risk, each of the investee companies is taking Duke's money to make a change in the business, such as make a capital investment for expansion. Such changes do bring risks.

I was having a quick look at the Alaris Royalty website and at their latest presentation:



Alaris have exited a number of investments and made substantial losses on 3 although the successes vastly out weigh the losses. Worth a look.

[piedro] 17/7/2018 14:47

dsct,

Thank you for your frank reply.
I only recently took up a small position in DUKE having spent about a week going through the RNNs' and entering all in my database. What is still to be done is checking the Partners.

I have seen DUKE mentioned on other bbs and believe that it is not a bad idea to clear the air for the doubters .... .... and then we can perhaps leave off till the share consolidation which will no doubt be necessary sometime.

GLA,

P.

[dsct] 17/7/2018 13:57

Firstly, apologies to the readers here for turning this previously quiet board into a near daily-posting situation - The lack of posts, and those that were here, being informative and useful was one (minor) reason I invested ! lol

@Piedro

I first looked at DUKE in April - an article in Shares magazine I believe, but although interested, never researched any further until June.

A 'too good to be true' attitude, I believe is a benefit when investing, to stop over-zealous or impulsive purchases - speaking from experience and looking at some of the dogs in my 'folio ;^)

I think the two main downsides for DUKE could be:
1) - Failure of one (or more) of their Royalty Partners (RPs). The ever-increasing diversification should lessen this impact. I think it will happen at some stage, but their selection criteria appears quite robust. I have read investor's concern about this while they only have/had 4 RPs.
2) Global recession - Increasing the possibility of 1) above. More potential RPs but with obvious added risk(s). Knock-on effect when trying to raise funds.

As far as I'm aware, the placing is with new and existing Insitutional/large investors. This may be for speed/cost reasons, but maybe one day there could be a placing or rights issue for all shareholders.

The £2m costs of the £44m placing (approx. 5%), plus the 44p placing being a 7.6% discount to the share price, equals a 12.5% one off-cost. I've no idea if this is good, bad or otherwise in comparison to the norm.

[piedro] 17/7/2018 10:02

dsct,

I am also impressed with the business model, but wary as seems "too good to be true"

Should we not be receiving a placing document to subscribe for new shares?

[dsct] 16/7/2018 12:33

@Piedro,

As I said in my post #40, I presumed they'd be making a placing to enable them to invest more/faster, but expect them to be self-funding at some point, unless they have a large and/or high quantity of investment(s).

If they have £80m invested with Royalty Partners, at 12% p.a., returning £800k per month, less costs of say £50k p.m., so every 4 months, they can self-fund a £3m Royalty, which would also increase their income stream.

As a bonus, I'm quite pleased with the near 10% share price rise since investing less than a month ago :o)

As you may tell, I'm impressed with their business model, especially so when reading the positive reports from their Royalty Partners.

[davr0s] 16/7/2018 10:55

Chill - good rise post a placing tends to be a very good sign