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EJFI Ejf Investments Ltd

101.00
0.00 (0.00%)
24 May 2024 - Closed
Delayed by 15 minutes
Share Name Share Symbol Market Type Share ISIN Share Description
Ejf Investments Ltd LSE:EJFI London Ordinary Share JE00BF0D1M25 ORD NPV
  Price Change % Change Share Price Shares Traded Last Trade
  0.00 0.00% 101.00 4,700 08:00:00
Bid Price Offer Price High Price Low Price Open Price
96.00 106.00 101.00 101.00 101.00
Industry Sector Turnover Profit EPS - Basic PE Ratio Market Cap
Trust,ex Ed,religious,charty 18M 14.26M 0.2331 4.33 61.76M
Last Trade Time Trade Type Trade Size Trade Price Currency
16:29:42 O 4,700 102.40 GBX

Ejf Investments (EJFI) Latest News

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Date Time Title Posts
23/5/202410:36EJF Investments20
21/2/201810:44EJF Investments2

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Ejf Investments (EJFI) Most Recent Trades

Trade Time Trade Price Trade Size Trade Value Trade Type
2024-05-24 15:29:43102.404,7004,812.80O

Ejf Investments (EJFI) Top Chat Posts

Top Posts
Posted at 25/5/2024 09:20 by Ejf Investments Daily Update
Ejf Investments Ltd is listed in the Trust,ex Ed,religious,charty sector of the London Stock Exchange with ticker EJFI. The last closing price for Ejf Investments was 101p.
Ejf Investments currently has 61,145,198 shares in issue. The market capitalisation of Ejf Investments is £61,756,650.
Ejf Investments has a price to earnings ratio (PE ratio) of 4.33.
This morning EJFI shares opened at 101p
Posted at 23/5/2024 10:36 by davebowler
Liberum-
Banking sector M&A and Republic First and NYCB updates
Analyst: Shonil Chande

Mkt Cap £62m | Share price 101.0p | Prem/(disc) -38.4% | Div yield 10.6%

Event

EJF Investments’ NAV per share increased by 1.3% month-on-month in April 2024, to 126p. Valuation movements were minimal, with a portfolio return of 1.0% largely reflecting interest accruals from the CDO equity portfolio. The impact of the dollar strengthening was +0.5%.



Republic First failure and EJFI exposure

Republic First became the first US banking failure of 2024 in April. Its failure has been attributed largely to a mismanagement of interest rate risk. Higher interest rates increased unrealised losses in its available-for-sale securities portfolio, reducing buyer interest and tangible book value. Fulton Financial subsequently announced the acquisition of the majority of Republic First’s $6bn in assets, through the the FDIC resolution process. Fulton expects a 1.2-year earn-back on the deal. Assuming no recovery and considering the current over-collateralisation in the underlying deals, EJFI estimates a loss of up to 1% of NAV from its look-through exposure to Republic First.

New York Community Bank (NYCB) out of crisis mode

NYCB has been the key factor behind lower sentiment towards US regional banks over the past two months or so, reflected by the KBW bank index. In January 2024, NYCB reported unexpectedly low earnings, down by 50% and leading to a 70% dividend cut. NYCB’s earnings announcement also included an increase in credit provisions on account of commercial real estate office loans and rent-regulated multi-family exposures. EJFI’s factsheet notes that NYCB is out of crisis mode, following its Q1 results and a stabilisation in deposit levels. As at 31 January 2024, EJFI’s underlying exposure to NYCB was less than 2.5%.



US banking sector M&A

Three meaningful deals took place in April, summarised below:





Liberum view

Some lingering concerns over the US banking sector have impacted EJFI’s share price rating YTD, with first NYCB and more recently Republic First. In the manager’s view, there are unlikely to be many FDIC deals (like Republic First) this cycle as most banks with upside-down balance sheets should be able to be sold at a price with time. As long as banking issues remain idiosyncratic, we think a bigger takeaway is the recent vibrancy in M&A.

If the manager’s assertion (in the factsheet) that the deals are the tip of the iceberg plays out, this will materially increase the return potential of the equity securitisation portfolio (69% of total investments). One of the acquired banks, Heartland Financial, was the 8th largest look-through portfolio exposure, as at 31 March 2024.

From EJFI’s perspective, the regulatory aspect of the strategy centres on the consolidation of US banks. The number of banks consolidated from c. 16k in the 1980s to c. 8k following the GFC. Today, there are still over 4k banks. A unique characteristic is the ubiquity of community banks and it is these institutions that issue the bulk of the TruPS collateral pool. As the majority of the TruPS trade at a discount to par, prepayment speeds have a material impact on the returns to equity holders of the securitisations. When a larger bank acquires a smaller one, it can result in the acquired bank's TruPS being redeemed or called at par. This pull-to-par effect has historically allowed EJFI to realise gains on TruPS purchased at a discount within legacy CDO deals. Maintaining the c. 5% post-GFC consolidation rate over the next 10 years would result in c. 2.5k banks by 2033. A rate of between 2.5% and 5% is probably a fair working assumption, in our view. We are BUYers with a 137p TP.
Posted at 22/11/2023 10:03 by davebowler
Liberum-
Community banks expected to benefit from regulatory changes
Analyst: Shonil Chande

Mkt Cap £61m | Share price 100.0p | Prem/(disc) -39.0% | Div yield 10.7%

Event

EJF Investments’ NAV per share increased by 1.2%, to 164p, in the month to 31 October 2023, led by a 64bps return from the securitisations portfolio. Regular interest accruals drove this, with the underlying CDO equity tranche valuations unchanged month-on-month. Other positive contributors included +27bps from the mortgage servicing rights portfolio, as US treasury yields increased, and a 22bps impact from US dollar strength.



Liberum view

Our main takeaway from the factsheet is the comments around the anticipated regulatory changes in the US banking sector. Capital requirements for large banks are expected to increase by 10% to 30%, which would increase the likelihood of larger banks disposing of certain assets, opening up a pathway for the smaller community banks EJFI focuses on to take market share. It is also noted that the increased likelihood of no more short-term interest rate increases should reduce tail risks to the banking sector in the near-term.

We note that the September mark-to-market decline in the securitisation portfolio was to a large extent driven by concerns driven over higher for longer interest rates in the US. We are BUYers with a 137p TP
Posted at 22/9/2023 09:22 by davebowler
Liberum-
EJF Investments’ NAV per share of 163p, as at 31 August 2023, represented a 1.6% NAV total return in the month. The portfolio returned 118bps, driven by regular interest accruals attributable to the securitisations portfolio. The earlier unrealised mark-to-market loss in June 2023 is expected to be temporary. It largely reflected the lagged pass-through of the earlier upheaval in the banking sector in March. The valuation of the portfolio’s CDO equity investments tends to lag both on the way down and the way up, relative to movements in the underlying collateral or markets.



Other positive contributors to returns in August were from the mortgage servicing rights investment, (+26 bps) and FX (+71bps). We estimate the IRR on the mortgage servicing rights investment to be over 40% since the first investment was made in late 2020. This senior stream of income benefits from lower prepayments on US mortgages.





Liberum view

The core securitisation portfolio should continue to reverse some of the earlier mark-to-market losses, with the banking sector having stabilised. Important differences exist between the c.160 community banks that underpin the securitisation collateral EJFI has exposure to and the banks that failed earlier this year. The three banks were outliers based on the proportion of uninsured deposits held, ranging from 94% (Silicon Valley Bank) to 68% (First Republic).

Distributions to equity investors in the CDOs, like EJFI, are based on the residual cash flows remaining from the collateral pool after distributions to AA and Mezzanine tranche holders. The majority of the collateral pool pays floating rates and in a higher interest rate environment there is an additional benefit from the overcollateralisation built into securitised structures like CDOs. A typical CDO will be issued with an underlying collateral to CDO debt ratio of c.1.12x, so there is a larger asset base earning a higher spread compared to the CDO tranche liabilities.



In our view, risks on the CDO portfolio are lower than perceived by the market. In addition to the structural differences between the underlying collateral, US community banks and the banking sector in general is in far better shape than it was 15 years ago or so. Deposit stability has been evident over recent months. The main concern for community banks at the moment is the potential for higher rates to last for longer, as this affects net interest margins.





Strong track record

On a NAV total return basis, EJFI has been the best-performing fund within its peer group since it launched in 2017. Some of the best return years were driven by significant consolidation in US banking, which remains an idiosyncratic market with far more banks than most developed markets (1.24 commercial banks for every 100k people vs 0.52 for the UK and 0.31 for Germany). Consolidation significantly helps returns as there is a pull-to-par effect on the underlying collateral when larger banks acquire smaller ones and prepay at par. This effect can also improve the credit rating of the CDO debt tranches, as the collateral credit quality increases, raising the value of the equity tranches. M&A remains relatively muted in the banking sector but should regain momentum over time – a 3-5% consolidation rate is typical.
Posted at 08/9/2023 14:29 by davebowler
LiberumStructured CreditEJF Investments¬†Solid performance in the toughest market since the financial crisisAnalyst: Joachim KlementMkt Cap £65m | Share price 107.0p | Prem/(disc) -34.4% | Div yield 10.0%EventThe company published its interim report for the six months ending 30 June 2023. The NAV as per 30 June (162p) and per 31 July (163p) were previously announced.The total return for the period was -9.57% compared to an annualised total return since inception of 9.1%. The first half of 2023 saw significant events in the US banking sector. This included the failure of Silicon Valley Bank and Signature Bank, the US government engineered and back-stopped sale of First Republic Bank to JP Morgan and the voluntary liquidation of Silvergate Capital Corporation ("Silvergate"). Of the four banks, EJFI's only exposure was to Silvergate, which was equivalent to less than 2.5% of the then NAV on a look through basis and prior to any recoveries.Due to the impact of these events on broader market sentiment and the recommencement of limited trading activity in the second quarter of the year, the CDO Equity Tranches recorded significant unrealised mark-to-market losses creating the drawdown in the NAV. The company believes that these mark-to-market losses are temporary and will be reversed.?Liberum viewWhile H1 2023 has been the toughest environment for structured finance since the financial crisis 2008, the track record of EJFI speaks for itself. The annualised total return since inception of 9.14% is well within the target range of 8-10% p.a. despite the drawdown in the period. The company trades on a 34.4% discount to NAV, compared to a long-run average discount of 15%. The average discount for the wider structured credit peer group is 13%.We acknowledge there is an element of an illiquidity premium, but we believe the current share price offers an attractive entry point into a high-performing portfolio. After all, we know that US regional banks are not failing but are able to withstand current high interest rates. This speaks for a significant recovery in depressed mark-to-market valuations in the second half of this year. Even if we assume the discount to NAV simply closes to its long-run average, the upside to the share price is more than 20%. We are BUYers of the fund.
Posted at 26/5/2023 09:41 by davebowler
Liberum ;
+1% underlying portfolio return in April before FX
Analyst: Shonil Chande

Mkt Cap £68m | Share price 110.5p | Prem/(disc) -36.6% | Div yield 9.7%

Event

EJF Investments NAV per share of 174.2p, as at 30 April 2023, represented a -0.2% NAV total return in the month. FX was the main drag in April, with 0.9% impact. This impact was partially offset by EJFI's hedging of c.57% of its USD exposure. The underlying portfolio return was +1.0%, led by a 111bps impact by securitisations & related investments. EJFI's YTD NAV TR to 30 April 2023 was -3.9%.



Liberum view

In our view, EJFI remains well-positioned within the context of the US banking market given the distinctions between regional and community banks compared to the likes of SVB EJFI adds a further level of diversification within its portfolio, which includes 260 US banks and 113 insurance companies, of which 162 US banks and 41 insurance companies were unique issuers. The largest exposure to any single bank is 3.1% of the underlying principal across the risk retention deals.
Posted at 29/3/2023 14:37 by cc2014
That RNS seems to have sorted out the share price.
Posted at 29/3/2023 09:13 by davebowler
Liberum;
EJF Investments

Additional disclosure should reduce fears
Analysts: Shonil Chande and Nick Anderson

Mkt Cap £66m | Share price 107.5p | Prem/(disc) -41.3% | Div yield 10.0%

Event

EJF Investments provided an update with respect to its exposure to US regional banks, which we summarise as follows:


Community banks versus SVB/Signature/Silvergate, and regional banks

The manager notes that community banks with less than $50bn in assets generally have more secure and less monoline deposit bases than SVB/Signature/Silvergate, and regional banks.

EJFI primarily invests in the securitisations of debt issued by smaller US banks, aiming to take advantage of regulatory and structural changes within financial services. The securitisations contain subordinated debt where the weighted average credit rating of the collateral pools is typically BBB-/BB+.

Regulatory changes likely

In the manager's view, recent events will drive more regulatory changes, which it believes will speed up consolidation as costs attributable to risk and compliance increase. Community banks account for a significant portion of US lending, representing c.55% of commercial real estate loans, and 20-30% of residential real estate loans, commercial and industrial loans, and consumer loans. Community and medium-sized banks also benefit from broad bipartisan support.

Liberum view
EJFI's shares declined by 13% from when SVB Bank's crisis came to the fore on 10 March to 28 March (+4.7% today at the time of publication). This announcement should address some of the wider concerns, in our view. With respect to the SIlvergate, EJFI previously noted that the mechanics of securitisations mean the exposure (<2.5%) does not automatically correspond to an equivalent write-down in NAV.
Posted at 09/11/2022 15:47 by apollocreed1
Yeah... Seems to be a very safe yield. US banks are in very good financial condition. But my worry is that their holdings are within the category of "corporate bonds" which lose value as interest rates rise, so no matter how great the credit quality, there's a headwind exerting downward pressure.

It would have done even better if ejfi hadn't hedged their dollar exposure back to GBP.
Posted at 02/9/2022 14:07 by cc2014
Over a year since I last posted. Bought some more today.

There seems to be an endless supply of stock at 120p which is good because I've bought some but bad because I suspect the share price will remain stuck here.

I'm happy to collect the dividend while I wait.
Posted at 21/2/2018 10:44 by davebowler
Liberum;

EJF Investments (Mkt Cap £90m)

8% gain in January on market expansion

Event

EJFI Investments' (EJFI) January 2018 NAV per share was 171p, representing a monthly gain of 8.28% mainly due to the sale of two securities for a gain of c. £7.3m, which generated total sale proceeds of c. £15.8m. These REIT trust preferred securities (TruPS) CDO bonds started to receive cash flows in January, driving the valuation uplift that allowed EJFI to sell them as the secondary market continues to expand.The rest of the portfolio performed in line with expectations.

In January, the Directors of EJFI declared the fourth quarter dividend of 2.5p per share (c. $0.03/share), an increase over last quarter’s dividend of 2.4p per share. The total dividend declared for full year 2017 was 9.7p per share. The 7.1% annualised dividend yield is higher than the initial target dividend of 6% p.a. driven by the company’s robust performance. EJFI is targeting an annual dividend of 10.0p per share for the financial year to 31 December 2018.

During the month, the EJFI announced its intention to raise new capital under the company’s placing programme*. EJFI is seeking to raise £50m via a placing of new shares.

Liberum view

The TruPS sector continued to perform strongly in January as LIBOR moved up approximately 5% in the month to 1.78%. Five issuers redeemed their TruPS in January, one of which was held within EJFI’s TFINS 2017-1 position.

There were 19 M&A deals in the U.S. banking sector in January at increased valuations (median P/TBV 19.1% higher year-over-year). We expect deal activity to remain robust driven by increasing interest rates, changing regulatory environment and positive U.S. economy.

As LIBOR continues its upward trajectory further consolidation within the smaller U.S. banks should occur driving increased prepayment activity in EJFI's securitisation exposures and higher returns. The company is trading at a 3.5% discount to NAV and has a current yield of 6.1%.

*Liberum is acting as sole bookrunner in relation to the placing.
Ejf Investments share price data is direct from the London Stock Exchange

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