Fair Oaks Income Share Discussion Threads

[rambutan2] 02/4/2020 20:06

Hunting for any info/insights, so signed up for this with no hassle:

FAO all European Dryden CLO investors:

PGIM will be recording and uploading a market update that all current Dryden CLO investors are invited to download and listen too. The webinar will be available Friday 3rd April at 10am. Please find attached the webinar registration link below.

[spectoacc] 02/4/2020 13:24

Seemingly destined to tank on massive spread. Going to be a while before FAIR shakes out.

[cerrito] 31/3/2020 23:02

Thanks again Rambutan for that. I note his comment that at the moment no liquidity for equity tranches and little for B which will make valuation interesting.
Interesting the comment in the Oak tree discussion that so far they have seen little forced selling which is my reading and the good security cover the BB tranches have in a CLO.

[rambutan2] 31/3/2020 20:03

CLO commentary:

[spectoacc] 31/3/2020 12:58

Comedy spread on FAIR now.

[cerrito] 31/3/2020 12:49

I can understand what SMIF are doing but I wo set how you measure NAV in these markets.
rambutan 2 Thanks for the Oak tree link.

[rambutan2] 30/3/2020 19:29

Fairly recent from Oaktree:

[rambutan2] 30/3/2020 19:22

SMIF today:

Company Update

The credit market has endured significant volatility over the past month as market participants have reacted to the economic uncertainty brought about by the effects of the Covid-19 pandemic. Forced and indiscriminate selling has resulted in unprecedented volatility that in turn has created the opportunity to source assets that have been otherwise unavailable to investors for almost a decade. The higher yields available for selective credits in the current market have enabled the Board of Directors of the TwentyFour Select Monthly Income Fund to approve the issue of 20.9m new shares to meet specific investor demand. The estimated mark-to-market yield of the portfolio as at Close of Business 25th March 2020 is 13.01% based on NAV (gross, GBP hedged, current yield-to-worst).

[spectoacc] 30/3/2020 14:36

They're only a small position for me (smaller now!) but the "long term" comment at the end seems a bit ominous - not going to be any swift return to normality:


"It is premature to seek to quantify the fundamental impact of the pandemic, which will depend on an array of factors including the effectiveness of recently announced government intervention, but over time there is risk of underlying CLO managers being required to divert cash flows from CLO subordinated notes to purchase additional loan collateral in response to increased credit downgrades and defaults. At the portfolio level the Investment Adviser has also taken steps to minimise mark-to-market risk, retaining a prudent reserve of cash to cover any fx hedge and warehouse financing needs.

The dislocation in the credit markets will create investment opportunities, which is expected to be a factor in the allocation of future cash flows as the Company continues to seek to maximise shareholders' total return over the long term."

[danieldruff2] 30/3/2020 11:14

My memory was that GLIF and CIFU suspended dividends for a couple of years, but it all bounced back to where it was. What a disaster GLIF turned out to be after it sold its portfolio on to FAIR

[cerrito] 30/3/2020 11:12

danieldruff230
Yes on my things to do list, although quite low down, is to remind myself of the GLIF days and if they suspended dividends.

[danieldruff2] 30/3/2020 11:06

Remember what happened when their portfolio was owned by GLIF in 2008, went down to 1.5p, recovered to 45p, a 30x return. Keeping an eye out in case it gets close to that again...

[cerrito] 30/3/2020 10:09

Not entirely unexpected news for me this morning about the dividend and their explanation makes sense.
That said I would have strongly preferred if they had given an indication of their cash position. My sixth sense tells me they have gone into this fully invested and let's hope my radar is wrong.
I take some comfort from the fact that in the top 10 industry classifications, no oil and gas, consumer transportation, or retail , although hotel,gaming and leisure is no 5 at 5%.
I have goofed here . I do not have the courage to buy more and will sit tight.

[spectoacc] 29/3/2020 13:28

Interesting stuff, thanks.

[rambutan2] 28/3/2020 21:40

Latest fact sheet:



We have modelled a stress scenario to reflect the current market environment. The key assumptions imply a significant increase in defaults in Oil & Gas, Hotel, Gaming & Leisure, Retail and Consumer Transportation sectors, CCC rated and loans trading at a discount. We give very limited credit to reinvestment, assuming low prepayments and a reinvestment price 10pt above current index levels. Using prices as at February 28th and excluding the impact of the share price discount to NAV, the gross IRR under this scenario is -2.4%3.
The CLO market has not been spared the stress and volatility experienced by broader markets in March. In these unprecedented times, we will endeavour to keep our shareholders and general market informed about the evolution of the market and Fund.

[rambutan2] 28/3/2020 21:33

From last sept, but will it hold true this time...

[yieldsearch] 21/11/2019 13:20

Cifu posted a drop in nav. Mezz , equity clo markets weak, particularly US

[mozartprodigy] 21/11/2019 12:31

Wonder why this is dropping so much recently...

EDIT - Dollar weakness related!

[mozartprodigy] 17/11/2019 00:47

Thank you Specto - its just different buying them in USD never done it before. Ill take a look at these and read the annual report tonight.

[spectoacc] 15/11/2019 11:48

No you're right about the divi. Has been chunky final divis in past tho.

I tend to ignore the exchange rate - could go either way! Miles up if no Brexit, miles down if Marxism..

[mozartprodigy] 15/11/2019 10:13

Specto - I read it is they will pay 12 monthly dividends @ $.007 each. that makes it the same as this year @ $.084? Have I read that wrong? Im toying with this share for monthly income however unsure how the dollar status will affect the final income. Any advice appreciated! :)

[spectoacc] 14/11/2019 14:12

Disappointing NAV fall and divi change for next year, but quite like the planned change - seems they've been in too much cash whilst waiting, & a good chance of better performance ahead.

[cerrito] 18/4/2019 18:27

AS a FA14 holder I got the final redemption earlier this week; I joined up in FAIR in June 2015. I found I had a small capital loss despite the favourable FX movement-the $ was 1.57 approx in June 15. This loss has been much more than compensated by the dividend flows.
I have known the portfolio since January 2010 when I signed up with GLIF.
I will keep this under review-at the moment both FAIR and the $ are priced correctly IMO, so am waiting.

[grahamg8] 10/1/2019 18:00

Well it makes a 15% running yield. The only problem is that the share price has dropped by 20%. The asset value is down around 5%. So this means a great buying opportunity or the assets are greatly overstated. If the US economy takes a downturn then property prices will go down and debt defaults will rise. Which would make a perfect storm for FAIR. Clearly pessimism has taken over for the moment but that could easily be reversed. It has happened before with the FAIR share price bouncing off previous lows. I'm hanging on for the moment. The bounce was very fast taking just 2 months in Summer 2016. I remember it well and rode the price down and back up again, pretty scary at the time. The madman in the White House only has two more years till he gets kicked out. Then hopefully normal service can be resumed.