Fair Oaks Income Share Discussion Threads

[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 19:27

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.

[atholl91] 10/1/2019 14:56

Reduction in final Div from 5.75c to 3.45c for 2017 shares. Total Divs for year 11.15c against 13.45 in 2017. Pretty good performance by FAIR.

[cerrito] 02/9/2018 22:42

Long article in today’s Sunday Telegraph on detiorating credit standards in the US loan market-and increase in cov lite loans caused by demand from investors with CLO funds. Cite figures that in 2012 24% of loans were cov lite and 2018 YTD 76% Quotes warnings from Moodys and IMF and comment that default stats and recovery rates will be far worse than what CLO issuers have been touting.
Fair points and the key is and always has been the credit skills of the Managers.

[danieldruff2] 28/8/2018 07:14

Interesting RNS from CIFU today which is being rolled into BGLF

[spectoacc] 28/8/2018 06:56

Agreed re FX although wouldn't look so good the other way! FAIR still paying out big but shares go down.

[cerrito] 27/8/2018 21:09

The Interims a worthwhile read.
The main takeaway for me from the Chairman's statement was the importance of having control of the CLO's and a reminder of the v good default rate.
The Manager's report a v good summary of the state of play of the loan markets; struck by comment that investors not being paid to take incremental credit risk with the premium for junk bonds over senior secured bank loans too small.
I am in FA14(and CIFR) and have quite alot in VTA; as a £ based investor enjoying the current FX rates.

[eudiaceo] 27/6/2018 08:39

FA14 returning capital to shareholders.

"The Company today announces that it will return $6,500,000 (equivalent to 13.978 cents per share) on 6 July 2018 (the "Redemption Date") by way of a compulsory partial redemption of 2014 Shares (the "Fourth Redemption").

As at today's date, the Company has 46,501,283 2014 Shares in issue of which none is held in treasury. On this basis 15.4097 per cent. of each registered shareholding would be redeemed on the Redemption Date.

[eudiaceo] 21/6/2018 11:16

Company updated the factsheet... they may be reading this board! good response time!

"The Company estimates that the total return generated for this investment will be 17% p.a. above its original 15-16% expected at the time of investment"

[grahamg8] 21/6/2018 07:43

Ares XXXV target was originally 15-16%pa not 15-16%. I just hope this is a slip of shorthand rather than a bit of sleight of hand trying to show the return is better than target when in fact it is worse if the return total is 17% not 17%pa.

[cerrito] 28/4/2018 16:42

Had a run through of the Annual Report.
As a 2014 shareholder I must be very much on the minority on this board as not only did 85% go for the 2017 shares last year but institutions dominate the 2014 register with Coller( who as SVG shareholders will remember were so important on how that panned out) having 70% and two other institutions a further 15%. This explains why liquidity of the 2014 shares is so limited. I see that for the 2017 shares there are four institutions with 3% plus totalling 38%.
I also see that the 2014 shares trade currently at 100/106 and the 2017 at 96/98 with the end March NAV of the former at 0.9267 and of the latter at 0.9583c, so the 2014 shares at a big premium.
One suspects that Coller who were pre the reorganization the second largest shareholder after Old Mutual were a moving force behind all of this-important to bear in mind if one buys shares where they have a large shareholding.
No indication in the AR of timing of redemption of 2014 shares.
The Chairman's statement was very pedestrian doing little more than noting the corporate developments and no mention of strategy.


The Investment Manager started out on low default rate saying the fund's equity default rate since start of Master Fund II was 0.14% compared to twelve month industry wide rolling average of 1.72%. The last monthly report said they dodged the bullet of a couple of defaults in March including the fifth largest on record.
The IM report had an interesting discussion on resetting vs refinancing CLO liabilities.

[cerrito] 20/4/2018 22:44

Comments on very strong CLO issuance recently including first half of April and up 2/3rds from 2017 issuance figures. Concern about dilution of credit quality in light of abolition oif risk retention rules. Also demand for floating rate debt but strong supply have pushed prices lower. Ie all in yield of AAA top rated slice up from 2.81% in January to 3.34% now. S&Pflag waving on lower credit quality.

[cerrito] 30/3/2018 13:30

Interesting that both FAIR and VTA are saying in their monthly reports that now right time to increase their exposure to equity tranches.
In the case of VTA their equity tranche at end of February was 22% of the portfolio-up from 19% two years ago and down from the 27/28% of Q2 17.
FAIR give the breakdown by ratings and there has been no big shift over the last 12 months.
Given my exposure to the sector is going down with the rapid redemptions of CIFR looking at buying a bit more VTA.

[cerrito] 16/2/2018 22:01

In the January monthly released today, they were happy about the court derision on the Dodd Frank risk retention rule.

[cerrito] 16/2/2018 21:39

Article discusses that CLO issuance still strong this year and the premium over libor for the top tranche continues to fall and despite equity market volatility prices for the lower tranches holding up. Also a three judge panel has just ruled that CLO managers do not need to follow the Dodd Frank stipulation that managers retain a piece of each deal they complete which may boost the market.

[cerrito] 30/11/2017 23:11

Just read the commentary for the report as at October 31 and pretty gungho; ie annualized default rate 0.07%; talked about their ability to invest across 23 CLO managers who are all very diversified and also about their strong sourcing capacity which they have fed with a share raise and receiving $14m of early amortizations.

The market seems to agree with them given the premium at which

[cerrito] 05/9/2017 22:47

I thought that FAIR's half year report was very clear(unlike the CIFU one which I found v hard going) and I would encourage holders to read it.
The Investment Manager very upbeat in his outlook( but to quote Mandy Rice Davies they would say that would'nt they ?)
quote
The Investment Adviser believes that the Company’s current CLO investments, implemented via the Master Funds, are well
positioned to continue to generate attractive returns, given the quality of the underlying portfolios and the continuous active
monitoring and management of the underlying credit risk.
The Master Funds will also continue to benefit from the optionality inherent in the funding of its control CLO equity investments.
We expect to refinance the CLO liabilities of additional CLO positions, increasing the future cash distributions to the CLO equity.
We further expect to continue to source new primary investment opportunities for Master Fund II, taking advantage of the current
unquote
very attractive funding levels for new issue CLOs.

[cerrito] 20/7/2017 17:19

Good discussion of refinancing and resets in the July 14th monthly report.

[cerrito] 24/5/2017 22:46

I have commented that the portfolios of CIFU and VTA have changed quite a bit over the last year and have become more orientated towards income notes.
Had a look to see what shift there has been in the Fair portfolio as at 4.17 compared to 4.16 and the answer-as measured by the ratings-is not a lot with the percentage of the portfolio rated BB-, B+ and B being 80% at the end of April this year and Last.
For those who have faith in ratings to get the returns one is on FAIR with almost 90% of the portfolio rated B or better seems pretty good going.

[cerrito] 09/4/2017 17:00

Had a run through the annual report.
Good description of overall CLO market activity in 2016 and also a good example of the benefits of doing a refinancing but not all that much on the company’s portfolio.
I see that a 1% increase in interest rates as at 31.12.16 would impact net assets by £3.4m-ie manageable.
I checked to see if like VTA they had to pay a performance fee but then was reminded in note 8 that effectively investment fees are paid by the Master Fund.
I am one of the 15% who voted to leave ; am sure that in 2/4 years time, market conditions will get choppy and there will be opportunities to reenter.