Fair Oaks Income Share Discussion Threads

[spectoacc] 17/11/2020 14:22

600k at 57c a chunky punt by somebody.

[grahamg8] 13/11/2020 07:39

Historically the share price has followed the NAV very closely. The link was broken in roughly November 2019 but is much closer now although still lagging by a few %. My point being that if the NAV keeps going up or even stabilises the share price lag will eventually follow. Biden is tipped to launch a major stimulus package which should reduce the risk of loan defaults, plus with the prospect of a Covid vaccine we should be looking for more income and capital growth. Nice.

[spectoacc] 13/11/2020 07:20

+4.65% the next in the series of 2 posts above. So still gaining, and by more than even a qtly XD in a month.

[spectoacc] 05/11/2020 14:25

No move on 2.2c XD, but not unreasonable considering the rate they're earning.

[spectoacc] 20/10/2020 06:37

A rock bottom price you could have bought at in the market tho - lower in fact :)

But yes, they're shooting the lights out with the monthly return once again.

Last 6 months:

+6.95%
+4.14%
+2.83%
+8.45%
+10.03%
+13.04%

Hope I'll be forgiven for not quoting the earlier month in that series ;)

[grahamg8] 20/10/2020 06:28

Dividend, yesssss. See post #126. In fact 2.2c in the quarter is higher than the historic 0.7c per month. Another jump in NAV bodes well for an share price rise when the markets open. Although down on capital over my 5 year holding, when the dividends are added back I am in the black, wow. Plus traded out at the end of 2016 and bought back in early 2018 for a little extra return. Overall not too unhappy with the way things have gone. Still disgruntled with the new share issue as I can't help feeling there was a bit of sculduggery in crashing the share price and then almost immediately bringing in new investors at a rock bottom price.

[rambutan2] 18/9/2020 20:03

I'm on your side Specto. No dilution to holders and the opportunity to pick up some gems at very distressed prices, to the benefit of all holders. What's not to like?

[spectoacc] 18/9/2020 19:28

But why not buy at a lower price in the market, if concerned by share issuance at higher prices?

Obviously hasn't diluted by the amount the portfolio has "bounced back" by, unless the cash raised wasn't deployed, in which case the dilution would be proportionate to the number of shares issued.

Or looking at it another way - your argument is that NAV and share price would be higher now, if they'd never raised those 3 tranches & hadn't had that cash to invest at or near the bottom? I'd argue the opposite.

Did Numis respond to you, out of interest?

[spectoacc] 18/9/2020 06:34

@grahamg8 - agreed, and the NAV is "last reported", ie by the 27th of the month (one of the share issues) it could easily have moved by more than the quoted 2% premium.

But - the point stands - anyone bothered by it could have bought more cheaply than the placees, in the market. And without this cash to invest at the time, the rest of us wouldn't be enjoying the same level of returns we're now getting.

[grahamg8] 18/9/2020 06:26

There is a difference. NAV drops by half due to covid and collapse in values of secondary finance market, you would need to be pretty brave to buy more shares. Investment manager comes for a cosy chat and says we've decimated the share price but things aren't so bad as we can see some juicy returns from new investment opportunities, are you up for it?

Remember there is no active market for a lot of these loan packages and the 'value' is very much a matter of opinion.

[spectoacc] 18/9/2020 05:55

Covid may have something to do with the returns. But otherwise agreed re performance.

There were a series of small placings, all done at a premium. Surely anyone concerned could just buy in the market?

[spectoacc] 17/9/2020 18:45

We wouldn't be getting those monthly returns without there having been new money to invest - and all issued at a premium I believe, so not dilutory.

[grahamg8] 17/9/2020 16:39

The new investors got a good deal. The existing investors were shafted.

[spectoacc] 17/9/2020 07:04

Agreed, and should perhaps caveat the figs with the point that a 50% fall requires an 100% rise to get back to where it started.

They raised money at the right time.

[grahamg8] 17/9/2020 06:45

What we haven't been told and probably never will be is how big a discount the CLO's were sold for. We can but hope the overall move will be beneficial. Signs for another dividend next quarter look good. Monthly NAV changes -50.52%, +13.04%, +10.03%, +8.45%, +2.83%, +4.14% suggests interest is being serviced and defaults generally remain low.

[spectoacc] 15/9/2020 06:31

+4.14% monthly performance, wonder if they can keep that up...

[rambutan2] 09/9/2020 20:31

Interims out - as we know, it was an eventful 6mths!

...The portfolio has changed materially in the first half of 2020 moving from 95% exposure to CLO subordinated notes and 88% exposure to US CLOs, to 52% exposure to CLO subordinated notes, 32% to BB rated CLO notes and 15% to B rated CLO notes and a more balanced geographical mix (52% USD and 48% EUR).

These changes were motivated by an early de-risking of the portfolio (sale in January of four CLO subordinated notes and purchase of four B rated notes and one BB rated note) and the further acquisition of rated notes at deep discounts during weeks following the general market dislocation experienced as a consequence of COVID-19 in March.

As of 30 June 2020, all investments in the portfolio were in compliance with their relevant over-collateralisation tests and all made distributions in July.

[rambutan2] 25/7/2020 20:55

Latest factsheet:

[spectoacc] 20/7/2020 06:19

Another good month:


NAV

Monthly Performance


Fair Oaks Income Limited 2017 Shares

USD 0.4914

+8.45%


And:

"In light of the continued performance and the increased resilience of Master Fund II's investments, the Board has decided to resume the payment of dividends, on a quarterly basis and at a variable rate. The Company expects to announce the first quarterly dividend at the end of July in an amount of approximately 1.5 cents per share.

The Master Funds received distributions on all equity investments in April and, with all investments passing their over-collateralisation tests, distributions are also expected on all investments in July. Furthermore, the opportunistic investments made in the second quarter have resulted in the portfolio consisting of 48% CLO debt by market value. This increases the resilience and predictability of Master Fund II and the Company's cash flow."

[yieldsearch] 02/7/2020 13:37

I think VTA has been more pedestrian pace re dvd yield, i believe 8-10%, probably reflecting the underlying collateral (less equity more mezz). Would rather have steady dvd tbh

Cerrito: i need to look at the vta reporting, from memory there was some questions about gross NAV vs net NAV. There is no real incentive/action to reduce the discount, largest holder is Axa, the investment manager. I guess they dont really care much, as long as dvd is paid.

With VTA, Axa has a longer track record than Fair, CIFU and likely better access to the market due to size, better systems etc.

I have loaded on VTA in april at 3.80. As indicated previously, those can be extremely volatile. VTA trade below 0.4 in 2008! so really max 5% allocation would say.

[spectoacc] 02/7/2020 12:29

Not sure what yield VTA has historically been on, but FAIR's has been stonking at times - c.14% - which may account for the occasional premium?

[cerrito] 02/7/2020 09:29

also yieldsearch, I agree with you that I get a better feel from VTA about what they are doing from FAIR.
Do you have a view as to why over the last 3/4 years VTA has traded at a much bigger discount than FAIR, who indeed sometimes have traded at a premium.