Fair Oaks Income Share Discussion Threads

[rat attack] 26/5/2022 12:50

Can someone please explain how this is investable. Share price down by c40% in 4 years, NAV down c34% in 4 years, but receive 16% dividend pa?

[cwa1] 14/4/2022 10:45

Courtesy of @davebowler from elsewhere:-

Liberum on Fair Oaks Income

1.7%% NAV TR YTD

Mkt Cap £194m | Share price $0.63 | Prem/(disc) -4.6% | Div yield 16.0%

Event

Fair Oaks Income has released its annual results to 31 December 2021, with the previously reported NAV per share of $0.67 representing a NAV total return of +22.7% in 2021. FAIR has also published its monthly NAV to 31 March 2022, with the $0.65 per share value representing a +0.3% NAV total return in March (+1.7% YTD).


Liberum view

Despite ongoing potential for NAV volatility in the near-term, we regard the 16% dividend yield as attractive. We note that the credit performance of the portfolio has been strong and there is significant headroom on overcollateralisation tests. Distributions to the portfolio from debt investments remain healthy and CLO equity can potentially benefit from a widening in loan spreads as the CLOs financing cost is fixed and any increase in portfolio spread will benefit CLO equity investors.

[scrwal] 23/3/2022 12:45

ii have coughed up mow.

[scrwal] 22/3/2022 18:08

ii have been tardy for the last 6 months or so to credit any dividends paid in foreign currency into an ISA.

[cwa1] 22/3/2022 10:55

As previously, got the FAIR divi on the due date from iDealing-but still waiting for ii to credit theirs, which is slightly disappointing

[grahamg8] 18/2/2022 07:38

Thanks CWA1 I forgot that. In fact I think I must have been in hibernation as I missed the announcement altogether. We seem to have established a regular quarterly dividend which is very nice to have. As long as the share price holds steady this is a nice earner, hold and keep for ever, pretty much.

[cwa1] 17/2/2022 18:14

It's XD today, hence the drop

[grahamg8] 17/2/2022 17:34

NAV up by 3.26% in the past month and the share price drops. Strange indeed.

[cwa1] 17/2/2022 11:55

Courtesy of davebowler over on the VTA thread:-

Liberum on FAIR-

Fair Oaks Income

Strong level of distributions in January

Mkt Cap £197m | Share price $0.66 | Prem/(disc) -4.3% | Div yield 15.2%

Event

Fair Oaks Income's NAV per share as at 31 January 2022 was $0.69, representing a 3.3% NAV return in the month (+17.5% LTM).

US and European loan markets generated small gains in January, both returning 0.3% in the month. US 12-month trailing default rates remain very low at 0.3% and default rates in Europe were also stable at 0.6%. Following a record year for CLO issuance in 2021, new issue volumes slowed in January to $4.9bn in the US (down 47% year-on-year) and no issuance in Europe (€1bn in Jan-21).

Credit performance in the loan portfolios of FAIR's CLO equity investments has been robust with an annualised default rate of 0.3%. The portfolios also have low exposure to CCC loans at just 3.7% of underlying portfolios. The 15.4% dividend yield is supported by a robust level of distributions from new investments. The Master Fund received $20.6m of quarterly distributions in January, compared to $18.9m in October 2021.

Liberum view

The quarter to January was a strong period of distributions, which supports management's recent expectations. The manager made several new CLO equity investments during 2021 and two of these were expected to start making distributions in the quarter to January, which explains the 9% increase compared to the previous quarter. Another of the investments is expected to begin distributions in the quarter to July. The rising interest rate environment has increased demand for floating rate assets, resulting in the highest month of inflows into US loan funds since 2015. This demand is likely to be further supported by lower new CLO issues in 2022.

We view the 4.3% discount to NAV as highly attractive, given the 15% dividend yield and favourable outlook for default rates and distributions. The arbitrage spread of the loan portfolios over the cost of financing remains near all time highs at 1.95% and there is significant headroom on overcollateralisation tests.

Positive final paragraph...

[cwa1] 17/2/2022 07:52

A monthly increase of 3.23% to the end of January announced this morning by FAIR. Not too shabby at all...



Also, XD this morning of 2.5c per share, payable 18/3

[cwa1] 09/2/2022 11:27

...and just for the record...

Dividend for Quarter Ended 31 December 2021



The Directors of Fair Oaks Income Limited have declared that an interim dividend will be payable as follows in respect of the quarter ended 31 December 2021 in respect of the Realisation and 2021 Shares:



Ex-Dividend Date: 17 February 2022



Record Date: 18 February 2022



Payment Date: 18 March 2022



Dividend per Realisation Share: 2.50 US cents per share



Dividend per 2021 Share: 2.50 US cents per share

[cwa1] 03/2/2022 15:53

In the next few days I'd guess...

[ramellous] 03/2/2022 15:38

No dividend this month?

[cwa1] 20/1/2022 07:42

December NAV:-



Monthly Announcement of Unaudited Net Asset Value

As at the close of business on 31 December 2021 the estimated unaudited Net Asset Value of the Company's Shares was as follows:


Fund Name NAV Monthly Performance
Fair Oaks Income Limited
Realisation Shares USD 0.6679 0.66%
------------ --------------------
Fair Oaks Income Limited
2021 Shares USD 0.6682 0.62%
------------ -------------------

[grahamg8] 20/1/2022 07:23

sp based on extremely low default rate. Add in a bit of COVID, inflation, lower growth and higher interest rates will give you a rise in defaults and that will kill the asset values. High return implies high risk which is exactly what FAIR gives you. Having said that they make up quite a chunk of my portfolio.

[golden_eagle] 12/1/2022 19:13

Just taking a look at this for the first time.

Near 15% yield and trading at a modest discount to NAV.

What's the catch?

[cerrito] 15/12/2021 21:36

Liberum on last week's deal
Event The Master Fund has agreed a €28m primary investment in the equity tranche of Fair Oaks Loan Funding IV, a new European CLO managed by the investment manager. The CLO has a target portfolio of €400m across 136 loan issuers. The expected return on the investments is 14.3% pa.

Liberum view Throughout 2021, FAIR's CLO equity exposure has risen as the company has crystallised gains on mezzanine positions and recycled the capital into new CLO equity investments. The outlook for CLO equity tranche returns remains favourable given expectations of low default rates and the attractive level of CLO funding costs. This will be the fourth investment in a CLO run by the investment manager. These have demonstrated strong credit performance and achieved attractive funding costs. Th e pricing on the reset of Fair Oaks Loan Funding III completed recently at a superior cost of funding to other CLOs. Infrastructure

[cwa1] 09/12/2021 07:30

Portfolio Update

Fair Oaks Income Limited (the "Company") is pleased to announce that FOMC II LP (the "Master Fund") has entered into a binding contract to acquire, in the primary market, EUR28 million notional of equity notes in Fair Oaks Loan Funding IV, a new CLO backed by a portfolio of European broadly syndicated secured loans.

The manager of this CLO's portfolio is Fair Oaks Capital Limited, the investment advisor to the Company and Master Fund II.

This CLO's current target portfolio has a principal value of EUR400 million across an expected 136 unique bank loan issuers, with an expected weighted average exposure per issuer of approximately 0.71%. The potential total return for this investment, as estimated by the general partner of the Master Fund, is 14.3% per annum (see Note 1).

[scrwal] 23/11/2021 12:48

ii have paid up.

[cwa1] 23/11/2021 10:19

Sent a message to them but got a fairly hopeless:-

we aim to credit dividends as soon as possible

...type response from them this morning. So none the wiser-but at least I know it is not just me :-)

[cwa1] 22/11/2021 12:51

Thanks, makes me feel a little happier I'm not the only one waiting...

[scrwal] 22/11/2021 12:45

Still waiting from ii - usually got it on payment day.
Chased on Friday pm but only got a standard reply that it could take a few days to distribute funds to customer accounts. This is only the second time I have had to wait to receive a dividend in the following week.
I would expect it to be credited in the afternoon as that is what ii seem to do for smaller shares quoted in foreign currency.

[cwa1] 22/11/2021 07:56

Morning All

Had my dividend through idealing last week(ON 18/11) but, so far, nothing from II.

Anyone else had, or not had, theirs from them?

Cheers

[cwa1] 15/11/2021 09:39

Hoping db doesn't mind...

davebowler15 Nov '21 - 09:09 - 553 of 553
0 1 0
Liberum on FAIR -
Strong quarterly cash flows

Mkt Cap £201m | Share price $0.665 | Prem/(disc) -0.8% | Div yield 15.0%

Event

Fair Oaks Income's NAV per share as at 31 October 2021 was $0.670, representing a 1.9% NAV total return in the month (+22.6% YTD).

US and European loan markets generated returns of 0.3% and 0.2% during the month. Defaults remain very low with the 12-month trailing default rate in the US declining from 0.44% to 0.35%. European default rates also fell from 0.85% to 0.75%. Strong primary CLO issuance in the US and Europe has continued in Q4. Primary AAA spreads have remained stable at Libor +1.18% in the US and Euribor +0.99% in Europe.


All of FAIR's CLO equity investments made their scheduled quarterly distributions in October. Master Fund III received $18.8m in distributions, representing a 15% increase over the same period in the prior year. The portfolio has benefited from reduced exposure to lower coupon CLO mezzanine investments and strong cash flow generation from the CLO equity positions. Two recent CLO equity investments were not scheduled to make a distribution in October and their first payments are expected in January 2022.

Liberum view

Strong cash flow generation leaves FAIR well-placed to maintain its 15% dividend yield. The benign default environment and tightening in CLO spreads has created a favourable environment for CLO equity performance. The outlook for defaults remains low due to strong fundamentals and the maturity profile of the market continues to be pushed. The over collateralisation test cushion in FAIR's portfolio has steadily built up since mid-2020. We estimate an increase in the average OC test cushion in FAIR's US CLO equity investments from 2.2% in July 2020 to 3.9% currently. The arbitrage spread of the portfolio over the cost of financing has also increased steadily since mid-2020 to 1.93%, the highest level since August 2016.