Fair Oaks Income Share Discussion Threads

[scrwal] 14/9/2022 11:22

The interims were good but the price remains under pressure as there are constant large sells - it doesn't help that the UTs are dictating the downward trend.

[rambutan2] 11/9/2022 21:44

Interims out fri. Worth a read:

"We continue to believe that the 18.0% dividend yield offered by the Company, supported by a high-quality portfolio of primarily first-lien, senior secured loans with very attractive term, non-mark-to-market financing represents one of the most attractive risk- adjusted opportunities available to investors in the current market environment."

[cwa1] 25/8/2022 09:36

From davebowler elsewhere:-

Liberum on FAIR-note the last sentence.

Fair Oaks Income Realisation Shares

First capital distribution for realisation share class

Mkt Cap £30m | Share price | Prem/(disc) -1.3% | Div yield 17.7%

Event

Fair Oaks Income will return $4m to shareholders in its realisation share class. The distribution will represent 6.4 cents per share and will be effected by way of a compulsory redemption (11.2% of the shares will be redeemed).

Liberum view

This is the first capital distribution for the realisation share class. Dividends will continue to be paid alongside regular capital distributions. The full redemption of the previous realisation share class (2014 shares) took approximately two years. The 2014 shares fully redeemed in March 2019, resulting in a 9.8% IRR from inception. Alongside strong credit performance, we believe the option of a realisation share class is one of the reasons why Fair Oaks has commanded a much stronger share rating than peers in the CLO sector.

[grahamg8] 25/8/2022 06:40

Partial return of Redemption shares. No sign of trouble at’ mill. 7 to 10% upside from here looks possible.

[rambutan2] 18/8/2022 13:51

I added a few yesterday, first time since the lows of the pandemic. Discount and yield perhaps pricing in a bit too much doom.

[cwa1] 18/8/2022 08:30

Courtesy davebowler from elsewhere:-

Liberum on FAIR-
FAIR’s CLO portfolios have demonstrated considerably stronger credit performance since inception than loan markets. Q2’s loan market sell-off prices in a high default rate scenario. FAIR’s NAV has predictably weakened in this environment but offers near-term upside from recent loan price strength. Despite market volatility, we expect strong cash generation to drive an 8% NAV TR in 2022. We estimate a pro-forma discount of c.20% (vs a long-term average of 0.7%).

Download Fair Oaks Income* (BUY, TP $0.60 from $0.73) – Downside risk priced in (9 pgs)

[cwa1] 18/8/2022 07:14

XD this morning, pay dat is 15/9

[grahamg8] 12/8/2022 20:05

scrwal I am a bit more positive. NAV on 31/12 was 66.82c and the share price 62c which is a 7.21% discount. For the latest RNS the NAV on 29/7 was 59.83c and the share price 50c which is a discount of 16.43%. If you go back further then the NAV and share price follow each other very closely. The exception being from November 2020 to March 2021 when world markets crashed on Covid restrictions, but the discount was eliminated entirely. Short term the NAV actually went up in the past month.

So history tells us that the gap will close, share price up or NAV down or a bit of both. My thinking is that the doom merchants are in charge at the moment and the price will rise to 55-60c in the next six months. If not we can console ourselves with a 20% yield.

[scrwal] 12/8/2022 11:39

The discount is still 10c compared with early Jan when NAV was 66.82c so it is 17% now vs 15% - not a big difference in the grand scheme of things.

Looks like the 2.5c qrtly is now locked for the foreseeable future.

[cwa1] 12/8/2022 06:13

DIVIDEND DECLARATION

Dividend for Quarter Ended 30 June 2022

The Directors of Fair Oaks Income Limited have declared that an interim dividend will be payable as follows in respect of the quarter ended 30 June 2022 in respect of the Realisation and 2021 Shares:

Ex-Dividend Date: 18 August 2022
Record Date: 19 August 2022
Payment Date: 15 September 2022
Dividend per Realisation Share: 2.50 US cents per share
Dividend per 2021 Share: 2.50 US cents per share

Very small improvement in NAV as well...

[cerrito] 25/7/2022 11:38

I saw that and very welcome

[cwa1] 25/7/2022 11:35

Big increase in holding from Fidelity:-

[jrxs4all] 22/7/2022 12:05

The dividend is subtracted from the NAV on the ex-date, therefore not included in the end of June NAV. So for the June performance, you have to add the dividend.


www.spglobal.com/spdji/en/indices/fixed-income/sp-lsta-us-leveraged-loan-100-index/#overview

The LLI suggests a bottom for loan prices early July, as does the price of BKLN (US listed loan ETF). I added to FAIR at $ 0.49

[cerrito] 21/7/2022 18:24

The fall in the NAV in June was severe and even worse than that of Volta.
I am not sure how they treat the dividend which was declared in June and payable in July when showing the month end NAV.
I have emailed IR but have received no reply.
It is very sad to say but for a sterling investor like me a share like this made up of non sterling currencies-especially the US$- will be a good bet because the FX markets will not take kindly to Truss if she becomes PM as it seems she will.

[scrwal] 21/7/2022 13:53

Some heavy selling this afternoon, just over 3m sold in 4 trades.

[cwa1] 21/7/2022 09:25

Posted by davebowler elsewhere:-

Liberum on FAIR-
Fair Oaks Income

Resilient credit performance despite wider volatility

Mkt Cap £167m | Share price $0.495 | Prem/(disc) -15.8% | Div yield 20.2%

Event

Fair Oaks Income's NAV total return in June 2022 was -4.8%, largely due mark-to-market movements as a result of volatile credit markets. US and European loan markets delivered returns of -2.2% and -4.5% respectively in June.

The manager reports that the performance of the Master Fund remains robust with an annualised default rate of 0.34% since its first investment in 2017, compared to 1.63% for the loan market over the same period. The underlying loan portfolios also have low exposure to CCC assets at 2.6% (vs a 4.1% average for US CLOs and 3.2% for European CLOs).

All of the positions in the portfolio are in compliance with their overcollateralisation tests (the average test value is 4.5% above the threshold). The test compares the par value of the CLO portfolio (adjusted for defaults) with the par value of the CLO notes. This ratio must be above a predetermined threshold for the CLO to pass. The company expects the next dividend to be unchanged at 2.5c per share and it is expected to be well covered. Assuming 70% loan recovery rate, the loan portfolios would require 15% cumulative defaults in order to generate the loss required to breach the limit.


Liberum view

FAIR's CLO portfolios continue to perform resiliently, maintaining the track record since IPO. Annualised default rates and the proportion of CCC-rated assets is considerably lower than market averages. The headroom on the overcollateralisation test provides comfort on the ability to maintain high cash distributions. The reduction in loan prices will also provide opportunities for the underlying CLO managers to build par by acquiring strong credits at discounts. Stress testing scenarios are useful in assessing downside risks for CLO portfolios. The manager has stressed return expectation for a significant increase in default rates. Under stress scenarios based on 2000 and 2008, the estimated gross returns would still be positive at 4.4% and 9.3%. The shares currently trade on a 15.8% discount to NAV (20.2% prospective dividend yield), compared to a long-run average discount of 0.5%.

[scrwal] 13/7/2022 19:37

It will be interesting to see the June NAV which should be out shortly.

The only good news is that the £ value of our dividend has increased.

[grahamg8] 13/7/2022 15:56

After much searching I found a CLO index which suggests prices have dropped by around 10% in the last couple of months. So the fall is industry wide not specific to FAIR. So it looks like a combination of rising interest rates and fear of future defaults, rather than losses already made are causing the price to tank.

[danieldruff2] 11/7/2022 18:35

Nearly all high yielders blow up in the end, this launched at a dollar, now 50% lost over a number of years.

[scrwal] 11/7/2022 18:09

Big drop today - wonder what caused as it had been holding up ok over the last couple of weeks.

[scrwal] 19/6/2022 16:42

I'm with ii but have just looked at HL website and according to the share search search result you can and also hold it in whatever account you have.

[notbitcoin] 19/6/2022 09:18

Can you buy in UK from Hargreaves

[grahamg8] 13/6/2022 15:57

Share price and NAV never get far out of line. The ii's have probably spotted a drop in the transaction prices of CLO's. At least I hope that is all it is. Worse would be if we have a default of significance in one of the investments. That is a permanent loss of value, whereas trading prices come and go along with overall market sentiment. Update due this week.

[scrwal] 13/6/2022 11:31

Hooray it's declared at 2.5c xd 23rd paid 25th July - better late than never.

I wonder what the payment dates in future are likely to be, won't know until they happen most likely.