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| Share Name | Share Symbol | Market | Stock Type |
|---|---|---|---|
| Funding Circle Sme Income Fund Limited | FCIF | London | Ordinary Share |
| Price Change | Price Change % | Share Price | Last Trade
|
|
|---|---|---|---|---|
| 0.00 | 0.00% | 82.70 | 01:00:00 |
| Open Price | Low Price | High Price | Close Price | Previous Close |
|---|---|---|---|---|
| 82.70 | 82.70 |
| Top Posts |
|---|
Posted at 26/4/2019 23:01 by mxds I haven't an FT account, but thanks again for your advice.I'll sit it out for this divi and see what happens over the next month. Totally agree wrt the bad smell. I think the only real winners are the FC board, which is a shame because if they hadn't gotten so greedy it might have been a great British success story. |
Posted at 24/4/2019 21:00 by pyufak Hi MXDS,seems the trade was to buy FCIF and short funding circle. Unfortunately I'm here to say that while I still believe you'll be fine in FCIF in terms of not losing money overall - i'm getting out for roughly flat and use the money elsewhere. Sorry to hear you're stuck in FC property loans. P2P smells and my gut is saying go back to home infrastructure and REIT turf. |
Posted at 24/4/2019 08:16 by mxds Thanks for your research - I appreciate the effort and sharing your findings.I took the plunge yesterday, so will sit back and observe. I am an FC lender, but scaled back considerably a year ago - their foray into properties has been a complete disaster and borderline scandal - to encourage investors they pitched the majority of them as lowest risk (A+), from observation half took FC for a ride. As a consequence I have loans that FC claim are kosher but that can't be sold. Holding FCIF looks to be a better bet |
Posted at 16/4/2019 11:11 by pyufak well someone big doesn't agree with me - continues to cross 400k shares a day in the FCIF purchases and looks to be one of the big sellers (Invesco my best guess) selling - slight worry |
Posted at 12/4/2019 21:18 by pyufak So here is my best shot at a deep dive into this one.My conclusions are twofold. 1. FCIF has limited downside from here unless the UK economy really craters, I bought FCIF as I think it's good risk reward from here given we have a Brexit delay. It's purely a play that the fund wind up will be >86.6p. 2. Stay away from P2P lending - I believe their implied default rates are far far too low and their incentive structure is wrong --> i think this is the reason the institutional investors want this fund unwound - they want out of this sector and I wholeheartedly agree. So using recent fact sheets and last year's annual report I get the below Net assets 315 Cash 22.05 (7% of the fund is in cash from end Feb) Loans 292.95 Income 28.41615 (9.7% avg int rate 2016+; matches '18 fin statement) Costs 4.743 (from '18 fin statement, excludes FX charge and NPLs) I-C 23.67315 (Income - costs = NPL capacity) Below is the capacity for non-performing loan write downs for respective recovery rates just using the income generated by the loan interest less costs. Googling recovery rates I have found figures between 30-40% for Italian banks. However to be conservative I used the 10 & 20% recovery rates for my investment decision. NPL implied @ 0% R 8.08% NPL implied @ 10% R 8.89% NPL implied @ 20% R 9.70% NPL implied @ 30% R 10.51% NPL implied @ 40% R 11.31% To me, these default rates look quite realistic for UK SME lending. If anyone can find a good data series on this I would be interested. All I found was a European report - UK SME default rate in 2015 at ~11%, add in the 30% recovery rate commonly cited and this fund is returning negligible NAV gain. This view is corroborated by FC's own statistics: hxxps://www.fundingc So why did I buy? I have updated the implied recovery rates above to account for the market cap of the fund as opposed to NAV. Using 86.6p / (9.1%). Discount to NAV @ 9.1% = cash 28.66 NPL implied @ 0% 17.86% NPL implied @ 10% 19.65% NPL implied @ 20% 21.44% NPL implied @ 30% 23.22% NPL implied @ 40% 25.01% Now we're getting into territory where I like the risk reward. Lending Club (US P2P lender to households and businesses NPLs in '08 was 15%). I find it difficult to see FCIFs default rate getting towards these figures. My base is defaults of ~10%, 20% recovery rate and so no organic growth but should over time realise the 9.1% discount. Lastly, FCIF have stepped up their buybacks of their own shares since March. In Feb they bought 2.137m shares resulting in a 0.06% addition to NAV however after the fund wind up was announced they stepped this programme up and have bought 7.825m (+0.22% NAV) shares in March and in April are on course to buy 8.8m (+0.25% NAV). This appears to be the main way they can create NAV growth if the share price remains at such a discount - they will have significant incoming cash monthly from loan rolls offs to continue this. I do also take this as an indication of the boards outlook - the statement highlights they will use cash balances to correct material deviations of the share price from NAV which implies the default rate is not running away higher in my view. The risks: 1. it's a 10% trade with potential for ~5% further upside if things go better than planned but over what time period? Rolling off the loan book we'd be talking years and that isn't a great return over that period. This is why I have personally done this trade on margin rather than pure cash investment. Margin also allows me to play for a much greater return on equity and given I think the downside is limited I am comfortable with this in my wider portfolio. 2. Hidden aspects as mentioned above we just can't see. High unwind fees (even though fees should start coming down as they use less banking facilities etc). Thoughts welcome |
Posted at 07/4/2019 19:16 by pyufak I guess the nub is - how quick can they wind down the fund and get the money back to investors. On this I have little experience so would appreciate any feedback from others who have seen this happenaverage life of a loan is 30 months - that's a long time waiting for your 10% cap gain, albeit supposedly getting the 7.5% dividend yield. I expect institutional investors will want them to move much swifter than this so would expect them to be selling off certainly the performing loans over coming months... perhaps refinancing with incoming money to the FC platform? Just me thinking aloud here. Thanks |
Posted at 20/12/2018 13:34 by spectoacc CITI Sell rec today I believe. FCIF the other day won't have helped. |
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