Gcp Asset Backed Income Share Discussion Threads

[chucko1] 21/5/2024 11:43

I still have plenty of GABI. The main risk is a large single loss, as they have experienced in the past on one occasion. They counter this by saying that the 0.5% per annum experienced loss rate is basically entirely made up of that one loan. The risk manager would counter argue that this is not helpful in a wind down as there is no further diversification over time to soak up this (consequentially higher) loss (rate) were there to be another large single loss.

Nevertheless, all else appear to be in reasonable shape and the current discount and average portfolio life suggests a 15-20% IRR (reinvesting capital repayments in the short term) over the nest two years.

I would prefer a portfolio of a few GABIs, rather than swapping from one to another. I buy the arguments on things like ASLI and API, and I do not even mind a few VSL at the new lower sale price(!!), but I like the overall wind down concept as a risk rather than a similar risk on those not winding down where there remains a different systemic risk in that any further IR shock will knock further spots off them. The economic argument of higher underlying rates for the medium and long term argue against the same sorts of returns on the likes of SUPR (though I have many) and even the likes of EBOX. Chuck in some cheap things that are relatively IR-agnostic like RECI and SEQI, and I think you can construct an argument for a reasonably diversified 12-13% IT portfolio over 3-4 years. Do the maths and you find you will be 50% better off by the end of 2027 without much of a concern about rates.

[cc2014] 21/5/2024 06:34

Sold as my view of the credit risk changed after reading pages 140-141 of the accounts.

The manager conflicted loans (that's loans to the investment manager or directors of the investment manager or employees) are a disgrace.


Better options elsewhere. Chucked two thirds of the cash on GSF at under 60p which has worked out well


PS - as an aside I do not like that the portfolio information pages 140-141 are unaudited. I am confused by this. It seems to be provided as additional unaudited information but I would have expected it as part of a set of annual reports and financial statements to be audited. Is all of it unaudited or just parts of it?


Edit. I'm completely and utterly confused why this section is unaudited. Surely the whole point of the annual accounts is that the auditors take a random sample of the assets and check the evidence the company is providing to it's shareholders

[williamcooper104] 20/5/2024 20:36

Indeed - that's why despite my concerns I did buy some GABI

[papy02] 20/5/2024 20:11

Thanks. I agree those are the worry pinch-points. Especially the 57m getting deferred from Mar to June, alongside the memory of how they took their last humdinger loss spread over many years, writing it down but by bit. And with this 57m (and the 18m repaid in Feb) it doesn’t look like it was clear it was all effectively with a single borrower.

But on the other hand, the independent valuers should have already built these concerns into the last NAV. In many of these windups it seems to me that pessimistic assumptions are counted in multiple times, by the company, then by investors.

But you are right, surprises are also par for the course! Time will tell.

In any case, thank you for your feedback - always more useful to understand a contrary view than feeding our confirmation bias ! (Especially when it comes from respected posters like you guys).

[rimau1] 20/5/2024 20:00

My point was a portfolio could have both API and Gabi. Gabi could still be bought out, if not there will be a buyback. I am a happy holder, i'll buy more in the 60's

[williamcooper104] 20/5/2024 19:50

Indeed - think we all would quite like to have gotten out at 78 so long as it's 78 cash in a few months

[spectoacc] 20/5/2024 19:44

As @Wc104 says - look how many of GABI's loans are 2028+. Then look at how they had to extend some recent loans that we thought would have matured by now.

There's a bit more than that, and a turn in interest rates/the market may make their later loans more valuable, but every loan fund wind-up I've been involved in has had some surprises - VSL the most recent.

Not saying GABI's not reasonable value here, but there's more certainty in eg API. 1p XD and out at c.70p.

[williamcooper104] 20/5/2024 19:18

Commerical property assets (excluding some offices) are more liquid than loans so easier/quicker to wind down Problem with GABI is that while many of their loans mature reasonably soon there's a tail of long tenor loans that likely need to be sold at a considerable discountI do hold GABI but I've a lot more API and even a lot more DGI9 (yes they win the top of the muppet awards but they are still v v cheap)

[rimau1] 20/5/2024 18:44

Agree Papy i don't get the turn in BB sentiment to be honest. I hold API too and see both returning 1000bps compound over 24 months. Add in the 60's and forget IMO. These are short duration loans minimal risk and decent reporting transparency. I guess people get bored. There is a place in every balanced portfolio for Gabi.

[papy02] 20/5/2024 18:36

I’d convinced myself (and friends) that there is likely 20-30% pa on offer here, over a mid-point for returns of 2-3yrs. Maybe 10-15% pa worst case.

Q to those exiting: I assume you don’t subscribe to the higher of those estimates. Would be grateful to know your rationale for exiting, if you don’t mind sharing.

[madmix] 20/5/2024 16:58

Thanks Specto.

API has been on my watch list for a while. Will have to run some numbers on it.

The ideal scenario would have been for a sale here at 78p+ and recycling the funds elsewhere. But that's looking less likely as the months pass.

[spectoacc] 20/5/2024 14:38

API's my largest holding, average a little below current price tho. Uncertainty on timescale, but more certainty on return IMO.

Has to clear a vote next Tuesday first.

[madmix] 20/5/2024 14:27

I'd be interested to hear where you guys have been moving your money to.

Where do you see as the best risk/reward currently?

Still have a large holding here.

[cc2014] 20/5/2024 14:06

Interesting Specto.

The best I got was 53.4p

I sold all mine last week.

[spectoacc] 20/5/2024 13:53

Had hoped for more of a dcb on the vote passing, and the alleged 78p rejected bid, but I'm out - good luck holders. 51.54p lowest price paid, probably the only time I'll be the absolute low trade :)

[spectoacc] 20/5/2024 11:09

Interesting - particularly the 1 in 5 who'd rather GABI continued in present form.

[papy02] 20/5/2024 10:45

All AGM/EGM resolutions approved. Though some chunky votes against. 20% against discontinuation, 38% against the Investment Manager incentive plan letter, 28% against re-election of Alex Ohlsson (chairman)

[papy02] 17/5/2024 18:55

Thanks Rimau1 (from the back of the class!)

[rimau1] 17/5/2024 18:45

Explains why we have not had a buyback, they must have been in high level sale discussions. I would probably accept a smidge over 78p

[rimau1] 17/5/2024 18:44

Post #233 i think answers

[spectoacc] 17/5/2024 18:35

Ah but then the managers miss out on their juicy incentives..

Definitely ought to have been pursued, and presented as an option to shareholders.

[williamcooper104] 17/5/2024 18:26

Plus if the bidder has leaked it there's every chance they'd go higher than 78 78 is a bit stingy but 80 something for cash quickly could be interesting

[papy02] 17/5/2024 18:08

I'm struggling to make sense of the net Cash position at 31st Mar 2024 (stated in EGM Circular as £60.8m). My quick (so maybe faulty?) calculation is:

They had c £30m at year end 2023.

1Q expected maturities were £92m (plus non-capitalised interest?)
(and the 2023 AR, in April, said "Post year end, the Group received 22 repayments totalling £41.4 million". It is not clear how much of this was expected 2023 maturities and how much 1Q24)

After adjusting for 1Q opex (c. £1.3m?) and dividend (c. £6.7m?) it looks like a large chunk of the 1Q £92m had not been collected by 31st Mar?

Thoughts welcome.

[williamcooper104] 17/5/2024 17:56

Compare and contrast with API who are getting broadly (IIRC) up to 1% as a transaction fee on selling and c20bps plus a few costs as a management fee Kick out Gravis Plus we still don't know how many loans have conflicts we have only been told the bad loans which have conflicts not the currently performing ones Another reason to kick them out Given there's no shortage of opportunities if happily take money today at a discount which I can then quickly reinvest

[skinnypope] 17/5/2024 17:21

hxxps://citywire.com/investment-trust-insider/news/gcp-asset-backed-turned-away-wind-down-specialist-brett-miller/a2442680?re=120253&refea=2081802

Amongst a few titbits here, this one is interesting:

"However, our sources say in the past month a credit investor contacted the company with a potential 78p-per-share offer that would have matched the upper end of an offer made, but subsequently withdrawn, by a US bidder in December. That offer was disclosed by the company, but the latest approach has not been."