Gcp Asset Backed Income Share Discussion Threads

[williamcooper104] 13/6/2024 09:52

Makes sense for longer tenor assets as they might end up selling them so need to mark them to the return a buyer would expect

[2wild] 13/6/2024 09:26

chucko. I agree regarding discount rates. In fact, I don't even know why they are arbitrarily applied to assets currently generating high income. Debt funds should really only apply discounts for increased credit risk.

[garbetklb] 13/6/2024 08:35

Jam62 - AJ Bell still showing original holding and barring dealing too

[orinocor] 13/6/2024 08:24

is anyone buying or selling at 70.4p or just happy to hold on to what you have.

[jam62] 13/6/2024 08:22

It looks like HL is now the only broker not to have sorted the Gabi position. No new holding and no share quote.

[chucko1] 13/6/2024 08:00

... and far less exposure to electricity etc.

But recall, the argument about duration is weak, in my opinion, owing to the already excessive discount rates employed. I am not saying they are excessive because they are not correct, but very significantly overstate the long term risk. This is true for the majority of credit-like funds, and are at their most valuable from an IRR perspective when in wind down.

[2wild] 13/6/2024 00:53

Q: What if 95% was being returned?
A: Share price would have been around 88-89p.

Although average loan duration has increased markedly, quality has improvedWith most problematic loans now settled.

Interactive investor have updated my remaining holding of 995 shares to 623.

I estimate 30 June NAV will be around 91.7p. Equating to 23% discount at 70.6p. Compare to around 28% at GCP, which has longer average duration.

[chucko1] 12/6/2024 14:36

I knew you were, but other(s) were looking further ahead!

The share price change should, in theory, have been just under 7p (as currently it is). The next capital payment is possibly quite soon - on inspection of scheduled loan maturities, and that may support a continuation of the recent positive trend.

Against that, as the portfolio diminishes, costs will need to be increasingly managed to eke out most of the high yield etc. But they know this.

[hpcg] 12/6/2024 14:27

chucko - r.e. the discount, I, and I suspect others, were specifically talking about Monday to Tuesday when in theory a capital return at NAV should be discount neutral.

Another way of looking at it is that the people paying over 70p a week ago were misguided and they should have waited until the after the distribution when it returned to the running discount.

[chucko1] 12/6/2024 13:41

Barclays is now showing a short position (a friend of mine foolishly stuck with Barclays Smart Investor). They are struggling to get through this also.

[hpcg] 12/6/2024 13:31

There is some justification for a greater discount after the distribution as the cash required zero risk adjustment while the remaining must have some risk, and indeed a time cost of money. Whether the discount is justified is up to the individual investor.

[chucko1] 12/6/2024 11:28

Yes, both ii and HL.

Also, the fact that IG allocated yesterday and ii cannot is of note because when I look at the position ii think I have, it is incorrect (not that it can be traded). They have gone back to the position I had on Wednesday, so they clearly are having issues reconciling the trading that occurred the next two days.

And if that is the case, it is perhaps merely luck that IG think they have reconciled trades - i.e. that there were no trades done by their clients on 7th and 8th.

HL wrote to me yesterday and confirmed that they would receive the stock by COB yesterday. This also has failed to materialise.

As I proposed previously, it is not clear that the continuation of trading after the date 2 days prior to the Record Date was a fine idea.

[garbetklb] 12/6/2024 10:42

Jam62 - same for II

[jam62] 12/6/2024 10:34

HL has not yet allocated new GABI to my account. Is anyone in the same position with HL or any other broker?

[farmers son] 12/6/2024 10:05

The discount stayed the same in absolute £ terms but widened as a %.
As others have pointed out, the market is pretty efficient so the administrative process of making the redemption is not a P&L event.

[colonel a] 12/6/2024 10:01

I think the expectation is that the discount to the non cash element of the NAV would stay {has stayed} roughly the same.

[fordtin] 12/6/2024 09:30

If I’ve calculated it correctly, the discount to NAV before the share reduction was 12.79%.
After the share reduction, I’m getting a discount to NAV of 19.70%.

Is the rump (as Papy02 called it), really that poor?

[chucko1] 12/6/2024 09:00

That MINUS amount is quite (but only in theory) possible. It would merely demonstrate the cheapness of the existing share price relative to the NAV.

Of course, the ex-tender actual share price would not go to that practically impossible level, and where it settled relative to that minus amount would result in the profit gained on the conversion.

Previous calculations above are correct.

[papy02] 12/6/2024 08:57

I think it’s saying that the market had fully priced in the return of capital / cancellation, as of 10 June eob, and has not materially changed its view on the value of the rump as of eob yesterday.

[angelusf] 12/6/2024 08:49

I still can't get my head around the pricing. If I take the market value of my previous holding and then compare it to the market value of my reduced holding at yesterday's close plus the cash from the redemption, these amounts are about equal. But I should have turned a profit because the redemption was at NAV, not at market price.

Looking at it another way, the NAV per share should be unaffected by the redemption, and if the discount remains the same then the market price should remain the same. Which was what happened when the "new" shares opened yesterday.

As for the calculation earlier, "1000 Shares at 78.2p = £782 −375 x 0.8966. Divided by 625 new shares.", what if it had been, say, 95% redeemed? 1000 Shares at 78.2p = £782 − 950 x 0.8966 gives MINUS £69.72, so that can't be the right way of doing it.

Anyway, it's all pretty academic for me because I have no intention of selling at the moment.

[2wild] 11/6/2024 23:24

Yep, just Noticed

[papy02] 11/6/2024 23:11

Many thanks. So we are doing the same calculation but I get 71.32p

Only a small difference, and academic now anyway, so far as trading the mis-pricing today is concerned.

[2wild] 11/6/2024 22:29

Papy
1000 Shares at 78.2p = £782 −375 x 0.8966. Divided by 625 new shares.

[papy02] 11/6/2024 18:06

Hi 2wild. Re your post 369:

GABI closed at 78.2p this afternoon. Theoretically new GABI should start trading at 70.5p 8:00 AM Tuesday morning

I would be interested in your workings for that.

My simplistic calculation says if 37.5% are "priced" at 89.66875p (the redeemed shares), the other 62.5% (keepers) were being priced by the market at an implied 71.32p, for the average to work out at 78.2p at yesterday's close.

Yesterday evening I tried to do a calculation based on "net of cash" discount staying the same, but it was late so I just ended up confusing myself.

Hence my interest.

(In the event, it looks from posts here that only IG Index clients were able to take advantage of the anomalous market price this morning)