Harbourvest Sl Share Discussion Threads

[dendria] 10/10/2012 09:08

thanks edwardt - I see it now (the ex-date is 10 October 2012 for the distribution).

[edwardt] 10/10/2012 08:48

capital distribution.

[dendria] 10/10/2012 08:46

jonwig - any accounting for today's drop? I don't currently hold but been watching on & off for a while.

[jonwig] 05/10/2012 11:04

There looks to be a potential default in one of the loans:

During September 2012, one of the underlying portfolio companies suffered a deterioration in its business outlook and credit quality, which is likely to imply a reduction in the fair value of our investment. At the present time the Board believes that the impact will be less than 1% of the Company's NAV.

Let's hope the estimate doesn't change for the worse!

[edwardt] 05/10/2012 10:05

disagree topvest - the portfolio is in run off from june next year, so there is little reason it will widen out too much. The only catalyst to that would be a blow up in the euro or a default.

[topvest] 27/8/2012 19:51

Let see, not convinced that the discount won't widen. Need to look at these things medium term, rather than just looking at a 3m chart.

[jonwig] 27/8/2012 18:00

topvest - I think you're behind the curve on the discount, which went very wide in April-June this year and is now narrowing.

One loan is due to be returned to shareholders this year, and the whole portfolio by the end of 2018.
If redemptions come at par (which I think they will) that should help keep the NAV discount tight.

Of course, if the EZ does blow up there will be problems - but that will happen whatever you're invested in.

[topvest] 27/8/2012 16:17

Just having a look at this one. Think this will probably go to a much bigger discount, so will keep on my watch list. These sort of investment funds, always seem to go the same way. Start-off ok, then 2+ years in the price starts to fall and the discount increases.

[jonwig] 22/8/2012 09:51

Hi, edwardt.
Good to see some interest - I'd stopped posting when it seemed I was just talking to myself.

The current NAV (c. 94p) includes MtM discounts to par, so should build as redemptions are injected into the portfolio. Interest payments will inevitably be replaced by capital.

I assumed (and still do, despite Euro woes) that this will prove to be a very secure investment. The only slight worry is the 7% or so in one Italian company.

Once the situation in Europe gets resolved one way or another I think they will want to re-market this fund, if only with another C-share issue.

[edwardt] 22/8/2012 09:25

good announcement re the return of the loan. however, a bit disappointing it was only mildly accretive to nav. seems annoying that a take out takes away our earnings stream from what is evidently one of the better credit names in the portfolio. that said, it should help narrow the discount on the trust relative to peers.

[jonwig] 22/8/2012 07:10

Return of capital begins.
£12.7m potentially to distribute. That's 9p/sh.

[jonwig] 24/5/2011 07:12

NAV seems to be increasing by about 0.42p/month - ie. 5p pa.

Of course, the trend might be lumpier than that, and there may be a chunk of expenses to come out, but if the increase is just net accrued income it signals a yield of around 5%, which fits their earlier projections.

[jonwig] 16/4/2011 08:13

Citywire 4 April 2011:

With UK inflation recently announced at 4.4%, investors are in a dilemma. How do they protect their portfolios from the potential ravages of persistent inflation? High yielding equities are an obvious choice, but recent academic evidence from the IMF suggests it is far from the best long-term way of doing so.

Commercial property is another, but investors may well be concerned about how global economics and the state of the global banking sector could affect property valuations and security of rental income, as well as the potential for dividend growth from listed property companies.

Fixed income and corporate bonds are less attractive in inflationary markets, so what else offers lower volatility than equities, but with high levels of income, hopefully growing, and the potential for capital appreciation?

Closed-ended funds are well suited to unusual asset classes. A common feature of many new launches today is to have an element of Libor-linked income from several asset classes that traditional investors will probably have not invested in before.

Secured loans are probably the most well known asset class that offer a Libor-linked income. Formerly known as leveraged loans, companies use secured loans as part of their capital structure.

These typically rank above equity and below bank borrowings in the event of company default. Secured on company owned assets, they often pay an index-linked income stream. The rise of securitisation led to the sector being a favourite of hedge funds and investment banks who were attracted to its high yield and low volatility; 2008 saw that volatility rise and prices fall sharply, but both today are back to near their long-term averages.

Investment trusts and companies such as Henderson Diversified Income, HarbourVest Senior Loans Europe and the currently fundraising NB Global Floating Rate Income are all either entirely or significantly invested in the asset class. Others, such as Greenwich Loan Income fund (AIM listed) or Carador are invested in collateralised loan obligations (CLOs). Both are invested in the highest risk but highest return equity tranche of a single or range of CLOs.

All these funds have their own strengths and weaknesses. Their common link is that while they pay attractive income levels, investors must be extremely comfortable with the asset class, its risks and levels of gearing implicit in the loans or bonds that the funds own. When retail investors get interested in asset classes typically reserved for sophisticated institutional investors, however, one should also be wondering whether a particular asset class is reaching the top of its particular cycle.

[jonwig] 16/4/2011 07:43

Loans acquired are lower-risk. If target LIBOR (or EURIBOR) + 450bps can be achieved, that suggests a running yield of up to 7% when something like normality returns (LIBOR 3.5%, management charges 1%).

Progressive repayment of capital from 2012 along with C-share issues should help reduce risk.