P2p Global Investments Share Discussion Threads

[aroon001] 11/10/2016 15:35

ahhhh shame. what made u sell out. the hedging policy? u switching into rdl?

[spectoacc] 11/10/2016 12:58

Sold my remaining shares for small loss - so you should be hearing a bit less from me @Aroon001 ;)

Good luck holders.

[aroon001] 08/10/2016 15:16

Have u got the link for the SPD RNS?

[aroon001] 08/10/2016 15:08

Will check out the RNS.

If you don't want exposure to $ you don't do anything as P2P are hedged into GBP already, if u want exposure you sell GBPUSD.

By not hedging BA, BP etc UK shareholders are assuming the currency exposure of the underlying business. Perhaps they are happy for BA, BP to speculate on fx on them but that's a personal choice.

At any one point I assume you are not aware of the proportion of p2p's loans in euros, dollars and other currencies as it changes constantly. If you don't want p2p to hedge these exposures, all that you are telling me is that you are happy for them to speculate on fx on your behalf. I'm not, as that's not their speciality. P2P nav is about 1000p, its been returning 5% pa so doing what it said on the tin. Once fx vol subsides post brexit and it deploys more leverage, hopefully returns will inch up to 7%. I don't see a problem outside of the discount to NAV. But if you do have an issue, you could switch out of P2P into RDL I suppose and let RDL effectively punt on EUR, USD and various other currencies on your behalf. Any business with unhedged underlying dollar earnings/assets, I probably wouldn't touch now with a barge pole with GBP at a multi decade low.

[spectoacc] 08/10/2016 11:42

If you don't want exposure to the $, surely you just ring IG and long GBPUSD?

My point remains that P2P is one of the few P2P co's to hedge, and it's cost them money and performance even before a huge move against them. And that hedging doesn't seem to be necessary for the plethora of co's who both earn & pay in currencies other than the one they're listed in. I very much doubt that UK shareholders of HSBC, BLT, BP or British Airways, see the need to hedge.

That SPD RNS is well worth a read btw - funniest I've seen in a long time.

[aroon001] 07/10/2016 21:00

If they don't hedge then you would have to hedge the currency exposure. And you would have to hold margin which would be uninvestable. what's the difference between them or us doing it? I don't see what the alternative is here.

If you want exposure to being long the dollar, just call up IG Index and short GBPUSD to your hearts content.

[spectoacc] 07/10/2016 15:15

Latest £/$ swings will be hammering them - huge intra-day spike down overnight, they'll once again be having to preserve investable cash to rescue their hedge. See SPD RNS earlier.

Out of interest - ftse350 non-£ dividends:

BHP Billiton, Hochschild Mining, Anglo American, John Wood Group, Experian, Vedanta Resources, Kaz Minerals, Evraz, Micro Focus, Ferrexpo, Polymetal, Lancashire, SABMiller, Gem Diamonds, Lamprell, Sophos, Smith & Nephew, Acacia Mining, Carnival, Hikma, AstraZeneca, HSBC, Lonmin, Centamin, Standard Chartered, Fresnillo, Antofagasta, Indivior, Inmarsat, Petrofac, Randgold Resources, BBA Aviation, Petra Diamonds, Nostrum Oil & Gas, Glencore.
Stock Spirits, Tui, GVC Holdings, Smurfit Kappa, Hostelworld, CRH, UDG Healthcare, International Consolidated Airlines, Playtech, Coca-Cola HBC and Mondi.

[aroon001] 05/10/2016 13:12

Theres no issue here for myself so I don't require a solution personally.

I accept that hedging is not free, and there will be some drag from hedging into GBP. Sure they could issue a dollar share class and I could buy that but then I would have to start converting the proceeds into GBP myself which involve even larger retail bid offer hedging costs and id have to readjust the hedging proportion constantly and hold margin and so on. I don't see how that is any better than the current set up?

[spectoacc] 04/10/2016 15:18

True, but as it is you've lost 20% of your investment anyway! :(

I guess one solution is to buy a mixture of the p2p ITs.

Major dollar earners like Shell, BP, Diageo, Glaxo, AstraZeneca, RELX & Shire don't hedge their $ exposure, though some do pay divis in $s.

[aroon001] 04/10/2016 14:56

Yes there are costs to hedging in terms of bid offer and margin calls and so on. But most investors into p2p ln have gbp liabilities. E.g. School fees. Rent. Etc. So prefer an asset denominated and hedged into gbp like myself. If they didn't hedge, or I had to buy a $ class of shares then imagine if gbpusd now went from 1.3 to 1.6. I'd would lose 20% of my investment. What do you think.

[spectoacc] 04/10/2016 13:08

As per previous posts, hedging costs money. Beyond the obvious cost of actually taking out the hedge, it caused P2P to have to supply substantial sums for margin calls, money that earned zero when it could/should have been invested into loans. They cited it as a major reason for their underperformance, though it's even more nuanced than that since they also had to make a call on how much more could have been needed, further restricting investment.

Your "hedge fund share classes" will most likely be listed in the specified currency, something P2P could very easily have done by quoting in $.

Speculating in currency can take several forms, one of which is deciding to fix at a particular rate with a hedging product. If it was completely free then it would just be a judgement call they got wrong, and which as you say could have gone the other way. It's the fact it's not free.

[aroon001] 04/10/2016 12:54

I don't understand what your point is with regards to fx hedging I'm afraid. Like I said most hedge funds I have invested in have share classes for each currency and returns are hedged to that currency. I don't want this fund to be speculating on gbpusd personally. I can do that myself. Presumably if gbp goes higher p2p will outperform rdl? What am I missing.

[spectoacc] 04/10/2016 12:00

@Aroon001 - see my RDL example above. It's not the type of business, it's this business.

And at risk of banging the same drum - hedges are for gardens.

[aroon001] 04/10/2016 11:57

well its odd that the underlying loans dont trade on a 15% discount, but as soon as P2p buy them they are valued as such. Market clearly not enamoured with the outlook for this type of business.

[anley] 30/9/2016 10:40

NAV of £10+
Price £8.50 - top buying price by company
Dis of 15%+

Not sure what price/discount this should be...........but I still think the market does not really like this concept in much the same way that it used to hate HP/Leasing stocks many moons ago.

[anley] 27/9/2016 11:18

Is this the new policy?

Simon Champ, CEO of MW Eaglewood Europe LLP, the manager of P2P GI, said: "This transaction marks a positive step in enabling us to deliver on our objective to both diversify the sources and reduce the cost of our funding. The funds raised by the issue will now be progressively deployed in line with the investment strategy and our intention remains to steadily increase our leverage ratio to 100%."

"We believe our target rate of return, mostly paid out in dividends, is particularly compelling in this ultra-low interest rate environment."

Has anybody else got an idea as to what this may do to the share price over the next year? For me I just think that Champ and his mates were to cleaver and got it wrong but I am surprised that shareholders have not been more vocal with the directors.

[spectoacc] 26/9/2016 07:28

Interesting comparing P2P to RDL - RDL didn't waste money hedging, & has delivered the returns it said it would:
"The Company announced last month that July marked the sixth consecutive month of achieving its investment target returns (70-80 bps per month unlevered). The Company's returns have also outperformed the Liberum Index by 104 bps over the 3 months to July 2016."
Just to confirm - that's RDL not P2P!
Everything has its price tho, & I'm in the latter and not the former. But clearly if buying from the start, RDL by far the better punt.
Another tuppence ha'penny share buy from P2P RNS'd.

[anley] 24/9/2016 10:28

A small in-house buy of 10000 shares..........its all helpful so expect some news soon.

[rl34870] 06/9/2016 17:42

Does anyone know at what rate P2P are able to borrow for their gearing? Presumably because they are much bigger than Ranger they should be able to borrow at less than the 5% Ranger has to pay on their ZDP,s ? When I rang the company they would not disclose the figures but this is material info in working out likely future dividends.

[spectoacc] 05/9/2016 12:54

Have to wonder how much more bad news there is to come in P2P - and this during boom times, what would it be like in a recession? Still - the discounts (vs premium previously on some!) look a bit more reasonable.

[the monkster] 05/9/2016 12:41

sorry looking chart. been a real dog this.

[anley] 30/8/2016 09:40

Then let the company "run off" its portfolio and return the capital to the shareholders in an orderly way..........

[aroon001] 29/8/2016 15:08

- re the discount of 17% this means a sizeable 20% (1/0.83) return to investors if there is a efficient secondary market. I know that some p2p platforms have secondary markets so I don't think it would be too problematic especially as some of the assets might be trading above what we paid for them. Put it another way if the investment manager had £100 in cash now and could either return that to shareholders or buy more loans which would then be only worth £83 to investors what would shareholders vote for?

- re fx hedging I don't see your point so much. I own other hedge funds that usually have currency classes eg usd gbp eur. All returns are hedged to the base currency. The beauty of this is that as an investor you can invest in this vehicle just for exposure to the underlying theme in this case p2p yields which is the speciality of the investment manager. It's currently irrelevant what gbpusd does. If you wanted more or less exposure to the dollar you could simply call up IG index and trade currency futures to your hearts content or invest in a currency fund. I don't want this investment manager to speculate on fx for me. The hedging costs are largely minimal for the IM as forward contracts only cost a few basis points. Last month was exceptional in terms of cash drag but so were the circumstances (brexit). I mean consider now with gbpusd at 1.30. If there is a reasonable chance it returns to 1.60 over the next couple of years and there was no fx hedging in place, who would buy p2p ln now? No one as the expected return would be very low given the high proportion of usd denominated assets.

[spectoacc] 27/8/2016 07:36

@Aroon001 - ironically, the main reason they don't have more free cash for eg buybacks is the currency hedging. The extreme volatility has meant they've needed to put a large amount aside to maintain the contract, which has also caused the problem of the uncovered divi since that same money hasn't been lent out.

As for winding the co up - what would they get in the secondary market for their loans? Should they wait for them all to expire? I'm not sure a 17% discount is enough to warrant winding up - perhaps more like 30%.

They lost big on the hedging, fine, could as easily have gone the other way. You make the point that the co shouldn't be speculating on currency movements and so it's reasonable to have hedged. But my point is the same - why spend money doing so (as it's turned out, a large amount) when you could as easily list the co in $, or pay the divi in $. $ to $ means no hedging necessary.

At the end of the day, they're a co with majority of lending in the US, denominated in USD. I bought them in part because I thought the fall in the £ would have increased their NAV - more fool me for not checking sooner - but they're unusual among foreign-focussed ITs in hedging, as most recognise that the extra costs aren't worth it.