P2p Global Investments Share Discussion Threads

[aroon001] 03/3/2017 17:37

According to that liberium note the monthly return without one offs is 0.34% which is 4% a year.

The reduction in fees will add another 0.5% to make this a 4.5% a year investment.

The portfolio manager needs to find a way to bump up the return another 1.5% a year to get to 6%, or else the discount will remain. They could start by including a hurdle rate for performance, which should add another 0.5% to make 5% a year. On top of that, hopefully they can cut down on their admin costs etc. The buy backs if they continue this year should actually add back about 1% but those cant continue indefinitely I guess.

Lets hope they announce something interesting next month.

[anley] 03/3/2017 11:36

Bought again at under £8...........and I will continue to do so because of what the management is doing and that is to orgainse a price of around £875p or more for a 10% price increase.

[aroon001] 02/3/2017 16:57

one by one our predictions are coming to fruition. buy backs, cuts in fees etc.

now just need a full on winding down.

[davebowler] 02/3/2017 16:22

Liberum;
P2P Global Investments (Mkt Cap £669m)
Further reduction in management fee

Event
P2PGI's NAV at 31 January was 997.87p which represents a NAV return of 0.24% in the month. NAV performance was negatively impacted by equity revaluations (-8bps), FX hedges (-5bps) and the sale of a US consumer loan portfolio (-9bps) which together reduced the monthly return by 0.22%.

The investment manager has permanently waived the fee charged on leverage. The management fee will be 1% of NAV with effect from 1 January 2017.

P2PGI has also completed a sale of US loans as it seeks to reduce exposure to the US. This was highlighted last month as higher quality US loans have experienced a tightening in yields. Better opportunities are emerging in UK and European SME and in real estate lending. US consumer now represents 48% of the portfolio compared to 55% at December 2016. Cash balances have risen from 8% to 13% of NAV over the month.

Liberum view
We calculate an underlying income return of 0.34% after adjusting for share buybacks and the 0.22% impact of capital adjustments mentioned above. We calculate share buybacks added 12bps to returns in January and a further 9bps in February. The estimated underlying income return of 0.34% is an improvement on Q4 2016 and we believe this is due to a reduction in the implied impairment rate. We calculate the implied annualised impairment rate in the month was c.4.5% compared to c.5.0% during Q4 2016.



The amendment to the management fee is the second reduction since launch. At IPO the management fee was equivalent to 1% of gross assets. This was amended in mid-2016 when the fee on levered assets was reduced to 0.50%. The latest reduction announced yesterday should increase annualised NAV returns by c.50bps based on current debt levels. The change is a reflection that returns have been below expectations for some time and the manager has indicated a review of additional steps is taking place in order to improve returns. No detail has been provided on what the additional steps may be but a possible change could be the introduction of a performance fee hurdle.

P2PGI currently trades on a 19.8% discount to NAV and in our view the company's NAV performance needs to be able to deliver a 6% dividend yield on NAV in order to drive a material re-rating.

[anley] 02/3/2017 13:12

Reputation is important if these guys are ever to come out with a new concept in the future.

They need to get the discount to under 10% and with the Trump Bump this should be done asap. As to a recession - perhaps in 18 months time as the market starts to anticipate on............we shall have to wait and see so in the meantime a good buy at under 800p.

[aroon001] 01/3/2017 20:38

Reputation perhaps.

they are already doing it. Buying back 15%.
If the discount remains, I think they will authorise more hopefully until discount gets to perhaps 10% more in line with other trusts. Unfortunately by then the NAV may have fallen if/when a recession kicks in.

[rl34870] 01/3/2017 19:07

Why would they want to reduce the fund size when it would mean lower revenue for Eagle)wood?

[anley] 01/3/2017 17:56

This is the bit I like............

"The Investment Manager is dissatisfied with the net returns achieved by the trust and is currently undertaking a review of additional steps that might be taken to improve results."

Therefore they should sell the portfolio slowly or as and when and buy back shares in the market.................get the fund down in size and put any new ideas for the future to a shareholder vote............that will bring the big holders out of their closets!

[aroon001] 01/3/2017 15:44

cant believe they were charging that in the first place. Charging money on equity invested, fine. The leveraging that equity to borrow more and charging more fees for that portion, not cool.

Nice they have broken down the monthly return though. Bit more clarity. without the one offs would have been a semi-reasonable 0.46% month on month, though fx hedging and equity movements are not really one offs.

[rl34870] 01/3/2017 15:27

Interesting that in this month's update they have announced a permanent waiving of the annual management charge on the leveraged portion of the fund. Shows they are finding it harder going than originally anticipated.

[anley] 23/2/2017 09:50

Last week in the Wall St Journal there was bullish point made on P2P.......it said words to the effect that the shares were undervalued.........

[luckymouse] 08/2/2017 19:50

See - moaning stops - and she goes up lol

[rl34870] 31/1/2017 15:43

.... a bit like being on a small boat that's sinking where no matter how fast you are bailing out the water it makes no difference because of all the little holes.... ( forgive the crude analogy but it makes me smile on this dreary January day!).

[rl34870] 31/1/2017 14:34

This list may not be exhaustive: 1. Annual Management Charge 2. Performance Fee 3.Platform Servicing Fees. 4. Administration Fees 5. Impairment Charges 6. Cost of FX hedging 6. Cost of debt, both floating and fixed. 7.Securitisation related costs 8 Other liabilitres. ....

[aroon001] 30/1/2017 13:57

I cant see anything about charges and costs specifically in the newsletter? Management and performance fees are 1% pa and 15% of nav increase respectively I think. The platform charges/custody etc I cant see any info on.

[aroon001] 30/1/2017 13:46

read the newsletter. cant see much in there to be optimistic about. The level of impairments has risen especially on US consumer loans due to the aging of the portfolio. And it seems that it has reached the level it should be at rather than this being an outlier as the newsletter states that the portfolio benefitted from new loans being added in the first few years which begin with lower impairment rates. Average interest rate of 10-11% less about 5% in impairments only leaves about 5% before platform/admin fees and performance fees. The fund is also quite highly leveraged - more debt than equity.

In terms of drivers of performance, there doesn't seem to be anything that will revert to pushing up yields for investors. Gross yields are broadly the same as start of year, impairments are now higher and expected to stay at this level. Cash is fully deployed. Equity positions aren't doing much. Cost of leverage may decrease a little.

still not sure how average US loans size can be £9500 and they have 147,000 loans, which is more than gross assets just on this sector. Also it has gearing ratio as 115% but debt to equity as 82%. what is the difference?

[rl34870] 30/1/2017 13:32

I meant to say high charges AND high costs. This latest newsletter provides more transparency but also reveals more costs that the fund incurs for one reason or another and all these things add up to depress the monthly return . If the credit cycle was in a less benign period the returns would surly be negative.

[aroon001] 30/1/2017 12:43

All good points. I haven't read the newsletter yet but its not looking great. Really thought this thing would pick up after a few poor months following brexit.

If they can really only generate about 3% a year, and that's after using leverage, the fund ought to be wound down. No two ways about it.

[rl34870] 27/1/2017 13:43

Looking through the latest newsletter two things are clear:

1.Impairments are coming in at around 5% which is poor in this benign credit environment, and

2. The charges or total expense ratio are very high,

How else can you justify the low monthly returns culminating in the latest 0.12%? The only real attraction is the discount to net asset value. All the original hype ie each borrower can have up to 200 data points of information, led to the original premium to net asset value but the reality is turning out to be quite different. I think you get much better value in the preference shares of strong financial companies like Aviva and Lloyds Banking Group where you can get 6 to 6.6% yields covered more than 200 times by earnings. Why take the risk with mainly unsecured debt on this new unproven asset class?

[luckymouse] 26/1/2017 20:22

its borrowable.

rl34870 - the high yield isn't protection - because the yld is fairly guaranteed and compounded (theoretically over say 3yrs) that's a known 22% compound - hence high yielders, and esp v hi yielders, can tend to have negative price drift - of say 22% in this case, so the total return is flat in the same period - ceteris paribus.
That in addition to the standard discount of a zero yldr - of say another 10-20% - and that in addition to some elastic price action (TA - which doesn't exist of course - even tho every top city trader uses it lol). Which is why ultra hi yielders attract negative sentiment (and the odd shorter, moaner etc). Its just maths - but the shorter needs a slag story too mind (handily provided by the moaner), and a technical level to enter short off (even tho that technical level doesn't exist of course).

[aroon001] 26/1/2017 19:56

Im wondering who is selling at a 20% discount and furthermore its in the face of a buyback program. Bizarre isn't it. Someone out there feels its better to sell at this price than hold onto them.

I don't think you should knock technical analysis - I'm not a firm believer but we all use it subconsciously - eg looking at the recent highs and lows is technical analysis. If others follow such indicators then the can become self fulfilling.

Re daily volume, the average daily vol for past 3 months has been 100k, the same as average volume for the last 12 months. So I don't think you can draw the conclusion that its just management buying shares at the moment. Nothing has actually changed in terms of daily volume.

They probably announced the buy back program at -25% ish cos they thought there was risk discount would go to -50% in absence of doing anything! I'm not sure there is any value selling at 850. if you believe that they will start returning the 0.5-0.7% monthly returns needed to get share price back to 1000p then you should hold on. All the factors they mentioned for these low monthly returns shud have/be dissipating. And u get the extra kicker of the buy backs adding NAV.

[anley] 26/1/2017 15:08

Thank you RL for your kind words............I am wondering if LuckyMouse is a shareholder or just testing his ideas on this BB.

Like you it wont be long until we see some figures from the management and then the real debate can start on how this fund has been run.

[rl34870] 26/1/2017 13:20

Anley is right, most of the current daily volume is share buy back.As I said before if they hadn't made a formal announcement regarding the buyback back they could be buying shares at 7.30 rather than 8.10. All that technical stuff is nonsense. Next NAV will be very interesting as it will reflect end of year value in audited annual report so could be a sizeable move either way. Think more likely to be a good figure as I think they are a cautious lot and may have been slightly undervaluing.

[luckymouse] 26/1/2017 11:02

Then whats with all the moaning? TA is just a visual way of reading the tape, like sheet music. You cant pretend it doesnt exist just cos that was the old school culture. In between periodic news/ fundamental events, TA is all you have.
Plus if your city you should know a discount is no good on its own. Should have been called 'Assets at Discount with a Catalyst'. We have a catalyst here...