P2p Global Investments Share Discussion Threads

[aroon001] 26/8/2016 21:51

The currency hedging I have no issue with as most would have invested in this not to speculate on currency movements. You could do that separately if you wished.

However at a 17% discount to book value surely the investment manager ought to be discussing winding down the vehicle or engaging in large scale buy backs of shares which would be the most efficient allocation of capital. Especially if the assets are now worth more than listed book value given drop in interest rates. What's the point of the investment manager trying to return 7% over the course of a year when it cud return 25% immediately to shareholders.

[anley] 26/8/2016 18:33

Fine for the "easy" money managers BUT not the shareholders and if I were Woodford 29%) I would ask for the business to be liquiditated..........

[spectoacc] 26/8/2016 10:01

I bought in before realising about the currency hedging - more fool me. That was their big mistake IMO. Yes, easy to say with hindsight, but why hedge? It inevitably costs money to do so, even if it "works" (which it didn't in this case). Why not list the shares in $'s if concerned re currency swings, or simply pay the divi in $ as BP and other do.

Anyway - the discount/yield are keeping me in, but would have to go lower before I added.

[anley] 26/8/2016 09:46

Holding its own - fine for the managers BUT not for the shareholders is my view.

[davebowler] 26/8/2016 09:41

Liberum;
Specialist Finance

P2P Global Investments (BUY)
Interims: 2.4% H1 2016 NAV return

Event
As previously disclosed in monthly reports, P2PGI's NAV at 30 June 2016 was 1,011.6p per share which represents a NAV total return of 2.4% in H1 2016. NAV total return over the past year is 5%.

A number of factors impacted returns during Q2. Firstly, Lending Club and Prosper raised rates during June for new loans which had a mark-to-model impact on the company's existing portfolio of -0.18% as P2PGI holds some of its US investments within an LP Fund.

Currency volatility also led to a significant level of cash drag on the portfolio. The manager increased the cash weighting in the portfolio in advance of the referendum to cover any potential margin calls. 20.4% of the portfolio was held in cash at 30 June 2016 compared to 7.8% at 31 May.

The company has acknowledged that returns in 2016 have been below expectations but expects to meet the target dividend range in future quarters as leverage is deployed and cash drag reduces as FX movements stabilise. Also, the increased coupons available from platforms should increase returns and the company has also benefited from the recent pull-back by investors to secure incentivisation agreements with some platforms.

As previously announced, the investment manager has decided to waive part of its management fee. The management fee was previously 1.0% on gross assets and from June 2016 the fee on levered assets will be reduced to 0.5%. The manager has also waived the fee on cash balances until they are less than 10% of NAV.

Liberum view
The 2.4% NAV return in H1 2016 was well below the required run-rate to meet the target dividend. We believe the majority of the investor base expect a dividend equivalent to 7% of NAV (mid-point of 6-8% target range) and we expect it may take until the end of the year before the the company is fully levered and producing returns of 55-60 bps per month. The company indicated in the June newsletter that July returns may be below the target run-rate as the company maintained a significant liquidity buffer for further currency volatility. The reduction in management fee will help to improve returns as it will reduce the fee as a percentage of NAV to 1.5% (from 2%) assuming a leverage rate of 100%. P2PGI currently trades on a 17% discount to NAV.

[spectoacc] 26/8/2016 07:54

Can't see much in the Half Year Report - dividend going to be "within the range", a few problems acknowledged but the "permanent capital" of the IT structure they reckon gives them an advantage. Still hold but can't say inclined to add.

[anley] 09/8/2016 11:34

It would be interesting to find out if any shareholder would like to belong to a group who would not be afraid to call for an EGM where the resolution was to wind the business up and repay all current shareholders.

On the otherhand there could be a Hedge Fund who would buy a stake and make noises to the board..........

I prefer the second route as I feel its holders like Woodford who have been let down big time and he is in need of some profit to get his funds growth figures back on track............we shall see but thanks for the post AROON001

[aroon001] 08/8/2016 23:15

I agree. this should be wound down and the 25% return on the 800p returned to investors. 20% discount is way too much if the underlying assets are trading at normal levels.
Whats more, with the cut in interest rates and gilt levels, a lot of the assets shud be worth more than what was paid for them on a mark to market basis so surely the truer nav is closer to 1100 instead of 1000p.

[anley] 04/8/2016 13:28

Reading Liberum's view it seems to me that the fund should be wound down and the capital returned to shareholders all due to the failure of the business plan and subsequent loss of one of the founders.

My 11p will be re-invested back into shares and the continued buy-back will help with the share price being kept at these levels.

[spectoacc] 04/8/2016 09:47

Today's fall easy enough to explain - gone XD 11p.

[davebowler] 04/8/2016 09:30

Liberum; VPC Specialty Lending
Avant and Funding Circle US loans weigh on Q2 performance

Event
VPC Specialty Lending's NAV rose 0.58% in June 2016 due to revenue returns (+0.27%) with the remainder from capital returns. NAV TR in Q2 2016 as a whole was 0.33% and the YTD return is 1.5%.

The NAV performance was impacted by a number of factors in the quarter including FX volatility following the referendum. This led to a significant level of cash drag on the portfolio as the company has held cash to cover collateral calls on the hedges.

The main reason for the underperformance in Q2 2016 was that certain positions experienced higher than expected losses. During May, the fund marked down holdings in certain tranches of ABS securitisations of Avant loans. The company's investments in Funding Circle US loans have continued to "substantially" underperform expectations. VSL stopped purchasing Funding Circle US loans in late 2015 so this portfolio will be amortised down. The majority of the whole loan portfolio performed in line with expectations and the balance sheet loans are performing well.

Liberum view
The NAV return performance in H1 2016 has been underwhelming and the company has experienced some issues (cash drag from FX volatility, short-term drag from new leverage facilities) that have also impacted its closest peer (P2P Global Investments). We note that both funds have recently taken steps to amend management agreements with P2PGI cutting the fee it charges on levered assets to 0.5% (from 1%) and VSL's manager will now use 20% of the monthly management fee to acquire shares. We also believe VSL should begin to buy shares back at the current level to demonstrate confidence in the underlying business.

One of the more interesting aspects of yesterday's quarterly newsletter were the comments on the performance of Avant loans and Funding Circle's US loans. The Avant loans are relatively high-risk loans and the increased default expectations mirrors recent data on Lending Club's higher risk loans which have experienced increased default rates in loans graded E through G.

The comments on Funding Circle's US loans may have a negative read-across for Funding Circle Income Fund (FCIF) which has 24% of its portfolio is US loans. FCIF's performance to date has been slightly ahead of expectations but the portfolio is still relatively unseasoned.

VSL currently trades on a 19% discount to NAV compared to an average discount of 7.3% for the sector.

[anley] 01/8/2016 11:08

and don't forget to reinvest it.........

[argoal] 30/7/2016 08:49

Another 250K shares bought back. Another 0.5p added to Nav.

.....unfortunately no effect on the share price though.

I'm happy to wait until normal service is resumed regarding the discount. Bit worried that I might have to wait quite a long time though. The dividends will keep me company in the interim.

[anley] 27/7/2016 11:04

As a shareholder with all the dividends re-invested my average price has come down so whenever the company is buying back - for reasons we all agree with - then there comes a time when the market wakes up and says - this share is worth a look. All because some prat in the USA tried to be too cleaver. Yet again its Wall St greed which runs through the veins of many of our City spivs as well.

So buy now...................and take a £1 per share on a good risk/reward ratio...........

[aroon001] 26/7/2016 19:57

buying back about 237,000 shares (0.25% of shares) and making about 20% on them = 0.25 x 0.2 = 0.05%. so 0.5p uplift on nav is about right.

Surely the best thing the investment manager could do with a 17% discount to nav, is sell all the underlying assets and return shareholders the 17% now rather than having to wait the 3 years for such a return? And perhaps reopen this vehicle as a single priced opened ended fund with monthly subscriptions/exits rather than tradeable investment trust, so investors don't suffer mark to market volatility.

[davebowler] 26/7/2016 10:25

Liberum;
Event
P2P Global Investments delivered NAV growth of 1.08% in Q2 2016 with a return of 0.17% in the month of June. The company has declared a dividend of 11p for Q2 2016. NAV total return over the past year is 5%.

June's NAV return was impacted by two main factors. Firstly, Lending Club and Prosper raised rates during June for new loans which had a mark-to-model impact on the company's existing portfolio of -0.18% as P2PGI holds some of its US investments within an LP Fund.

Furthermore, currency volatility led to a significant level of cash drag on the portfolio. The manager increased the cash weighting in the portfolio in advance of the referendum to cover any potential margin calls. 20.4% of the portfolio was held in cash at 30 June 2016 compared to 7.8% at 31 May.

The investment manager has decided to waive part of its management fee. The management fee was previously 1.0% on gross assets and from June 2016 the fee on levered assets will be reduced to 0.5%. The manager has also waived the fee on cash balances until they are less than 10% of NAV.

The company has acknowledged that returns in 2016 have been below expectations but expects to meet the target dividend range in future quarters as leverage is deployed and cash drag reduces as FX movements stabilise. Also, the increased coupons available from platforms should increase returns and the company has also benefited from the recent pull-back by investors to secure incentivisation agreements with some platforms.

Liberum view
The monthly return of 0.17% and the YTD NAV return of 2.4% are both well below the required run-rate to meet the target dividend. However, we estimate the underlying return in June was broadly in line with May's figure of 0.48% after stripping out the impact of the mark-to-model adjustment and the cash drag. The mark-to-model movement should unwind over the term of each loan as they are held to maturity.


We believe the majority of the investor base expect a dividend equivalent to 7% of NAV (mid-point of 6-8% target range) and we expect it may take until the end of the year before the the company is fully levered and producing returns of 55-60 bps per month. In that regard, the reduction in management fee will help as it will reduce the fee as a percentage of NAV to 1.5% (from 2%) assuming a leverage rate of 100%. P2PGI currently trades on a 17% discount to NAV.

[spectoacc] 26/7/2016 07:33

"DIVIDEND DECLARATION
The Directors of P2P Global Investments plc have declared an interim dividend of 11p per ordinary share for the three month period to 30 June 2016. Of the 11p, 9.5p will be paid from the Company's revenue reserve and 1.5p from the special distributable reserve which relates to previously recognised gains.
The dividend will be paid on 26 August 2016 to shareholders on the register as of 5 August 2016. The ex-dividend date is 4 August 2016.
The Company has elected to designate all of the interim dividend for the period 30 June, as an interest distribution to its shareholders. In doing so the Company is taking advantage of UK tax treatment by "streaming" income from interest-bearing investments into dividends that will be taxed in the hands of shareholders as interest income. "

Also June Newsletter: hxxp://p2pgi.com/investorrelations/view/NewsLetterJune2016

A really interesting read. Share buybacks have only added 0.5p/share. Management charges lowered for time being, inc on cash balances. Currently under-invested. Eaglewood marked to market & value down on increase in lending rates. June and July going to be below target income but expecting to make it back later in year, partly due to self same increase in interest rates. My only niggle remains the currency hedging, which they sell as a positive but I see as an unnecessary cost, and an increasing one whilst currencies are volatile.

But plenty of interesting information in there - they give the impression of a co who know what they're doing.

[spectoacc] 25/7/2016 09:45

Good point @argoal, though as a recent buyer I'd rather they'd let the price tank a little further first ;)

[argoal] 22/7/2016 12:13

Another positive is that they are trying to put a floor on the size of the discount using buybacks.

This should also feed through to a small Nav gain as the buybacks are happening at a significant discount to Nav.

[aroon001] 22/7/2016 11:16

Do they revalue the NAV of P2P with falls in interest rates? or nav is just stated at cost of loans. Seems like the latter.

[davebowler] 13/7/2016 12:33

Liberum;
Funding Circle SME Income Fund
£10m-£15m capital raise

Event
Following the deployment of 90% of IPO proceeds, Funding Circle SME Income Fund has announced its intention to raise gross proceeds of between £10m and £15m through the issue of new ordinary shares under the ongoing share issuance programme. The new shares will be issued at a premium of 2% to the company's 30 June NAV to be published tomorrow, 14 July. The company currently trades at a -2.9% discount to the 31 May NAV of 99.9p; this compares to a peer group average discount of -13.9%.

It is anticipated that the new shares will be admitted to trading on 25 July.

[davebowler] 12/7/2016 15:20

Liberum on 8th June;

P2P Global Investments (BUY)
Lending Club indicates stable credit performance and interest rate uplift

Event
Lending Club yesterday released an update regarding its standard programme loans including an uplift in average interest rates and a tightening in credit criteria. Lending Club also indicated recent credit performance continues to be stable. The company expects a slight improvement in gross losses although this may be offset by slightly lower recoveries with a resultant unchanged expectation for net losses.

As a reminder, 60.5% of P2PGI's portfolio is invested in US consumer loans. The exact breakdown by platform is not disclosed but we estimate over half of P2PGI's US consumer loans were originated from Lending Club. P2PGI's investments are concentrated in the higher quality A-C rated loans which we believe account for 80-90% of the fund's US consumer exposure.

Lending Club is increasing the average interest rates across its portfolio to boost the attractiveness of the asset to investors. Interest rates will increase by an average of 55 bps and the changes are concentrated in grades D, E and F (Figure 1). Furthermore, the maximum debt to income criteria is being reduced to 35% (from 40%) across the standard loan programme. Loan volume is likely to be reduced by 5% as a result and will mainly impact grades E-G.


There is still a lot of uncertainty over the developments at Lending Club and the decision to delay yesterday's annual shareholder meeting at short notice will do little to assuage concerns (the share price fell 7.4% yesterday). We also note press reports that former CEO Renaud Leplanche is in discussions with private equity groups to fund a potential buyout for Lending Club.

Liberum view
Over the medium term, the change to interest rates will be beneficial for P2PGI given the increased return available although the NAV is likely to be impacted in the short term by mark-to-model changes in the value of P2PGI's US assets held within the Eaglewood Income Fund. This valuation takes into account a number of factors including Lending Club interest rates. These assets are revalued as it is an open-ended fund with other LP investors and the fair value is used to price the units in the fund. All of the other loans held within P2PGI's portfolio are held at cost. The markdown should unwind over the term of each loan as they are held to maturity.

Lending Club's statements regarding the credit performance of the loans is encouraging and is backed up by statistics from the loan book data. There has been a divergence in the credit performance of the higher and lower quality loans. Gross charge-off rates for higher quality loans (graded A-C) are in line with expectations (Figure 2) and this is where the majority of P2PGI's capital is deployed. Lower quality loans (graded D-G) have experienced a steady increase in gross charge-off rates which explains the larger rate rise for these grades.

[anley] 10/7/2016 18:21

Read the latest report from WHICH concerning the cost of short term borrowing from Pay Day and high st banks..................the answer is YES.