Real Estate Credit Inves... Share Discussion Threads

[wilwak] 04/4/2024 12:44

Well another fall this morning. Tempted to buy more! I hope this low price holds until 6th April as it’ll be my ISA target.

Looking at the portfolio it is pretty well spread. Even if one or two loans are going bad the large discount more than allows for this and they are backed by assets.

I’d like to think that a large investor is simply repositioning their portfolio. I remember once seeing Invesco do exactly this on one of their holdings which caused a large drop in the share price of the investment trust. Once they had finished the share price bounced straight back. With hindsight it was a fantastic buying opportunity.

If we have faith in Cheyenne then best just ride this out I feel. It’s certainly a bit un-nerving even for me as an experienced investor. There may be a lot of small panicing investors running for the exit with this fall.

Buy when there’s blood on the floor!?

[my retirement fund] 04/4/2024 11:15

We are seeing the effects now, we have very clear post covid statistics showing a significant decline in exported goods, albeit it slightly offset by an increase in services but presumably a blip. As for GDP, your showing the limit of your intelligence there, ot is normal for GDP to grow in an economy showing inflation, indeed significantly where many costs have exceeded 10%! Getting back to RECI and on topic. I believe we are already seeing early signs of the Brexit effect. That's why we are seeing it's investor base shrink and the company being forced to shrink by buying back its own shares. Already, some wiley investors are beginning to question the sustainability of the dividend. That's a forgone conclusion, much like the shareprice in the longer term environment we have, it would need to be cut. Clearly the problems Brexit has created over investment and trade will need to be addressed eventually. However, we can see a reluctance in all political divides to talk about that, and it may be another generation when it is addressed. Therefore, in the medium term, you should prepare for compounding hit upon your wealth.

[mwj1959] 04/4/2024 11:00

This is a RECI thread not one for arguing over the merits or otherwise of Brexit. Given the weak performance of the share price that is what our focus should be on!

[mcunliffe1] 04/4/2024 10:48

The one hard statistic you've provided in #2571 is the " 10% smaller " statement.

If such were likely to happen we should be seeing the trend now where UK GDP starts to lag the growth of that of say, France, Italy and Germany.

This link:

provides a snapshot graph showing the the GDP's of France and UK (and Mexico). The growth for both France and UK has been supressed equally for the past 15 years. Italy has declined over that same period and Germany's has increased slightly.

I see no indication of a disparity emerging since 2016 - eight years ago - and cannot therefore accept that your 10% claim by 2035 has any merit.

It has been recently reported that the EU is not faring too well and whilst the report added that this may bring comfort to Brexiteers it should not be rejoiced in as the EU is still our largest trading partner. Their demise is not great for us.

Except, we can of course now look to wider and more diverse markets with relative freedom. We were severely restricted in such when in the EU.

In respect of RECI, its shareprice and its dividends I fail to see how Brexit can have such an adverse effect. It's easy to pick a stock that has a declining share price and blame Brexit. How do you explain Rolls Royce? It's a worldwide business very closely linked to Airbus and is going great guns. With Brexit.

[my retirement fund] 04/4/2024 10:11

Brexit introduced Higher Tariffs, Lower investment, weaker pound, lower growth, customs checks and greater uncertainty and the UK economy is on track to be10% smaller by 2035 than it would have been without brexit. This will be reflected in many ways, including lower shareprices. You can expect RECI to have a lower long term shareprice, higher costs, increased loan losses, and overall lower returns to investors. Please tell me why it is not relevant to someone here?

[my retirement fund] 03/4/2024 13:47

Come on, it is funny. They got levelled down, and they are the ones that voted for it. Hahaha! Lol!!!

[mcunliffe1] 03/4/2024 13:34

MRF: I can add some flesh to your pitiful attempt to denigrate Northerners (#2566).

I was counting the votes that night at my local venue. I was lucky enough to get the table that counted the vote boxes from my own ward.

It was a slow start and so for the first few boxes to arrive I had the time, after ensuring the total count of ballots in the box matched that stated on the secure tag, to count the number in/out in each bundle of 25.

It was hardly ever less than 16 out of 25 wanting out and often 20/21 wanting out.

Now, my part of the North West is clearly populated by low IQ types - maybe 16 to 21 out of every 25.

When the local counts were amalgamated into regional and then countrywide there were clearly areas elsewhere who brought that 16-25 down to about 13 out of 25.

I guess that must be the area where you live, where massive IQ's abound. Where language can be circumvented by the use of foul swear words. Where logic is sidestepped in favour of sweeping statements.

But you still lost.

:-)

[feuille] 03/4/2024 11:12

The only low IQ is you MRF.

Absolutely no self-awareness.

[my retirement fund] 03/4/2024 10:33

The only thing to put a smile on my face post brexit was that the majority of Northerners who were stupid enough to vote for it, in the wards outside of London and southeast actually got "levelled down" rather than levelled up, post brexit! Hahaha, talk about schadenfreude! Certainly proof of a North/South IQ divide, no?

[tournesol] 02/4/2024 17:49

Wilwak

nope, i3E is the bee in my bonnet.

[wilwak] 02/4/2024 16:28

Just bought at 114.95p

Happy but a little puzzled at what’s going on!

[wilwak] 01/4/2024 21:03

Tournesol… Are you talking about VPC by any chance? I’m also hooked in to that one and hopefully it’ll all work out ok once the capital return gets underway.

RECI….. I may buy more tomorrow if I can get them at 115p’ish. Seems very cheap.

I’m nervous about the fall in share price because it may be that professional investors know more than us! On the other hand I’ve seen shares fall simply because a large investor decides to reposition their portfolio. Or a large unit trust investor is suffering withdrawals which forces them to dump liquid shares.

So the fall is a worry but there could be very plausible short term reasons for it.

Let’s see what tomorrow brings!

[tournesol] 01/4/2024 08:49

Sky

Of course the yield is the attraction here, there's no argument about that from me.

But high yield which is accompanied by capital loss is of concern - it's Total Return which matters.

I'm currently slightly down on a total return basis.

I sold half of my holding a few months ago because I was over-exposed. That has turned out to be a good decision. But it would have been even better if I'd sold the lot.

I may top up again at some point but I'd like to see a trend reversal before I do.

------------------

In this instance my total return loss is trivial so I can easily wait in anticipation of a change in fortune. However as a not particularly expert, not particularly successful investor I've done that elsewhere and got it badly wrong in the past. My current least successful holding currently yields about 14% but is about 45% underwater. That's a very uncomfortable position. At each stage in the retreat of that share I could have bailed out but was tempted by the yield. In that case staying in was clearly the wrong decision. I look at RECI and wonder if it is at the early stages of a similar experience.

In saying that I'm not complaining about RECI, I'm just giving myself a talking to in hopes of avoiding such errors in future.

[wilwak] 31/3/2024 23:11

It seems to me that RECI hasn’t been covering its dividend for some time.

0.8p interest income less 0.2p fees falls well short of the net 1.0p required to cover the 3p quarterly dividend.

NAV has gradually declined over the last couple of years.

Have borrowing costs risen faster than income as base rates have increased?

Will things improve once base rates start to decline?

I still have a gut feel that the shares are looking very good value but it would be nice to understand the decline in income performance. Has anyone delved deeper in to the figures and reports?

My worry is that a major borrower has been granted a payment holiday or something more sinister.

Overall I have faith in the quality of the manager but they’re not immune to market conditions. Some clarity would be useful.

[skyship] 30/3/2024 10:15

IMO the new Buyback Programme does in itself suggest there are no hidden surprises. If there were and they revealed down the line; then the managers would be toast for reinstating the buybacks rather than conserving cash.

Personally I feel it is just a random market move; perhaps further motivated by the Technically bearish outlook when it broke down through 120p.

Potential sellers however would be looking aghast at the surrender of a 10.4% yield; so further weakness unlikely as now also on a 21.6% NAV discount.


free stock charts from uk.advfn.com

[skyship] 30/3/2024 10:06

For the yield?

[tournesol] 30/3/2024 09:50

Day-to-day movements in all share prices are generally random. But over longer periods there can be very clear trends.

From 2011 to 2015 the trend was clearly upwards.

From 2015 to 2020 the trend was clearly sideways.

In 2020 there was a significant and rapid fall.

During the 2 years after the fall the price was again on an up trend.

From mid 2021 to date there has been a clear down trend which has now almost reached the low point of the 2020 fall.

The question I ask myself is not "why did the price fall today?" but rather "why has the price been falling consistently since 2021?"

Which does of course beg the question "why am I holding this share?"

[rcturner2] 30/3/2024 09:00

The share price movement could also be completely random, without any specific reason. Localised supply and demand on a share price can cause all sorts of strange movements. Don't overthink it. If there is no obvious reason for the share price fall, then (1) there is a reason that we don't yet know or (2) it is random.

[loglorry1] 30/3/2024 08:02

I own a lot of these. I'm not suggesting they are bad I'm just saying we pay plenty for their services so it's not like 8% returns on the loans will cover the divi.

Scale would help but that's not east when such a big disc to NAV exists.

[hindsight] 29/3/2024 19:57

In fairness theres been a lot worse places to be in fixed income as suspect many ZIRP pension funds will testify

[williamcooper104] 29/3/2024 16:29

They've got a performance fee - IIRC it's 20 over 7 That's unusual for a debt fund in Europe - pretty standard in the US They've never ran their own leverage hot to get it though

[loglorry1] 29/3/2024 14:55

Lol if only full the 8% earned on loan interest flowed to us as company owners!

Go look at the accounts and you will see a lot is spend by the investment manager. Last time I looked it was about 1/4 of the interest goes on running the Corp, the listing etc etc. You then have the inevitable bad debts which will probably be on average cost 1%.

This is partially mitigated by their ability to borrow cheaper than they lend and gear up returns.

They probably need to lend at 11% to cover the 12p.

Despite this RECI is a decent way to get exposure to this type of lending and if held in a tax wrapper and bought at a big discount to NAV combined with the tax benefits of basically receiving interest tax free is great.

[riskvsreward] 29/3/2024 14:18

In my view, if they can continue the payment of 12p dividend, then the best use of capital is to buy back a lot more shares at current or even lower price, rather than seeking riskier loan investment opportunities. Put it another way, the current NAV is about 146p, buyback will help to increase the NAV to 150 p and beyond. Then they will need only relatively safer loan earning 8 to 9% to cover the 12 p dividend and cost.