Sqn Asset Finance Income Share Discussion Threads

[chucko1] 05/11/2019 18:57

LG, the problem was that while this rampant selling was going on, SQN managed to muck up both the dividend dates and use some incorrect definitions in the financial statement. This was a noxious mixture for a small cap like this.

So far as I can tell, all management of church assets is inept. I put that to one side.

Because of all this, and because of my holding, I took a close look again at everything this company is about. I really could not see a major reason for a sell-off to anything like the extent we have seen. No major issues, so it remains a very long term hold (I sold 20% of my holding on the day of the dividend misstatement but bought back as it approached 70p which I thought was nuts, and as no negative follow-through was evident other than ill-disciplined selling).

[lord gnome] 05/11/2019 17:57

I don't know who the Church of England use for asset management and stockbroking, but on the evidence of their trading in SQN, I would sack them immediately. If they had just shown a bit more patience, drip fed stock into the market and allowed the share price to recover between bouts of selling, the price would never have cratered the way it did. Instead, they sold, sold, sold at whatever price they could achieve and forced down the price along the way. Great if you bought at the bottom, but unnerving for most holders I would imagine.
Compare this fiasco with the way Macquarie are selling down their holding in RRE.

[chucko1] 05/11/2019 17:12

@Specto, who is going to be selling?

[spectoacc] 05/11/2019 16:39

Going to be selling again at this rate ;)

Feels like a tip, and been some good volume - eg 100k at 77p, 95k at 79p.

[wrighna1] 05/11/2019 10:30

Bid price has moved up over last 24 hours to a more sensible spread. Encouraging signs

[ken298] 05/11/2019 09:11

Looks like bottom was hit and we are on the way back !

[chucko1] 03/11/2019 11:04

Sell off occurred on the date of the dividend correction. It just got worse on the replacement Annual Financial Report. Trust me, I was watching the screen all the time.

But it was all overdone in terms of fact, if not appearance. They need to tighten up on these corporate matters, but it’s a small organisation, so one must keep perspective.

[a0002577] 02/11/2019 15:28

Probably more due to the correction of the Annual Financial Report

28/10/2019 07:00 UKREG SQN Asset Finance Income Fund Ltd Monthly NAV and Dividend
25/10/2019 13:28 UKREG SQN Asset Finance Income Fund Ltd Holding(s) in Company
08/10/2019 15:38 UKREG SQN Asset Finance Income Fund Ltd Annual Financial Report (Replacement)
02/10/2019 11:01 UKREG SQN Asset Finance Income Fund Ltd Net Asset Value and Dividend (replacment)
30/09/2019 06:03 UKREG SQN Asset Finance Income Fund Ltd Annual Financial Report

[wrighna1] 01/11/2019 19:31

Why would the correction over the ex div date cause such a big reaction?

[chucko1] 01/11/2019 15:37

The dividend is uncovered. Their argument is that over a long period, everything will even out and the suggested IRR of 11% will be realised. They state in the annual report that equipment that has already come to the end of its lease term has indeed yielded such returns.

The market is afraid of SQN because of the revenue turned off on certain leases. SQN claim that their track record in restructuring similar leases should provide confidence that they will continue to earn 11%.

There may be some risk that they fall short of this target, but even allowing for that, 70.7p seemed way, way overdone. May have been a determined seller and if so, seems the seller has finished. That said, the big move from 81p to 76p occurred after they had to correct the date of the October ex-div. which unnerved many, including myself to some extent (I sold 20% of my holding). I have now bought back what I sold (and made a few pence).

[spectoacc] 01/11/2019 11:55

And how long it takes and how long the divi's uncovered. Mind you - between this, X, TORO, VSL, HWSL & SSIF, I seem to have covered all the bases :(

[makinbuks] 01/11/2019 11:17

I guess it depends if you believe the market has the correct view on the quality of the older loan book or the management will do better with recoveries and therefore theres a nice kicker to come

[spectoacc] 01/11/2019 07:43

Not a covered dividend tho. Hold both, but prefer X. Yes, not as "cheap", and doesn't have the kicker SQN has of things actually getting resolved. But the performance of the newer portfolio just makes it a better quality punt IMO.

Month-to-month 1 year return
Ordinary shares 0.39% 4.08%
C shares 0.60% 7.39%

[andyj] 01/11/2019 00:02

With the dividend now at 10% I am looking to top up too, taking it to 6% of my portfolio.

[wrighna1] 31/10/2019 13:36

Ticking up again today

[bisiboy] 30/10/2019 23:05

On board now

[wrighna1] 30/10/2019 11:59

Agree the last few days seem to have stabilised after several days of declines. Difficult to call though

[lord gnome] 30/10/2019 10:55

Selling pressure seems to have abated. Possibly the last holdings RNS from the CofE was the signal. We're they responsible for all the selling though? Having had a look back, the total volume doesn't seem to have been that great and could be accounted for by the Church. Selling into a market with no buyers is an easy way to muller the share price. Looks very clumsy to me. Any other thoughts?

[chucko1] 24/10/2019 16:30

So the bid/offer right now in SQN is 71.1878/71.1879.

No excuse for dithering here!

[spectoacc] 17/10/2019 09:43

SQNX appears to be in much better shape so might be some truth in that.

[lord gnome] 17/10/2019 09:38

Good point. A buy back via a tender offer may just help to clear out the seller. Long term it would shrink the company and if the directors can see a way out of the current problems they won't do it.I did speculate (in an idle moment) that the problems encountered with the main portfolio might all have come from the seed portfolio inherited at launch I.e. dumped. Anyone else with any thought? Are later investments of higher quality?

[spectoacc] 17/10/2019 09:22

@LG - and the ADs to sort. And nothing more to go wrong, bearing in mind it hasn't even taken a recession!

There's a further option - when money comes in, use some of it for buybacks instead. Highly NAV accretive, and removes some overhang.

Paying part of the SQN divi from capital isn't a good look, but then again - that discount.......

[lord gnome] 17/10/2019 09:06

The answer to the Directors' dilemma requires three things to happen. Firstly they need the seller to stop trashing the share price. Secondly they need to resolve the Suniva situation once and for all and restore the nav to the portfolio. Thirdly, this will then enable the merger with the 'C' shares to take place (at nav). Then, they will have a single, decent and diversified portfolio which may just trade at around nav.Apologies for stating the bleeding obvious.

[spectoacc] 17/10/2019 08:58

Yes, apologies, the SQNX's, which I now hold.

Added a few SQN too - 72.48p is buy price on 72.4/73.2 spread, so a lot more stock still to be shifted IMO.

Is a toss up on discount, yield, paying divi out of capital, possibility of Suniva resolution, AD issues, and conclusion for me is - buy both.

Directors talk about wishing they both traded "..At NAV or a slight premium" - I bet they do. Personally I think the risk (of the poorly diversified portfolio suffering "events") justifies both discount and high yield.

Happy to be a holder down here tho.

[lord gnome] 16/10/2019 14:23

Answering my own question, I can only assume that it is Investec who are continuing to sell down their position. Depending on just how many they want to dump, we might be here for some time. I wonder just how low this could go?