Tetragon Financial Share Discussion Threads

[alpal2] 27/5/2019 09:57

Seems strange that RIT trades at a premium to NAV whereas TFG trades at a substantial discount.

[skyship] 25/5/2019 14:33

Hpcg – Welcome aboard. Personally I don’t expect a retreat down to a double bottom at $11.50. I hope the Fib retrace to $12.45 would be the limit of any weakness; indeed we are already seeing signs of recovery with the MACD just turning back up:


free stock charts from uk.advfn.com


free stock charts from uk.advfn.com

[hpcg] 25/5/2019 11:53

Bought some, well TFGS, Thursday and Friday. I think markets might be heading lower so I will ease in, given the next dividend is a couple of months off. 10% downside on the chart so it is not a huge deal. I'm not advocating trading, which is too costly, but no point over paying.

[spangle93] 11/5/2019 08:19

Davebowler - a rework of your article by Kepler was circulated to inter-active inv-estor article subscribers this morning


Tetragon Financial (LSE:TFG), which might be considered in the same category as RIT Capital (LSE:RCP) in that it employs a diverse range of investment strategies which would be hard for investors to access in the normal course of things, is expected to be relatively defensive compared to world equity markets, and has a number of idiosyncratic private investments in the portfolio.

In contrast to RIT Capital (premium to NAV of 10%), Tetragon trades on a discount of 45%. Tetragon is certainly a complex vehicle, which may have contributed to investors steering clear in the past. The portfolio includes a diverse number of "alternative" strategies, such as those investing in convertible bonds, event driven equity strategies, and bank loans. It also owns stakes in a number of asset management companies (30% of NAV), many of which manage the company's capital.

The variety and the types of strategies should mean that NAV is uncorrelated to equity markets, we believe, which together with the historic return profile (consistent double-digit NAV total returns), if repeated, make this a highly attractive investment. The complications with Tetragon include the corporate governance angle (the shares do not have voting rights), as well as relatively high fees. We hope to provide a full analysis of Tetragon soon.

[rcturner2] 08/5/2019 13:07

I bought into the sterling version today.

[ironstorm] 02/5/2019 15:26

I concur. Have had a 25% return over a small number of years plus the divi.

The wide discount gives added protection and means at this price yield is market-beating.

[davebowler] 02/5/2019 13:00

Kepler's May review of its 'Sweet or Sour' selection;

hxxps://www.trustintelligence.co.uk/articles/discount-opportunities-update-apr-2019

Tetragon is the third trust to have seen substantial discount tightening already, of 2.6%. As
we have previously highlighted, it is a complex vehicle, which may have contributed to
investors steering clear in the past. The portfolio includes a diverse number of “alternative”
strategies, such as those investing in convertible bonds, event driven equity strategies, and
bank loans. It also owns stakes in a number of asset management companies (30% of NAV),
many of which manage the company’s capital. The variety and the types of strategies should
mean that NAV is uncorrelated to equity markets, we believe, which together with the historic
return profile (consistent double-digit NAV total returns), if repeated, make this a highly
attractive investment. The complications with Tetragon include the corporate governance
angle – Tetragon’s principals Reade Griffith and Paddy Dear have a controlling shareholding,
as well as relatively high fees. In our view, although there are complications, there is a price
for everything, and the discount of 47% on a portfolio of uncorrelated assets which have
delivered solid returns in the past is too wide.

[ironstorm] 30/4/2019 07:56

Chunky yield as well nicely covered.

[skyship] 30/4/2019 07:46

A 3% NAV gain in March - 7% YTD:

[davebowler] 14/3/2019 13:04

Tetragon Credit Income Partners Announces total Tetragon Credit Income III
commitments of $430 Million

LONDON, March 13, 2019 -- Tetragon Credit Income today announces that its
February 2019 final close of Tetragon Credit Income III L.P. (TCI III) brings
total commitments to approximately $430 million. TCI III is a private equity
vehicle which focuses on CLO investments, including majority stakes in CLO
equity tranches. Tetragon Credit Income's other most recent CLO investment
vehicle, Tetragon Credit Income II L.P. (TCI II), raised just under $350
million through its final close in 2017.

"The CLO market continues to be a dynamic space presenting many interesting
investment opportunities, both near and long-term and across various credit and
economic cycles," said Scott Snell, Portfolio Manager for Tetragon Credit
Income. "Today's announcement marks an important milestone for the Tetragon
Credit Income business, as TCI III is a new, dedicated pool of capital that
will enable us to continue to make control equity investments in the primary
market and to play an active role in the structuring of these investments."

Tetragon Credit Income is one of the asset management businesses that comprise
TFG Asset Management, the diversified alternative asset management business of
Tetragon Financial Group Limited. Tetragon Credit Income invests in both
externally-managed CLOs and in CLOs managed by TFG Asset Management's LCM Asset
Management. Assets under management for TFG Asset Management as of 31 December
2018 totaled approximately $28.1 billion.[1]

Stephen Prince, Head of TFG Asset Management, added: "Our aim is to partner
with leading alternative asset managers and provide a shared strategic
direction and operational support, with a view to them delivering attractive
returns to their investors, as well as to Tetragon which looks to invest
alongside them. Today's announcement underscores the success of the approach."

Since 2005, Tetragon, directly and through Tetragon Credit Income private
equity vehicles, has invested over $2.3 billion in CLO equity, across 101 CLOs
managed by 32 managers. Snell added: "Since inception, Tetragon has been a
leader in taking majority equity stakes in CLO transactions and forging deep
relationships with CLO managers to deliver strong risk-adjusted returns for its
investors. Tetragon Credit Income is seeking to continue this effort.

[horndean eagle] 05/3/2019 18:13

Its also gone xd in case you weren't aware. So in old money we are back to nearly $12.90. We have definitely lost some more weak hands in the recent tender. Eventually that supply will dry up. I think they might resort to a bigger tender soon. Libor going up has made beating high water mark trickier. They are relying on big gains in asset management valuations. They can't expect those of the same magnitude year in year out so I think they may resort to bigger tender offers as a means to line their pockets. Hopefully next tender is back near the $13.60 level. Even then its a near 40% discount to NAV.

[skyship] 05/3/2019 07:24

NAV $23.14 - 52c of the gain came from the share repurchase.

[skyship] 18/2/2019 13:01

HE - thnx for that insightful post

[horndean eagle] 18/2/2019 11:39

CLO falls would affect TFG but not massively. Its a smallish percentage of assets now. CLO equity get regular cash distributions so the position naturally amortises. If it got to a stage where CLO equity got into trouble then distributions would stop. However they would then be able to re-invest the cash trapped excess into loans at lower prices and that should in theory then make them good in due course. Just as what ended up happening during the financial crash. Nearly all CLO equity managed to survive and recover. Lower share price would simply allow them to hoover up more stock at lower prices and enhance NAV. Just as a footnote you are not really taking much in the way of fx risk on TFG. About half the portfolio is Europe/GBP. The vash majority of that is GBP. They do hedge some of the GBP stuff but in the grade scheme of things if sterling collapsed then you will do ok on the fx side. If sterling rose very sharply then TFG nav should benefit.

[ceaserxzy] 17/2/2019 21:10

Agree with you rambutan2 that utl is far more geared yup and therefore its NAV is more volatile, varying more widely between 270 to 340 p in relatively short time span. But gearing can be beneficial in a market upswing and the risk is balanced a bit by the big discount which is itself above its average. I also like some of their underlying investments like apt, rsg, uem etc and therefore getting into utl is a discounted way into those companies. A 4.4% yield is also useful in the current low-interest rate environment although I wish it should be progressively increased.

@SpectoAcc, we seem to own the same companies so we must share some common criteria for an investment. I have invested in tfg, tfgs, utl, toro, vsl etc. I have now tendered all my toro for the 0.8345 euro tender offer though and am completely out of vsl, but added to tfg (recently I can buy tfg for about 930p but have to pay tfgs for 982p so have gone to tfg) and utl as I think they are better value than toro, although toro has a yield of 10%.

utl five year compound NAV performance is over 20% and ten year compound return is over 13%, I don't have nav figures for tfg but its 3yr price compounds at 15% and fiver years at over 9%. That looks very good value for such big discounts.

[rambutan2] 17/2/2019 20:26

ceaserxzy, a big difference in my view is that UTL is geared by the Zs. TFG has net cash. With splits, I always knock off the Zs at redemption value to get to a true discount. And on top of that, the TFG management are imho a more cautious crew than Duncan Saville et al at Utilico. I've held UTL and its predecessors over the years but have been out for a while. TFG is a happy hold for me.

[spectoacc] 17/2/2019 15:11

@Sky - I hold TFS (or rather, TFGS), but I still say that if the NAV should fall (whether CLO-related or not), the discount is more likely to go out than come in - ie the share price will fall faster than the NAV.

I question whether a c.6% divi is enough return, should the discount turn out to be persistent (as it has been). But like I say - I do hold some, and perhaps we're arguing apples & pears. I'm wary of "buy £1 of assets for 50p" when you have to sell that same £1 of assets also for 50p.

@ceaserxzy - I hold a lot more TORO than I do TFG ;) Sold out of UTL some time ago & think it's much more opaque/controlled than TFG (tho bought TFG without realising the lack of voting control of the ords).

[ceaserxzy] 17/2/2019 10:25

Another trust similar to this one is utl, which also boasts a See Through discount around 50%. It pays a dividend about 4.4% but kept for several years without any increase.

Both trusts have the same faults of complicated capital structure, controlling management stake (both good and bad from a PI's perspective) and high cost (management fee and performance fee plus multilayer of fees).

I have invested about 2% of my SIPPs in each of them so I may be biased.

[skyship] 17/2/2019 09:28

Specto - have to disagree on this occasion.

Firstly TFG is not really a CLO player anymore. The Oct'18 Presentation doesn't mention CLOs once!

Secondly, of course a large discount provides a measure of protection. There comes a point when a discount doesn't open up anymore as the VALUE becomes irresistible. I'd put that at 50%, not much more than where we are now.

Thirdly, the real underlying value here is TFG Asset Management. AUM $26bn, of which TFG just $2bn. If this does eventually float then we would see some serious upside; all of which is in for FREE.

[ceaserxzy] 17/2/2019 08:52

Agree with the worst scenario its price will suffer. But that applies to any investment if you apply the same argument "if depression happens, if recession happens, if trade wars get much worse etc ...". It is still true that its big discount does provide a better safety margin than many,such as those trusts specializing on CLOs like toro, vta etc.

[spectoacc] 17/2/2019 08:11

Not sure I get all this "margin of safety due to the discount" stuff - if the NAV took a fall (eg due to CLO trouble), you can guarantee the discount will move out and not in!