Tetragon Financial Share Discussion Threads

[horndean eagle] 17/11/2020 11:35

fwiw I think they will be borderline re getting enough people to tender. Unfortunately these tenders generally just negate the dilution we get from scrip dividend and performance fee awards. Go and have a look at Reade Griffiths latest compensation package. Its eye watering.

The IM is effectively taking control via the backdoor here. They take dividends in scrip form. Take bonuses in new shares. All issued at current levels. The less minority shareholders there are the better. The tender offer does clear out stale bulls. Eventually they will be out and in order to get new people to tender they will simply bump up the range re what they will pay. That is how you will get out of TFG. No other real mechanism I fear.

[makinbuks] 17/11/2020 11:02

ceaser, I share you're concerns but my point was that all that weas true before March too. Nothing has happened to make that worse

Spec, I do agree that cutting the dividend was odd and never explained. On the other hand you could argue why was it being paid in the first place. I don't agree that the tenders are comical. I get your point that it enhances NAV and thereby the fees but that's mutually beneficial. Why on earth would the tenders not constitute returns to shareholders in exactly the way a dividend does? You can say its just paying us money we already own but so is a dividend. I accept the dividend as a marketing tool is attractive to a certain group of investors and therefore to change the policy without explanation or without indicating the future creates uncertainty

[spectoacc] 16/11/2020 19:22

@Makinbuks - largely agree, and believe cheap. But. The thing that changed was the cut in the dividend, and the failure to restore it once the worst (at least in NAV/earnings terms) was passed, followed by these two comedy tenders.

Bear in mind they make a song & dance about being uncorrelated to equity markets. Some similar ITs - at least at the CLO and PE end - have bounced back well, and in the seemingly irrelevant NAV, TFG aren't doing badly.

" It aims to provide stable returns to investors across various
credit, equity, interest rate, inflation and real estate cycles. "

I'd like them to define "..Returns to investors..", but you can guarantee they'll include the $25m's.

[ceaserxzy] 16/11/2020 19:01

The problem with this company is that it is completely Undemocratic in the sense that shareholder have No say in anything, although in theory they are the owners of the company. The management can get away with robbing the share holders. On paper it has
long term good performance. But is it true? As the shareholders don't benefit from it by the look of the poor share price performance and much reduced dividend, while the management creams off with big performance fee year on year. The tender again will on paper improve the NAV performance by about 3%, which again only benefits the management with their performance fee that is directly linked to this NAV improvement from doing nothing but just tendering some shares using the shareholder money, while the shareholder don't benefit much on each tender.

The company constitution needs to be changed, such that shareholders have more say, that the performance fee should be linked to shareholder return in terms of share price performance and dividends, in addition to the NAV performance, to be fairer to all stakeholders.

[makinbuks] 16/11/2020 17:38

Look at the price graph above, Pre COVID this traded consistently above £12 for a year or more. Its bounced off the worst but still broadly 25% lower. All the negative things we comment on about transparency, governance, fees etc are exactly the same so the thing that has changed is COVID. I don't see that this company is worth 25% less due to the crisis therefore its a recovery buy

[topvest] 14/11/2020 21:32

AVI Global Trust appear to have reduced their position, at a loss, which is hardly encouraging!

[hpcg] 13/11/2020 21:45

I certainly don't mind them using cash to buy CLOs which are currently trading at a discount to historic stressed default rates.

[makinbuks] 10/11/2020 14:25

Yes I agree with both those points. So the tender should be bigger and its effect on NAV should be excluded from the managers fee calculation

[hpcg] 09/11/2020 17:35

It is still NAV accretive though irrespective of the share price response. Fundamentally it depends on ones time frame. For me these are a long term hold; were I retired and interested in revenue then I would want dividends.

[alpal2] 09/11/2020 13:39

Mak: Can only agree with you. But there are so many 'stale bulls' that $25m will not clear them - as demonstrated by previous tender. What is the comment on the intelligence of management 'repeating an ineffective action and hoping for a different outcome.'

[makinbuks] 09/11/2020 12:05

The preference here for a dividend over a tender offer at a 60% discount to NAV is mathematically perverse. The problem here is that the corporate governance is so bad, the market does not trust the promoter and therefore the market does not respond to stimuli as it should

[alpal2] 06/11/2020 09:39

What's your estimate for price of tender settlement? My guess = $8-50.
This tender is a waste of money which should be paid as dividend.

[spectoacc] 06/11/2020 08:20

Or the more tenders they can afford ;)

Wouldn't have a problem with it if they hadn't cut the divi - restore it, then do tenders I say. Only I don't have a say, because the shares are non-voting.

[ceaserxzy] 06/11/2020 08:12

On the bright side, the more they tender, at a low price (unfair to the investor who tender their shares), the more likely that they can afford to increase dividends in the near future?

[spectoacc] 06/11/2020 07:41

Price doesn't bother me, and the lower the better for NAV accretion.

They just shouldn't be doing tenders, since the history of TFG shows that our only shareholder return is from the (previously generous) divi.

If they did loads more tenders and got the NAV to $50, bet we'd still be at about $9 ;)

[skyship] 06/11/2020 07:17

LUDICROUS, considering the share price of $8.80-9.20 & the NAV of $24.11:

The tender offer, which was initially announced by Tetragon on October 30, 2020, will be conducted as a "modified Dutch auction" with shareholders able to tender their Tetragon non-voting shares at prices ranging from and including $8.00 up to and
including $9.50 per share.

[ceaserxzy] 01/11/2020 10:32

The management takes a generous 2.1% management fee plus a 25% performance fee on a low bar hurdle of libor + about 2%, so no wonder they use the pandemic as a good opportunity to cut the dividend so deeply.

Unfortunately the PI cannot do much about it except to sell and go somewhere else.

[topvest] 31/10/2020 19:49

It will be interesting to hear what AVI Global say about this next time they report. I must admit to have lost a little trust in management and their intentions.

[spectoacc] 30/10/2020 19:10

The only shareholder value we were getting was from the divi. And much easier to trust a divi over the NAV.

[topvest] 30/10/2020 19:08

It works well for the owner employees I guess. I was tempted to buy some more, but the share structure put me off. I will just sit tight on my few. Its a good business overall - the key question is....will the minority shareholders ever be given a fair exit or some shareholder value?

[horndean eagle] 30/10/2020 14:11

The other way to look at it is that the overhang gets cleared quicker. That is probably more pressing for time being. This $25m will not far off clear the worst of it. It is over 2.5% of outstanding shares. There was less than that who didn't get taken out at 8.75 last time. Imagine tender price is higher this time.

[spectoacc] 30/10/2020 09:58

Lol, I like it.

Disappointed divi not been restored today.

[skyship] 30/10/2020 08:53

Another appalling "waste of time" $25m tender.

Maintaining the dividend at the vastly reduced 10c/Qtr costs an annual £30.4m.

The tender costs £19.4m & achieves absolutely nothing as the shares already trade at a 63% NAV discount.

That £19.4m should obviously be allocated to at least partially restoring the dividend cut, ie back up to 65c pa - still well down on the 2019 level of 74c.