Tetragon Financial Share Discussion Threads

[alpal2] 04/5/2021 09:40

Another 'cut-price' dividend and not even a share buy-back. The $175m spent on Ripple Labs would have been better spent on a buy-back. Oh, I forgot, that would benefit shareholders and reduce management fees; so, a non-starter.

[horndean eagle] 03/5/2021 20:11

Ripple likely will win their case or come to an agreement and pay a fine. XRP will likely double if they do and the likes of paypal then allow XRP to be traded as they have other cryptos. Don't forget US investors not been able to touch ripple through any of the major exchanges. XRP market cap will be nearer $300bn at that point. Ripple labs will own over $150bn worth of XRP. TFG will likely make out like bandits given their in price is supposedly $10bn market cap.

[makinbuks] 03/5/2021 08:19

Hard to imagine there can be an IPO without a successful outcome to the case

[hugepants] 02/5/2021 22:07

"scburbs30 Apr '21 - 08:31 - 481 of 493
They continue to write up the value of Ripple Labs every month (presumably by the pref element) increasing management fees"

Actually think the Ripple valuation is pretty solid. Worst case they get their money back. Or if Ripple spend their cash Id assume they'll get shares in Ripple. Ripple is going to be worth a lot with or without XRP if some recent news articles are anything to go by. And talk now of a ripple ipo.

[riskvsreward] 30/4/2021 17:44

As a shareholder I sincerely hope that the positive interpretation offered by some here will turn out to be true, but I am very doubtful about it.

One needs to make a clear distinction about the Nominal NAV total return reported by management and the total return for the shareholders. The Nominal NAV total return means nothing to the shareholder if it is not properly reflected in either shareprice or dividend (ideally in both). Instead it is only a TRUE and REAL total return for the management as their income increases with it while the shareholder return, which can only be realised by either divesting his/her shares or receiving a dividend, has been decreasing over the time.

The simple fact that the market has PERSISTENTLY valued the company with high and widening discount tells you that the market has no regard for both the NAV and the company management integrity. If a company management has no bother about their integrity and reputation, let alone any concerns about their obligations to their shareholders, you know you are not in a good position if you, myself included, unfortunately have become a shareholder in such a company.

I have owned a few deep value trusts over the time and in comparison by far this one is the worst. For example, han, utl, nsi, nas etc, none of them used the pandemic as an execuse to halve the dividend and some of them even increased the dividend. They have also used meaningful buyback on the market paying their share holders a fair price to exit And their managers purchased shares themselves using money out of their own pocket. TFG has done none of these. As a result, all of them have outperformed significantly.

[ironstorm] 30/4/2021 16:43

I know what you mean about the discount - though I do fear that they will steal it off us either slowly through fees or quickly through worse!!

Question is whether we can trust the management or whether they attended the Madoff wake!

[spectoacc] 30/4/2021 16:34

Agree they've not particularly done what they said on the tin, but that discount is irresistable for me.

[alpal2] 30/4/2021 15:50

No, I didn't see the video. How do they view 'total return' to a shareholder? I will buy it if it's a combination of dividend and share price. NAV accretion is not acceptable if they cannot get it reflected in the share price.
My shares are in an ISA so don't care whether it's dividend or capital gain. But reduced dividend and lower share price doesn't please me.

[makinbuks] 30/4/2021 15:26

I don't know if you saw the video of the Q&A's after the AGM but the managers were very clear that they didn't see the dividend level as being that important in the context of total return. I would not therefore buy this fund if my primary objective were income. This is an absolute return fund hopefully operating independently of returns on bonds or equities. My annual question is has this produced an absolute return greater than cash or gilts. If the answer is yes I stay invested irrespective of whether the return came as a dividend or a rise in NAV. In fact dividends should really be reinvested to maintain the hedge position

The discount reflects the excess of sellers over buyers for the share and there you have a point, the widening may indeed be caused by the dividend cut rather than the macro economic background. Certainly that would explain the lack of correction.

The market is not always rational. People who need income invest for dividends, those who don't see them as part of overall returns, or should do

[alpal2] 30/4/2021 14:05

Makin: Sadly this is one of my bigger holdings but not a good one. It cannot be when management are not responsible to non-voting shareholders.
I agree that generally the fund is well managed and overall returns quite acceptable.
But I disagree with you that they have "plenty of offers to invest it and produce a further return for the shareholder." You could use the same argument to justify cutting the dividend completely, then the outgoings will only be management fees. No, given past performance they could maintain the dividend and borrow for new investment.
To use the converse argument, can you see a situation when things are going badly with no investment opportunities and poor returns; do you see them increasing the dividend then?
The discount to NAV widened to over 60% when they unjustifiably cut the dividend by nearly 50%.
Would you agree with an analogy I use: Makin, you're a lucky man, I am thinking of giving you $1000. However, to ensure it's well used, I will personably be responsible for investing it, it will pay no dividend and you certainly cannot spend it. You can sell it but only to someone who recognises that they too can never get their hands on the capital. What would you say is the 'value' to you now of that money. Maybe at a 63% discount to NAV? Like TFG?

[makinbuks] 30/4/2021 12:05

I think we share similar views here, but just to speak up for the management on a couple of points, lets not forget they own about a third of the fund alongside us. And this is an absolute return fund which on a NAV basis since inception and in any discrete 12 month period has performed pretty well. I get that they see a dividend distribution as a missed opportunity in that they have plenty of offers to invest it and produce a further return for the shareholder.

On the discount I agree on the reasons for it, simply that the governance means that many institutions can't invest therefore demand is slack. But I still point out it worsened significantly at the outset of the pandemic and should logically return to that rating soon (40% not 60%)

[alpal2] 30/4/2021 11:19

Risk: Just shows you don't understand TFG dividend policy. The directors 'know' that shareholders are only worth a 4% dividend yield; that's why [when the share price dropped] they were able to cut the dividend from 18c to 10c per quarter.

[riskvsreward] 30/4/2021 09:38

It is surprising that nobody challenged their trumpeting about their 4.1% yield at the AGM Q & A. if their share prices drops even more say to $1, then they can be even more boastful that the yield would be 40%. Disgraceful.

[alpal2] 30/4/2021 09:31

Makin: "....unsurprising but disappointing." No-one should wonder why the discount to NAV stays so high. Business run totally for benefit of management. They trumpet the NAV but if they stated the dividend yield based on NAV, it would be 1.5%.
My mole tells me they will only list the asset management companies when they have worked out how to ensure [non-voting] shareholders don't benefit.

[makinbuks] 30/4/2021 08:36

No comment on the court ruling in the fact sheet, unsurprising but disappointing

[scburbs] 30/4/2021 08:31

They continue to write up the value of Ripple Labs every month (presumably by the pref element) increasing management fees. Why would anyone be concerned about their private valuation policies!

[makinbuks] 29/4/2021 11:59

I thought the Edison analysis was very obviously careful to point out the negatives/health warning and not so upbeat on the prospects

[spectoacc] 29/4/2021 11:27

Added a few. Have to hold nose with TFGS, but there's little cheaper on the market IMO. Something will give eventually.

[flying pig] 27/4/2021 08:32

hxxps://www.edisongroup.com/publication/tfg-asset-management-grows-in-aum-and-value/29389

Edison report - Despite the long-term NAV returns Tetragon demonstrated, its shares continue to trade at a wide discount of 63%, which is ahead of the already wide 10-year average of 43% and visibly higher than its peers. This may at least partly come from its incentive fee structure (which also dampened the NAV TR in FY20), only non-voting shares being available to investors (which means Tetragon cannot enter LSE’s premium segment) and TFG Asset Management’s carrying value being based on private valuation. The recent enforcement action of the US Securities and Exchange Commission (SEC) against Ripple Labs (7.3% of Tetragon’s NAV) may add to this. Nevertheless, the current discount offers considerable downside protection to investors, who are also rewarded through dividends (4.1% yield on a last 12 months basis) and NAV-accretive share buybacks. Tetragon sees room for further growth in AUM of TFG Asset Management and does not expect to float the business in the near term (which, however, remains its long-term intention).

[tula100] 23/4/2021 17:00

I see the lawsuit is going ahead, but can the SEC really win the claim against Ripple that XRP is not a currency? Once Ripple wins, its value will go up.

[makinbuks] 23/4/2021 15:19

OK got it now, RL is unquoted so in the absence of a "refund" they are stuck with it.

[alpal2] 22/4/2021 15:39

It would be nice to get some clarity from management [but fat chance of that] as to actual situation re Ripple / XRP. My understanding is that TFG does not own any XRP. XRP is quoted but the investment into Ripple is into an unquoted company. Dear Paddy or Paddy Dear seems to have made a total shambles of this investment but, rest assured, it will not reduce management fees.

[tiltonboy] 22/4/2021 11:56

Ripple isn't quoted

[makinbuks] 22/4/2021 11:02

Agreed but hasn't the share price of Ripple recovered to the level TFG bought in?