Twentyfour Income Share Discussion Threads

[badtime] 28/9/2022 15:46

Wonder what caused the sudden dip

[ammons] 21/9/2022 12:55

Re the Telegraph article.

How to secure 14pc returns – even as we head into a recession

Questor investment trust bargain: this fund’s divi is in line for a boost and its assets should follow suit for a double-digit total return
By Richard Evans 15 September 2022 • 6:00am

For that elusive combination of high returns and low risk, Questor has tended to favour either specialist property funds or specialist bond funds.

Our thinking is that the professionals who run these portfolios develop such deep understanding of their markets, and have cultivated such fruitful networks of the contacts on which successful deal-making in these areas often depends, that they can buck the normal rules of investing and unearth assets that really can deliver good returns at disproportionately low risk.

Among the property funds tipped here, we would put into this category the likes of Residential Secure Income, Triple Point Social Housing and Regional Reit; for bond funds we would mention Real Estate Credit Investments, BioPharma Credit, Honeycomb – and TwentyFour Income, the portfolio we cover today.

The share price chart since we first tipped the fund in 2018 at 116.5p may seem uninspiring; with the shares at 104.5p we are in the red to the tune of 10.3pc in capital terms. But this is to ignore its income – the portfolio has exceeded its dividend target of 6p a share every year since it listed in 2013.

What is more, we can now expect big increases in the divi, and indeed in the fund’s net asset value and hence in all probability in the share price too, because of the way the portfolio’s assets work.

There are two forces at play here. First, the managers invest in “floating̴9;rate” assets, so rises in interest rates mean more income for the fund.

The second is more complex. The market value of many of its assets has fallen in recent months as investors more generally have sold bonds in response to the rise in inflation. But TwentyFour Income’s managers tend to hold their investments until they mature – which of course they do at “par” value, or the amount originally lent when the bonds were issued.

As the maturity date approaches (and the fund’s assets are about three years from maturity on average), the market price naturally tends to rise back up to the par level at which investors will be repaid. And, when the money from matured bonds is reinvested, it will generate higher interest rates if used to buy other bonds at depressed prices.

None of this, obviously, would hold water if the more perilous economic times we are entering led to a spate of defaults among the fund’s bond holdings. But this is where that specialisation on the managers’ part we referred to above comes into its own. Such is their skill at assessing the creditworthiness of those they lend to (and mortgage borrowers in Britain and Europe, via “mortgage̴9;backed bonds”, account for about 60pc by value) that the fund has never suffered a default.

“TwentyFour Income has never held an investment that has defaulted, nor has it ever held a position that has subsequently defaulted after it owned it,” said Numis, the broker, last month. “There are no credit‑impaired positions in the portfolio and bonds have been underwritten against adverse scenarios more severe than the global financial crisis.”

Let’s return to the rising income we can expect thanks to increases in interest rates.

“We expect the [fund’s] dividends for the current year to be substantially higher than the prior year given the rise in base rates,” Numis said.

“We see scope for a dividend of 8.6p‑9p, equivalent to an 8.3pc‑8.7pc dividend yield on the share price [almost unchanged since its note], based only on the change in market expectations for UK interest rates. This is assuming there is no benefit from reinvesting any [bond repayments] at the current attractive [rates].”

But the broker said it could see scope for “an even higher dividend” as more of the portfolio’s bonds matured and the proceeds were reinvested at better rates. For the year to March 2024 “we could see scope for a dividend of about 10p”, it said, although it said “a lot could change between then and now”.

But we also need to consider the potential for capital gains as the prices of its bonds drift upwards towards par value as maturity approaches.

Adding together the yield and these likely capital gains, Numis said “total returns in the medium term should be closer to … about 14pc [a year]”.

Fourteen per cent from a bond portfolio that has never suffered a default is a very attractive proposition. Buy.

Questor says: buy

Tickers: TFIF

Share prices at close: 104.5p

[return_of_the_apeman] 21/9/2022 12:45

Answer may be in here but its behind a paywall so can't read it

[return_of_the_apeman] 21/9/2022 12:42

7p plus any excess returns


The Company recently announced (11 August 2022) the Mark-to-Market yield and
Forward Yield to Maturity of its portfolio at 13.0% and 14.9% respectively.
Given the strong cash flows, being generated by TFIF's investments, where the
purchase yield of the portfolio has increased by 2.14% to 10.11% over the last
nine months - an incremental pick-up of almost 50bps compared to the 1.65%
increase in base rates in the same time - the Company is increasing its minimum
annual dividend to 7p per share through the payment of three quarterly
dividends of 1.75p per share and a final dividend of 1.75p per share plus any
excess returns in respect of a financial year.

[panshanger1] 21/9/2022 07:38

BIPS upped its quaterly dividend today too - hope it's a trend bond funds (and reits !!) taking a helluva beating atm

[cwa1] 21/9/2022 07:34

Nice work:-

Increase in minimum annual dividend to 7p (from 6p) per Ordinary Share

The Board of Directors of TwentyFour Income Fund ("TFIF" or the "Company") is
pleased to announce its plan to increase minimum dividend payments above its
annual target. The Company will increase minimum annual dividends from 6p to
7p per share with minimum quarterly dividends increasing from 1.5p to 1.75p per
share beginning in respect of quarter end 30 September 2022. The Company will
continue to distribute all its annual net income to shareholders through a
final balancing dividend.

[stun12] 16/9/2022 08:23

TwentyFour offer to repurchase shares at a set discount to net asset value. It's a reverse tender, so you apply to sell, say, 1000 shares and the acceptance level will depend on how many other shares are tendered. So you may end up selling 200, or 500. As the discount to NAV was lower than the market bid at the time, it didn't make any sense to take up, and it has since fared better anyway.

[petercarley] 15/9/2022 18:41

Sorry if I'm sounding a bit of a "Thicky" but can somebody in words of one syllable explain the “Ins and Outs” of this offer. I've a small batch of TFIF shares and have been happy with the yield so can see no benefit in taking up the offer.

What am I missing?

Pete
e

[stun12] 01/9/2022 12:40

NAV is a bit nebulous with asset-backed securities, never mind the future flow warehousing. Happy to sit here with the yield and it should be relatively low risk. Hopefully.

[cc2014] 01/9/2022 12:23

Well since the NAV was 103.55p in the middle of last week and is likely to now be lower, it might be best to sell them at 102.5p if you are so inclined.

[stun12] 01/9/2022 12:18

I think the tender is at 102 and a bit pence.

[davebowler] 01/9/2022 09:22

Twentyfour Income Fund Ltd has announced that it intends to purchase all of the shares in issue through a tender offer. This will give you the choice to sell (tender) your shares at a fixed price with no dealing charges.

Under the terms of the offer, if you choose to tender your shares it will be at a 2% discount to the NAV per ordinary share, calculated as of the electing NAD determination date, 18 October 2022. Your election may be subject to scaling back.

[stun12] 21/7/2022 14:35

Yield is OK for what should be a low beta stock - though losing 10% of its value since the combination with UKML wasn't too good. The yield was higher on UKML, so hopefully there will be a gradual increase in dividends.

[jong] 21/7/2022 08:49

XD Today. 1.5p per share payable on 5th August.

Annual yield around 6.6% at this price.

[jong] 21/4/2022 08:50

XD today. 2.27p per share paid on 6th May.

[panshanger1] 04/4/2022 16:12

Bit of strength and volume here today

[stun12] 01/4/2022 08:54

To be fair, a couple of those look like the new holding statement after the conversion from UKML as they're odd numbers of shares.

[panshanger1] 31/3/2022 15:07

Yes Nice vote of confidence

[jong] 31/3/2022 14:54

Lots of Director buying at these low prices over the last few days.

[peterbill] 13/2/2022 10:27

From the Sunday Teleghaph ....


With rising inflation and interest rates, there have been some big losses in government bond markets over the last two months, confirming the old truism that even when it comes to government debt, there is no such thing as a “risk free asset” – much as HM Treasury might want you to believe otherwise.

Since the middle of December, for instance, the price of a 10-year UK gilt has fallen by nearly 8pc, more than doubling the effective yield on the security to 1.5pc.

That may not seem much of a loss by the standards of equity markets, where volatility of this magnitude is relatively common, but for government bonds it is a major move, and quite a shock to pension funds required by regulatory dictat to match burgeoning liabilities with assets which are supposedly completely bullet proof - by which regulators mean mainly top rated government bonds.

[ammons] 10/2/2022 09:25

Solid, steady, boring, reliable income.... Sounds good to me. I am holding off through fear of Russia incursion into Ukraine. During 2020 I was not looking at retirement but now I am. This is the sort of share I need to supplement my income.

[scburbs] 10/2/2022 08:37

So an investor in March 2018 hasn’t done very well but is still up (“wonderful investment chap(s)”) and an investor in March 2020 has done really well (wonderful investment chap(s)).

Most investors over the last 5 years have probably purchased between 110 and 120 with the price being relative stable and the dividend yield decent. Solid investment chaps.

[divmad] 10/2/2022 06:37

So, let me see. From Quaestor, a holder since March 2018 has lost 12% in value but received max 24% total dividends? A 3% total return p.a. at most. Wonderful investment chaps.

[cc2014] 09/2/2022 13:54

#125. It depends on whether the fund contains fixed rate bonds or floating rate bonds.

A fund holding fixed rate bonds will fall in price whereas a fund containing floating rate debt should remain unchanged (because if interest rates go up by 0.25%, the rate the bondholder gets charged goes up by 0.25%).


However, that starts from the premise that the bonds the fund holds are appropriately valued and not puffed up beyond all reason by QE. The BOE announced last week it is reversing QE on it's holding of corporate bonds. As it sells these bonds bond prices should all other things being equal fall because supply and demand of bonds is changing.

One also has to consider whether rises in interest rates will cause any defaults on the bonds held in the fund, so very broadly a rise in interest rates by a quarter of a percent makes very little difference but a rise of say 1.5% over a short period of time or a larger increase in rates introduces more credit risk.