Volta Finance Share Discussion Threads

[cerrito] 30/11/2017 23:25

Just caught up with the end of October report.
As they say cash continues high. Over the last three month ends it has been E29m+ compared to summer of 16 when from the end of May to the end of September the amount of cash was below E10m
Interesting comment that spreads on debt tranche were lowest since 2008 and got lower in November.

[davebowler] 23/11/2017 09:31

Liberum;
Volta Finance (Mkt Cap £228m)
1.7% NAV increase in October

Event
Volta Finance's NAV was €8.42 at 31 October. NAV return in the month was +1.7%.

The CLO market enjoyed a strong month with continued debt spread tightening. Performance by segment in the month was +2.3% for CLO Equity tranches; +0.8% for CLO Debt tranches, +1.0% for Synthetic Corporate Credit; 0.0% for Cash Corporate Credit deals; and +0.7% for ABS.

Cash as a percentage of NAV was relatively high at 31 October at 10% and the manager is considering increasing its CLO equity exposure as spread tightening has benefited equity positions as they are able to lock in an attractive cost of funding. Most of the cash is expected to be deployed in the coming weeks.

Volta has generated a NAV return of 5.8% to date in 2017 and c.10% over the past 12 months. The shares currently trade on a 13.9% discount to NAV in comparison to an average 0.7% premium for peers.

[tiltonboy] 30/10/2017 09:30

I've been picking up MCT, and CSH for clients.

[skyship] 30/10/2017 07:47

Hi Tilts....the result of yesterday's casting around for yield - as per my post on RECI on the JDT thread.

Think for the moment I prefer CIFU to VTA...

[tiltonboy] 30/10/2017 07:14

That's a random post this early in the morning!

[skyship] 30/10/2017 07:08

A weakening technical position, perhaps suggesting a pullback to cE7.00:


free stock charts from uk.advfn.com



free stock charts from uk.advfn.com

[cerrito] 21/10/2017 19:19

Went through the Annual Report
Glad to see that once again the dividends paid of E22m were comfortably higher than opex of E7m(up this year because of performance fees) and dividends/coupons received in cash-E34m.
We need to recognize that the dividend yield of 8.3% based on 7.17 share price was 8.3% less than FAIR and CIFU at approx 14% and 12.5% respectively.
Reiterates what said in interims-need to reduce discount so they can issue new equity.
Also as said in interims commented on involvement in less liquid Wharehouses and Capitalized Manager Vehicles( and I have yet to see CIFU/FAIR reference them) where in their opinion extra return compensates for lack of liquidity.
Good to see reduction in management fees.
Once again I would strongly encourage all holders to read a for me very good Investment Manager’s report.
Comfortable with what I have and as a £ based investor any decision to invest further influenced by my view on FX as 63% of assets are Euro dominated at least count. As of now have zero inclination to sell.

[davebowler] 02/10/2017 10:48

Liberum;
Event
Volta Finance has agreed a reduction in management fees and a revised performance fee under an amended investment management agreement.

The management fee will be 1.5% of NAV up to €300m and 1.0% of NAV above €300m (previously 1.5% of NAV). The performance fee will be 20% of NAV outperformance over an 8% hurdle (subject to a High Water Mark) and will be calculated on an annualised basis.

Liberum view
The simplified performance fee and tiered management fee is a positive move as the prior performance fee calculation was overly complex and did not have a strict High Water Mark. The management fee is still at the higher end of the range in the peer group (range of 1.0% for Fair Oaks to 1.5% for Carador). Volta trades on an 11.7% discount to NAV.

[rambutan2] 20/9/2017 11:18

Also worth considering TORO imho.

[yieldsearch] 20/9/2017 09:49

Davebowler: tks for posting the research, always useful.
Do you have any view on BGLF/BGLP? it seems similar to Volta

[davebowler] 20/9/2017 09:17

Liberum;
Event
Voltas Finance's NAV was €8.38 at 31 August. NAV return in the month was +0.4% after negative impact of 0.2% from USD depreciation against the Euro; USD exposure is 31% of NAV.

The mark-to-market movement across portfolio sub-sectors was CLO equity +0.8%, CLO debt +4.0%, Cash corporate credit +0.4%, synthetic corporate credit +0.7% and ABS -0.1%. Cash as a percentage of NAV was 9.6% at the end of the month.

Three assets were acquired in the month, all US CLO Debt, with total capital deployed of €9.5m. The average projected yield on the new acquisitions was 9%. One US CLO debt position was called in the month, with the equivalent of €6.7 of principal received.

Liberum view
Volta has generated a NAV total return of 5.3% year to date and 13.1% over the past 12 months. Cash still represents a relatively high proportion of NAV at 9.6%, on the back of higher pre-payments. The manager will seek to deploy this cash into CLO equity positions as spreads on CLO debt continue to tighten.

The shares currently trade at an 11.7% discount to NAV, compared to a 1.1% average premium for the other CLO funds in the peer group; the current yield is 8.3%.

[cerrito] 18/8/2017 15:47

Thanks DB for your TFIF commentary and was interested in their observation for demand for yielder junior levels.
I see that for the second month running $ weakness against the Euro has impacted the VTA NAV performance:at least VTA did well in moving up their Euro exposure during the last year though I see that they are reversing this.

[davebowler] 15/8/2017 14:30

TFIF's portfolio is 37.5% in CLOs and it trades at a 4% premium to NAV

[davebowler] 10/8/2017 10:38

RNS
9 August 2017

According to our early computations, the end of July Early Estimated
NAV(*) of Volta is at EUR8.40 per share. Volta's Early Estimated NAV(*)
performance is +0.4% for July 2017.

The Early Estimated NAV(*) is published for information purposes only;
the official Estimated NAV will be disclosed in the Monthly Report of
Volta which will be published in the course of the month, on or around
17 August 2017.

[davebowler] 22/6/2017 10:23

Liberum;
CLO funds
Slowdown in loan spread compression

Event
Carador Income Fund and Blackstone GSO Loan Financing (BGLF) have both announced NAV gains of 0.9% for May. US CLO debt tranches performed relatively well in the month (gains of 1.1% and 1.8% BB and B tranches) during a broadly positive period for credit markets.

BGLF completed a €50m investment in Blackstone / GSO US Corporate Funding, the adviser's US affiliate which established two new US CLOs in the month. BGLF now has exposure to three US CLOs in its portfolio. BGLF has also applied to the UKLA for a premium listing on the Main Market (currently specialist fund segment). The quote will also change to Sterling to enable the company to be included in indices.

CLO funds - NAV performance


May-17
YTD
12 months
Fair Oaks Income Fund
n/a
5.8%*
31.5%*
Carador Income Fund
0.9%
3.7%
24.9%
Volta Finance
0.6%
3.3%
19.3%
Blackstone/GSO Loan Financing
0.9%
1.3%
7.3%


Source: Liberum estimates *figures to end of April 2017

Despite relatively low supply, spread compression across the loan market has decelerated. Loan issuance was the lowest month YTD with €5.6bn in Europe and $44.3bn in the US. In Europe, low loan supply in addition to a high level of prepayments led to an increase in the supply shortage. Loan repricing remains relatively high in the US and this is expected to continue into the end of Q2 2017 with 68% of the loan market trading above par.

CLO equity investors have largely been able to offset the reduced yield on loan portfolios by refinancing/resetting CLO liabilities although the pace of refinancing activity slowed in May. Carador reset once CLO during the month which resulted in a 16% increase in valuation.

Liberum view
The reduction in yield compression echoes what NB Global Floating Rate Income Fund has been experiencing in relation to a slowdown in repricing activity as the yield to maturity on new issues has remained steady. CLO equity investors have benefited from the ability to refinance/reset CLO debt tranches at a lower average cost to maintain the arbitrage of the portfolio spread over the cost of funding. The length of reinvestment periods is also increasing to the benefit of equity investors. The CLO funds trade on an average 0.7% discount to NAV (10.9% dividend yield).

[davebowler] 12/6/2017 10:43

Twenty Four views on CLOs;
wentyFour Asset Management

The recent trend of spread tightening across the fixed income space is also impacting the leveraged loan market, with spreads tightening from 4.8% to 4.25% (Moody’s Analytics) on average over the past year.

Not surprisingly, the more recently issued CLOs are more acutely impacted as they lack a base of more seasoned, higher yielding assets. These new CLOs are forced to buy lower spread assets, with the most recent deals investing with a weighted average spread of 3.8-4.1%. In addition, prepayment speeds are at elevated levels and hence we expect the average spread for 2015-2016 transactions to reduce further.

Over the same period, however, average returns for the equity tranches have remained fairly stable. We have looked at the relevant statistics to understand what is happening to these transactions and how they can still pay the equity with a stable return.

The initial reaction would be that managers must be increasing risk to maintain the same equity pay-out. However, we can see this has not been the case, when we look at the “Weighted Average Rating Factor” (WARF); it has deteriorated slightly but remains relatively comfortably around the B2 rating level. Encouragingly, over the same period we have seen portfolio diversification significantly improve.



Source: Moody’s Analytics

So managers have not added a significant amount of risk, spreads are tighter, but equity yields have been fairly stable? The first factor contributing to this is that default rates of leveraged loans are running at very low levels and even “distressed221; assets (priced below 80c on the dollar) are running at the lowest level seen since the financial crisis. The second factor has been managers selling assets, especially fixed rate bonds, that rallied a long way above par that became inefficient for the CLOs. Selling these assets at a premium resulted in a yield boost for the equity tranches. Lastly, and probably the most important factor, has been the ability of CLOs to adjust the cost of the liabilities to the new assets’ environment. Around €15bln of CLOs (source : Morgan Stanley) already repriced their liabilities focusing mainly on the senior, IG-rated part of the capital structure especially the AAA rated tranches that are the main driver of a CLO’s cost of funding, representing on average 60% of the total stack. As a result CLO spreads have tightened 60-250bps over the past 12-months in the AAA to B rated classes; although there remain large differences between managers and between vintages.

This is one of the reason why CLOs were one of our top picks for 2017, and with BBs yielding around L+6% they still deliver attractive returns in a low yield environment without compromising on credit quality. That said we remain cautious on equity tranches, as the arbitrage is thin with little room for error and specific manager selection is now more important than ever!

[davebowler] 02/6/2017 13:58

TFG looks to be at a big discount to NAV.Some CLOs amongst motley other stuff in the portfolio.

[cerrito] 20/5/2017 22:40

Just gone through the April Monthly report.
What is interesting(to me at least) is the reduction of CLO debt as a percentage of GAV-40% at end of April 17 compared to 53% at end of April 16 and the increase in CLO equity up from 19% to 27% in the same period. For now at least te increased risk is dampened as they have 10%+ of GAV in cash whereas last summer they had minimal cash balances.

[davebowler] 18/5/2017 12:33

10 May 2017

According to our early computations, the end of April Early Estimated
NAV(*) of Volta is at EUR8.52 per share. Volta's Early Estimated NAV(*)
performance is +0.1% for April 2017.

The Early Estimated NAV(*) is published for information purposes only;
the official Estimated NAV will be disclosed in the Monthly Report of
Volta which will be published in the course of the month, on or around
19 May 2017.

(*) Please note that this Early Estimated NAV has been computed on the
basis of fair values for the portion of the portfolio for which end of
months prices were available or were able to be collected as of 9 May
2017 and on the basis of estimated prices for the rest of the portfolio.
Such estimated prices have been estimated based on market observations
as of the end of April 2017. The Early Estimated NAV is therefore not an
accurate or reliable reflection of the value of the assets of Volta as
of the end of April 2017 and can significantly differ (upwards or
downwards) from the published Estimated NAV that will be disclosed in
the next Monthly Report of Volta and that will be subject to the
limitations set forth therein.

[davebowler] 19/4/2017 12:53

Liberum;
Volta Finance (Mkt Cap £224m)
Cautious short-term outlook

Event
Volta's NAV return in March was 0.9%. The mark-to-market performance of the various portfolio sub-sectors was +1.8% for CLO equity, +1.5% for CLO debt, +0.7% for synthetic corporate credit, -10.9% for cash corporate credit and 0.2% for ABS.

Cash corporate credit reduced NAV by 0.4% in March. Cash corporate credit was impacted by the final payment of a German SME CDO that depended on the value of a pool of defaulted SME loans. Cash flows from the investment have been well ahead of expectations in recent years.

Volta invested a total of €13.4m in the month in two USD CLO debt tranches, a new USD CLO equity position and a drawdown under the risk retention vehicle investment. The expected yield on new investments was 10.7% compared to a yield of 5.5% on the €10.8m of CLO debt tranches sold in the month.

Cash is still relatively high at 9% of NAV and reflects the manager's caution on credit market valuations. The manager has also added a short S&P 500 position representing 2.5% of NAV to protect against short-term market volatility.

Liberum view
Volta continues to deliver attractive returns with a NAV return of +3.2% for Q1 2017 and +22.3% over the past 12 months. The company is on track to deliver another year of double-digit NAV performance. The manager has consistently used hedging and portfolio positioning to protect returns during periods of market volatility. The shares currently trade on an 11.4% discount to NAV

[davebowler] 10/4/2017 10:46

Liberum;
Volta Finance (Mkt Cap £250m)
0.9% NAV gain in March

Event
Volta has published an early estimate of its NAV at 31 March 2017 which indicates growth of 0.9% over the month to €8.51. The monthly report will follow in due course around the 20 April.

Liberum view
Volta continues to deliver attractive returns with a NAV return of +3.2% for Q1 2017 and +22.3% over the past 12 months. The company is on track to deliver another year of double-digit NAV performance. The company's recent interim report projects the portfolio IRR at 10.4% and the manager has consistently outperformed the portfolio projections in recent years. The shares currently trade on an 11.9% discount to NAV.

[davebowler] 20/3/2017 11:15

Liberum;
Volta Finance (Mkt Cap £234m)
0.9% NAV return in February

Event
Volta's NAV at 28 February 2017 was €8.58 per share which represents an increase of 0.9% over the month.

The mark-to-market performance of the various portfolio sub-sectors was +0.2% for CLO equity, +0.5% for CLO debt, +1.8% for synthetic corporate credit, +1.5% for cash corporate credit and 0.1% for ABS.

Volta invested a total of €15.7m in February in six USD CLO debt tranches and a drawdown request on the risk retention vehicle that was announced in January.

Cash has increased to 10% of NAV as the manager's view is that credit markets are now quite fully valued and better opportunities should emerge in due course.

Liberum view
We calculate approximately half of the NAV return in the month was attributable to FX gains given the 2.1% appreciation of the US Dollar (portfolio exposure is 24% US Dollar). Volta continues to generate attractive returns and is well-placed to deliver another year of double-digit NAV performance. The shares currently trade on an 12.9% discount to NAV.

[davebowler] 09/3/2017 12:34

Liberum;
Volta Finance (Mkt Cap £234m)
FX gains drive NAV growth

Event
Volta has published an early estimate of its NAV at 28 February 2017 which indicates growth of 0.8% over the month to €8.57. The monthly report will follow in due course around the 20 March.

Liberum view
We calculate the majority of the NAV return in the month was attributable to FX gains given the 2.1% appreciation of the US Dollar during the month. Volta is well-placed to deliver another year of double-digit NAV performance. The shares currently trade on an 12% discount to NAV and offer an 8.2% prospective dividend yield.

Specialist Fi