Volta Finance Share Discussion Threads

[cerrito] 09/11/2019 21:26

I would encourage people to have a look at the VTA AR and good commentary from the Investment Manager on the increase in clo equity, default rates, Projected IRR, impact of covenant lite and volatility. Good tables but would have preferred that we had prior year comparisons.
Fact is that NAV increase to end of July with dividend reinvested at 2.5% was very low compared to last 5/6 years and the main reason was unrealized portfolio losses of 9.3%.Exoenses were 1.9% of NAV-the same as the year before.
The Chairman was also pleased with the reduction of the discount following the various initiatives they had taken.
We do need to note that as in the previous year dividends used E22m of cash and that net profit was E7m in the year to July 2019 compared to E22.7m in the year previous.
I also see that between the July31 year end and end of September the NAV has decreased from 7.94 to 7.64 in euros with a greater loss for £ based investors like me.
I do not see myself buying or selling in the immediate future.

[cwa1] 07/11/2019 16:19

Director purchase...

[joan of arc] 31/10/2019 19:54

I know nothing about the first point but am aware of the second with which I agree.

[kenny] 31/10/2019 19:14

Don't know for certain but there are rumoured problems in the CLO market in the US.

I think that it does not help that management of VTA are very greedy and only running it for their ability to extract fees. No interest in increasing value accruing for shareholders.

[joan of arc] 31/10/2019 17:56

We appear to be in a slow free fall. Anyone know why?

[davebowler] 20/9/2019 19:20

Liberum;

Specialist Finance

CLO Funds

Weak loan prices drive CLO equity markdowns

Event

Weak leveraged loan prices have resulted in a reasonably poor NAV return for the majority of the listed CLO funds in August. Loan markets were impacted by weak sentiment due to ongoing trade wars. Technical pressures also contributed to a reduction in loan prices. Retail fund outflows continued against a backdrop of expected rate declines. We also note commentary from Fair Oaks capital that secondary liquidity in CLO equity BWIC auctions (bids wanted in competition) was significantly lower in the month ($67m traded across 9 positions compared to $177m traded in August 2018).

The average loan price of the US S&P/LSTA Leveraged Loan Index fell from 97.1 to 96.3 over the month, weighing on CLO equity NAVs. Average loan prices have recovered marginally to to 96.5 in September.


Returns for the funds ranged from -0.2% for Blackstone GSO Loan Financing to -4.0% for Marble Point Loan Financing. Blackstone GSO Loan Financing tends to outperform during times of market volatility due to its mark-to-model valuation approach. The remainder of the peer group uses mark-to-market pricing.

CLO Funds - NAV TR performance



Aug-19

YTD 2019

2018

Prem/(Disc)

Div Yield

Blackstone/GSO Loan Financing

-0.2%

9.1%

6.7%

-11.9%

12.6%

Fair Oaks Income Fund

-3.9%

0.0%

0.4%

-5.1%

13.4%

Marble Point Loan Financing

-4.0%

5.2%

-12.9%

-0.7%

9.6%

Volta Finance

-1.5%

5.5%

0.0%

-13.0%

9.1%



Source: Liberum, Bloomberg


Managers remain relatively confident on the outlook for future returns as underlying CLO managers have been able to reinvest cash and prepayments at lower loan prices. The trailing 12-month default rate in the US loan market remains low at 1.3% and market expectations for US loan defaults remain well below the historical average of 2.9%. The loan market has grown significantly over recent years but a relatively small proportion of the market matures before 2022 (less than 10% of outstanding loans mature before 2022).

[davebowler] 05/8/2019 12:15

We get a mention-

[holts] 18/6/2019 13:28

CErrito

I had a reply as follows

Technically speaking, the only final dividend is the one declare in November (following the publication of the annual report).
This 15 cents interim dividend isn't really a change in the dividend policy. It could be compensated through the comings distributions.
Obviously we will communicate on any change (if it happens to be the case).

[cerrito] 16/6/2019 16:50

Thought of your question Holts when I saw in the preliminary May report that in six months to end of May they generated E20.2m in interest/coupons; expenses and interest would have been E4m approx and the 31c in dividends would have cost E11.2m so could have afforded to be less stingy.

[cerrito] 04/6/2019 21:09

Good question, Holts and I have no answer.
I note in their monthly statements they say how cash generating their portfolio is and I just checked the Chairman#s statements in the interims as of January this year and nothing there to suggest they were going to cut the dividends that they have paid in the last years.

[holts] 31/5/2019 20:56

Why was the div declared not the same as equivalent last year ?

[cerrito] 31/5/2019 10:27

April figures showed a record amount received in coupons and dividends. Note that overall CLO equity was 43% of portfolio-comfortably the highest percentage since I started following in Marc 16, when CLO were 19%.
I note that 30.4.19 NAV was Eu8.02 per share compared with 8.25 at 4.18.
Also note that Euro assets were 73% of total-the highest for some time but the notes suggest more the way the cookie crumbled than any overall plan.
PS Good that we are back to getting the regular information

[cerrito] 14/5/2019 11:29

Thanks as always davebowler for that.
Btw, the report as at the end of March is garbled and does not have the normal information.
I have written to the Manager requesting a fix; no reply and if others can write in all the better.

[davebowler] 14/5/2019 09:09

Via Liberum

[davebowler] 14/5/2019 09:08

Volta has released an early NAV estimate for April. NAV per share at 30 April 2019 was €8.02 representing an increase of 1.9% in the month. Currency movements had limited impact in the period.Liberum viewThe NAV uplift maintains the strong start to the year for Volta. NAV total return in the four months to April is 6.0%. Returns in 2019 have benefited from a recovery in the leveraged loan indices, resulting in improved CLO equity NAVs. Volta deployed additional capital in CLO equity positions in early January following the market sell-off.

[dendria] 09/5/2019 10:24

An update from Edison today:

[davebowler] 23/4/2019 08:48

Liberum;
CLO Funds

Strong Q1

Event

The majority of the CLO funds have reported NAV figures for March with broadly positive performance across the sector. The US and European leveraged loan markets both produced a return of returns of -0.1% in March.

Returns in the month ranged from 0.1% for Fair Oaks Income Fund to 1.2% for Blackstone/GSO Loan Financing. The Blackstone/GSO Fund uses a mark-to-model valuation approach (as opposed to mark-to-market for peers), which results in a smoother NAV return profile. The 1.2% return in the month included 0.3% from mark-to-model gains, mainly relating to US CLOs.

Fair Oaks reports a challenging primary market for US CLOs as loan spreads have tightened by 83 bps in 2019, but spreads on AAA CLO debt tranches have widened by 5 bps over the same period.

CLO funds - NAV TR



Mar-19

Q1 2019

2018

Prem/(Disc)

Blackstone/GSO Loan Financing

1.2%

4.4%

6.7%

-7.4%

Carador Income Fund

0.1%

8.8%

-10.5%

-7.7%

Fair Oaks Income Fund

0.9%

1.9%

0.4%

-0.8%

Marble Point Loan Financing

n/a

8.8%

-12.9%

-5.7%

Volta Finance

0.8%

4.3%

0.0%

-11.8%



Source: Liberum, Bloomberg

Liberum view

The CLO funds have experienced a NAV recovery in Q1 2019 following a weak 2018. Performance has benefited from a a sharp increase in the loan market in January, resulting in improved CLO equity NAVs. We note loan prices have continued to increase in April despite ongoing outflows from retail investors as the prospect of further rate rises in the US has diminished.

[davebowler] 22/3/2019 08:50

Liberum;
CLO Funds

2019 NAV recovery continues

Event

The majority of the CLO funds have reported NAV figures for February with broadly positive performance across the sector. The US and European leveraged loan markets produced returns of 1.6% and 0.7% respectively in February.

Returns in the month ranged from 0.2% for Fair Oaks Income Fund to 1.9% for Blackstone/GSO Loan Financing . The Blackstone/GSO Fund uses a mark-to-model valuation approach (as opposed to mark-to-market for peers), which results in a smoother NAV return profile. The 1.9% return in the month included 1.1% from mark-to-model gains.

CLO Funds - NAV performance



Feb-19

2019 to date

2018

Prem/(Disc)

Blackstone/GSO Loan Financing

1.9%

3.2%

6.7%

-7.1%

Carador Income Fund

1.7%

8.8%

-10.5%

-8.8%

Fair Oaks Income Fund

0.2%

1.0%

0.4%

0.2%

Marble Point Loan Financing

n/a

7.9%

-12.9%

-4.9%

Volta Finance

0.4%

3.5%

0.0%

-12.5%



Source: Liberum, Company data

Liberum view

The positive NAV performance to date in 2019 follows a strong start to the year for the leveraged loan indices, resulting in improved CLO equity NAVs. US loans returned 4.2% for the first two months of 2019, which is the best start to a year since 2009. The managers of Volta and Fair Oaks deployed capital in early January following the market sell-off. In addition, the underlying CLO managers would have been able to reinvest cash and prepayments in loans at lower prices. The average loan price of the US S&P/LSTA Leveraged Loan Index has risen from 93.8 to 96.9 to date in 2019.

[dendria] 21/3/2019 12:34

Another note from Hardman on VTA March 2019 Presentation:

[atholl91] 28/2/2019 08:41

Thanks Dendria. Excellent Read. May have to limit my FAIR exposure and replace with VTA even though total return of FAIR 2x that of VTA over past three years.

[dendria] 25/2/2019 14:12

A chunky research note out from Hardman today 'Debt Investment Companies':

[cerrito] 12/2/2019 21:16

Appreciated,davebowler

[davebowler] 12/2/2019 10:05

Liberum;
Event

Volta has released an early NAV estimate for January. NAV per share at 31 January 2019 was €7.94, representing an increase of 3.0% in the month. Currency movements had limited impact in the month.

Liberum view

The NAV uplift follows a strong start to the year for the leveraged loan indices, resulting in improved CLO equity NAVs. The YTD total return on the US loan index is 2.9%. We note the confident outlook commentary from the manager of Volta in last month's report. The company deployed capital in early January following the market sell-off. In addition, the underlying CLO managers would have been able to reinvest cash and prepayments in loans at lower prices. The average loan price of the US S&P/LSTA Leveraged Loan Index has risen from 93.8 to 96.1 to date in 2019.

[genista71] 07/2/2019 15:26

Hardman note does not discuss how many loans have increasingly weak covenants, in truth it will be difficult for the manager to see through the structured finance wrapper and actually know what’s going on.

There will be opportunities to buy this much cheaper

[davebowler] 07/2/2019 14:01

Hardman's answer;
''The fund’s income is primarily driven by those interest coupons and it’s not reliant on volatile capital gains, or losses in any period, there is broad credit risk diversification and AXA, the fund manager, has a proven track record over the long-term. As of today, the shares are trading on a mid-teens percentage discount to the net asset value and that has a lot of worries and potential bad news already baked into it.''''