Vpc Specialty Lending In... Share Discussion Threads

[davebowler] 08/1/2018 10:28

Liberum;
VPC Specialty Lending Investments (Mkt Cap £286m)

Marketplace loan exposure reduce to 3% of NAV

Event

VPC Specialty Lending (VSL) has reported a NAV return of 0.55% in October which is comprised of income returns of 0.82% and capital losses of -0.27%. NAV total return to date in 2017 is 2.8%.

Income was predominantly from the balance sheet loans which produced a gross return of 0.91%. Exposure to balance sheet loans was 75% in November and has risen to 79% in December following the sale of the Prosper loan portfolio.

A new £35m balance sheet loan investment completed in Oakam, a UK digital micro-lender. This was partly funded by the repayment of zipMoney's Australian Dollar balance sheet loan. VSL also exercised half of its equity options in zipMoney in November. The remaining investment in zipMoney is 0.4% of NAV.

Marketplace loans and securitisations returned -0.13% in November and the manager is seeking to reduce the exposure further. It was 10% of NAV at 30 November and the company sold its Prosper marketplace loans in December (4.2% of NAV), reducing the marketplace loan exposure to 3.4%. The loans were sold at a discount to book value and will reduce the December NAV by 0.56%.

The shares currently trade on a 15.3% discount to NAV.

[harveydee] 06/12/2017 16:13

Yes more director buying plus yesterday more buybacks .. a great monthly report .. and yet the market makers just keep punishing the share price .. it really is a share off almost everybody's radar and it's very frustrating that the share price is apparently unable to get some upward traction !

[wskill] 06/12/2017 15:11

Some good buying today Harveydee not sure why is it the 10 percent yield or 20 % discount to net assets maybe the continued director buying ,even a newspaper article such choice we could pick any one of those.

[wskill] 27/11/2017 18:55

We seem to be the only buyers today probably due to investors thinking VSL invests in consumer loans.

[harveydee] 27/11/2017 18:20

I meant 50k, not £50k !

[harveydee] 27/11/2017 18:19

Strange, wskill .. You bought 20k shares today and I bought £50k yet it says that total trading volume today was just 56,956.

[harveydee] 27/11/2017 14:49

Yup, good point.

[wskill] 27/11/2017 13:01

Like the share buyback with the present 20 percent discount Harveydee that will get the net asset value up quickly and get them to the promised 2p per quarter dividend in next to no time .

[harveydee] 27/11/2017 11:34

Me too. Looks like it's just us buying, plus vsl share buybacks and Invesco :))

[wskill] 27/11/2017 11:25

Topped up a few today another 20k for the SIPP a gift at this price over 10 percent yield on targeted dividend.

[wskill] 25/11/2017 16:10

They went from 5 percent to 29 percent in April 2016 so must believe things will improve that is my take on it .
The company has already told us they aim for an 8 percent yield on starting capital so I would think 8p dividend per share is the target this will be easier to achieve with the share buy backs at a 20 percent discount as at present.
I have bought in my SIPP and ISA to hold for the long term a gift at this price especially with the disinformation from citywire that VSL is in consumer lending which was true in the past but more or less finished now.

[harveydee] 25/11/2017 13:14

wskill, I noticed that too and agree it's a positive. I also spoke to the company (Chicago parent company) myself last week and was very reassured by what I heard. We have an excellent yield at this price of almost 10% and I think their lending model has some key inbuilt safeguards. biggest problem is the very narrow shareholder base and low trading volumes as well as scepticism that the original model (marketplace loans) didn't go as planned. Parent company say they will be making more efforts to change this perception in the new year, eg by coming to UK on marketing roadshows.

[wskill] 25/11/2017 13:08

Invesco seem happy to increase to 30 percent thought a holding of over 30 percent would mean that a offer must be made?
At the very least we have a long term shareholder cannot be a bad thing will add a few more on a down day.

[wskill] 19/11/2017 09:31

An out of favor sector but with asset value of 90p per share and the dividend yield of 9% looks like a good time to top up I have held them for a year now so cannot complain on the return .

edit just read a report in citywire that this fall is due to consumer loans on the books at VSL not right I would think as now out of such loans .

[harveydee] 18/11/2017 18:35

Anyone else still following this ? The share price seems to drop easily on v low volume

[harveydee] 16/11/2017 19:36

Div raised again to 1.8, putting current yield at over 9%.

[harveydee] 24/10/2017 14:08

Why so down again, yesterday's announcement is more good news as company gets rid of most of its dodgy marketplace loans. Currently yielding about 8.5%, what's not to like ?

[davebowler] 23/10/2017 10:43

Liberum;
Event
VPC Specialty Lending Investments has sold the majority of its remaining Avant loans (excluding those held through securitisations), which represented 7.6% of NAV at 31 August 2017. The impact of the sale on NAV will be -0.53%.

The company's exposure to marketplace loans has been reduced to 7.8% of NAV following the sale. All of the proceeds are expected to be invested in balance sheet investments in the near-term.

VPC Specialty Lending currently trades on a -15.3% discount to NAV compared to an average discount of -3.4% for the direct lending sector.

[davebowler] 04/7/2017 10:29

Liberum;
Event
VPC Specialty Lending generated a total NAV return of -0.68% in May which comprised an income return of 62 bps and a capital loss of -130 bps.

As previously, balance sheet loans continue to perform positively, contributing 0.7% to the monthly return. The capital loss was driven by Avant securitisations (-0.66%), which account for 3.8% of NAV. In addition, the equity portfolio returned -0.32% due to the fall in the Elevate share price and marketplace loans, from Avant, Funding Circle and Prosper, returned -0.27%.

The allocation to marketplace loans continues to fall, down to 15% of NAV (April: 21%). The allocation to balance sheet investments fell to 56% (April: 59%) due to the partial repayment of the zipMoney investment.

Liberum view
The company's marketplace loan and securitisation investments have resulted in a major drag on performance since the end of 2015 (c. 1.5% NAV return over the past 17 months). The silver lining for investors is that the portfolio repositioning to balance sheet loans is gathering pace but returns are likely to remain low in the short term.

The shares trade at a 10.5% discount to NAV; this compares to a peer group average discount of 0.8%.

[davebowler] 09/6/2017 09:50

Liberum;
Marketplace loans continue to weigh on performance

Event
VPC Specialty Lending generated a NAV return of 0.06% in January which comprised an income return of 58 bps and a capital loss of -52 bps.

Balance sheet loans continue to perform well with a gross monthly return of 0.66%. The capital loss of -52 bps is comprised of marketplace loans (-49 bps), residual securitisations (-16 bps), FX (-12 bps) and equity investments (+25bps). The uplift from equity investments was mainly due to the gain from the participation in the Elevate IPO.

The allocation to marketplace loans continues to fall, reducing from 22% in March to 16% after the sale of the majority of the Funding Circle US and Upstart loan portfolios.

Liberum view
The company's marketplace loan and securitisation investments have resulted in a major drag on performance since the end of 2015 (2.3% NAV return over the past 16 months). The silver lining for investors is that the portfolio repositioning to balance sheet loans is gathering pace but returns are likely to remain low in the short term. The shares currently trade on a 13.5% discount to NAV compared to an average 3.1% discount for the sector.

[davebowler] 05/5/2017 09:20

Liberum;
VPC Specialty Lending Investments (Mkt Cap £305m)
1.4% Q1 NAV return

Event
VPC Specialty Lending Investments generated a NAV return of 0.57% in March 2017 and 1.4% in Q1 2017. The performance in Q1 comprised a net revenue return of 1.56% and a net capital loss of -0.16%.

As in previous periods, NAV returns were driven by income generation from the balance sheet investments which were partially offset by capital losses on the market place loan portfolios and fair value adjustments of the Avant securitisations. The company also experienced capital uplifts from equity investments and FX gains in Q1. The company has started to hedge its exposure to Australian Dollar (9.6% of NAV) from March which should reduce the FX impact in future.


The company's balance sheet loans produced an annualised return of 13.9% in Q1 and the manager reports no signs of stress on the credit metrics of the underlying portfolio. The marketplace loan portfolio continues to suffer from higher loss curves than projected and the impact of seasoning. Marketplace loans and securitisation residuals accounted for 27% of NAV compared to 31% at December 2016.

Liberum view
NAV performance in Q1 is a significant improvement on the -1.5% loss for Q4 2016 although we note that 40% of gross returns in the quarter came from equity investments and FX gains. There is potential for marketplace loans and securitisation residuals to continue to weigh on performance in the near term given the relatively high-risk nature of the portfolio (weighted average coupon of 22.1% on marketplace loans). The shares currently trade on a 14.8% discount to NAV.

[davebowler] 01/3/2017 09:05

Liberum;
Specialist Finance

VPC Specialty Lending Investments (Mkt Cap £291m)
0.51% NAV return in January

Event
VPC Specialty Lending generated a NAV return of 0.51% in January which comprised an income return of 48bps and a small capital gain of 3bps.

Income was driven by the balance sheet loans which generated a gross return of 64bps. Performance of the marketplace loans and securitisations remains poor with -27bps of returns.

Capital movements in the month included +12bps from equity valuations, +17bps from FX (Australian Dollar exposure is unhedged) and -31bps from balance sheet loans and marketplace loans. Balance sheet loan investments now account for 58% of the overall portfolio (51% at December 2016).

Liberum view
January's performance may help to alleviate concerns following recent performance (-1.5% NAV return for Q4 2016) although over half of the NAV return in the month came from equity investments and FX gains. The rotation to balance sheet loan investment is progressing but there is potential for marketplace loans to continue to weigh on performance in the near term given the relatively high-risk nature of the portfolio (weighted average coupon of 21.55% on marketplace loans). The shares currently trade on a 20.4% discount to NAV.

[davebowler] 08/2/2017 10:16

Liberum;
2016 NAV returns of 0.9%

Event
VPC Specialty Lending yesterday announced a NAV return of 0.04% for December which comprised an income return of 49bps offset by a capital writedown of -45bps. The company's NAV total return in Q4 was -1.5% with an overall NAV total return for 2016 of 0.85%.

The capital loss in December was due to a combination of the valuation writedown of the Avant securitisations (-21bps), FX effects (-16bps) and equity revaluations (-9bps). The FX loss arose from the company's Australian Dollar investments as only the US Dollar exposure is hedged.

Balance sheet loan investments drove the income return and now account for 51% of the overall portfolio. Marketplace loans and securitisations represent 31% of NAV after a portfolio of Funding Circle UK loans were sold in December. As a result, cash represented 13% of NAV at the end of the year.

Liberum view
The fund's return for 2016 was the lowest in the direct lending peer group and was three percentage points behind the closest peer. A majority allocation towards the higher risk marketplace loans (gross yield on remaining portfolio is 20.9%) and securitisations has weighed on returns as these have cancelled out the strong performance of balance sheet investments. In Q4, marketplace loans were the main drag on returns (-2.2% on a gross portfolio basis) but over the year, securitisations weighed heaviest on the portfolio with a gross return of -3.2%.

The portfolio is now being repositioned to focus on balance sheet investments which have exhibited lower volatility and higher returns. The ongoing issue in the short-term will be the extent of further capital losses in the marketplace loans and securitisations before the capital is recycled. The shares currently trade on an 18.6% discount to NAV.

[davebowler] 09/1/2017 15:27

Liberum;
Event
VPC Specialty Lending Investments suffered a NAV decline of -0.28% during the month of November as a revenue return of 0.48% was offset by a capital writedown of -0.76%.

The capital writedown was due to a combination of FX effects (-0.31%), write-downs of residual Avant securitisation positions (-0.10%) and write-downs and costs relating to the marketplace portfolio (-0.35%) including transaction costs from the sale of the Funding Circle UK portfolio. The FX loss arose from the company's Australian Dollar investments as only the US Dollar exposure is hedged.

The Funding Circle portfolio that was sold during December had accounted for 7.7% of NAV and the proceeds will be recycled into balance sheet loans which accounted for 48% of NAV at 30 November.

Liberum view
VPC's NAV return for 2016 to date is 0.8% and two of the main reasons for the underperformance has been the investment in residual positions in Avant securitisations and the marketplace loan investments. The portfolio is now being repositioned to focus on balance sheet investments which have exhibited lower volatility and higher returns. They key question in the short-term will be the extent of any further capital losses on these positions. The shares currently trade on a 17.3% discount to NAV.