Vpc Specialty Lending In... Share Discussion Threads

[wskill] 07/6/2019 11:22

Woody still reducing at a guess

[a0002577] 07/6/2019 11:08

So has anyone got any ideas why the share price is fading away? Now yielding over 12% which really has to be too good to be true.

[davebowler] 03/5/2019 09:05

Liberum;
Event

VPC Specialty Lending Investments generated a 0.7% NAV return in March 2019 and 1.8% in Q1 2019. Returns were diluted slightly by the catch-up component of the performance fee.

Over the past 12 months, we calculate a NAV total return of 9.9%. The portfolio has produced a gross revenue return of 14.2% before operating expenses and fees. This was reduced by -1.3% of capital losses (mainly relating to FX hedging costs) and fees and expenses of c.3%. The manager reports positive performance in its balance sheet investments.

Liberum view

VSL has maintained the positive trajectory in returns in Q1 2019. The performance in Q1 is slightly lower than the run-rate in 2018 but this is due to the catch-up nature of the performance fee. The company previously guided that the NAV volatility from this should reduce after Q1. VPC's performance fee accrual is different to peers P2P Global Investments and Honeycomb Investment Trust. All three of these funds have a 5% preferred return hurdle to meet before the performance fee can be paid. P2P Global and Honeycomb accrue for the performance fee on the basis of expected performance over the year. VPC does not consider future performance when accruing performance fees and only accrues an expense once the hurdle has been reached. As a result, VPC's monthly returns would be expected to be higher in the early part of a calculation period and with potential for some volatility later on once the hurdle is reached.

We note the share price discount to NAV has continued to widen despite the improved performance over the past 18 months. We would expect this to narrow as a result of company buybacks and recent changes in the share register which have removed a potential overhang of stock.

[spectoacc] 01/5/2019 13:58

Weiss bought 19m it seems.

[ph1ts] 01/5/2019 10:25

Trust Watch: Woodford-backed loan fund offers 11% covered yield
By Gavin Lumsden 08 Mar, 2019

Woodford's wonderful yielder
Like frontier markets, alternative lending requires a high risk tolerance. But if it’s a high income you want, VPC Specialty Lending (VSL) merits consideration on a 10.8% yield and its shares trading nearly 17% below NAV, wider than the 12% average one-year discount that gives it a Z-score of -2.2.

The £262 million investment trust, which is managed by Victory Park Capital Advisors in New York, started badly after its launch in 2015 with its shares falling to a discount a year later when it missed its annual 8% total return target. Since then it has overhauled the portfolio by pulling out of peer-to-peer lending and focusing on ‘balance sheet’ loans to platform lenders instead of their borrowers. The advantage of this approach is that the lenders take the first hit on any loan losses not the fund.

Performance has improved with a total return on net assets in 2018 of 9% up from 3.1% and 0.9% in the previous two years. Last May quarterly dividends were restored to 2p per share giving a total for last year of 7.8p covered by earnings, according to a recent fourth quarter report. The wide discount on the trust's shares reflects investor squeamishness towards US consumer credit – the lenders VSL lends to operate in the ‘sub-primeR17; and ‘near prime’ categories – at a time when the US economy may be slowing; and at the lack of data of how such loans would perform in a downturn.

There is also a threat of an overhang from under-pressure fund managers Mark Barnett and Neil Woodford who respectively own 28% and 17% of the stock and who have recently sold a small number of shares. Both fund managers have struggled with poor performance but Woodford has faced particular scrutiny this week after a controversial share swap between his Equity Income fund and Patient Capital (WPCT) investment trust. That has raised the issue of how much the fund and trust hold in unquoted stocks as well as the fund manager's reliance on broker Hargreaves Lansdown, whose investors own huge combined stakes in his funds.

Victory Park says it is determined to narrow its discount and has been buying back shares as part of its agreement to reinvest some of its annual management fee, adding 70,000 this week at 77p. They are 73.8p today.

hxxps://citywire.co.uk/investment-trust-insider/news/trust-watch-woodford-backed-loan-fund-offers-11-covered-yield/a1208012#i=2

[dendria] 01/5/2019 09:58

I took a slice this morning.

Looks like around -18% discount with a 1yr Z score of -2.9. Will probably always trade at a discount but if it recovered to a year high of -8% discount would give us 10% uplift along with the 10%+ quarterly dividend.

[ph1ts] 01/5/2019 09:27

Not just us, P2P too

[ph1ts] 01/5/2019 08:31

Has to be good news, especially seeing it has had a minimal effect on the share price Onward and hopefully upward!

[spectoacc] 01/5/2019 07:17

Fantastic news! No more Woodford overhang (tho Invesco, not under the same selling pressure, have nearly 30%).

Question now is - who's bought?

[lord gnome] 30/4/2019 17:38

There's your RNS confirming Woodford is out, lock, stock and barrel.

[spectoacc] 30/4/2019 16:43

Yes take out the 150k cash-&-new & it's about 25k shares :)

Hopefully holdings RNS soon. What a disaster Woodford has been - far too much money thrown at him when he left Invesco, now finds himself flogging perfectly good, cheap-and-much-cheaper-than-he-paid stuff to fund redemptions.

[ph1ts] 30/4/2019 10:46

Funny to see the volume yesterday compared to today!

[spectoacc] 30/4/2019 07:38

A hell of a buyback.

Looking out for Holdings RNS's. Be very good if Woodford's gone.

[wskill] 29/4/2019 18:26

I suppose with net assets at 91p per share its a good way to grow the asset value per share.

[ph1ts] 29/4/2019 17:50

So 9,000,000 were bought at 71.5p by the company, but that leaves 71,000,000 unaccounted for!

[ph1ts] 29/4/2019 17:01

Agreed. The average price today was 72.09 apparently.

[spectoacc] 29/4/2019 14:26

Be very interesting to see who's bought, with Invesco already pushing the 29.99% (They did a deal with Woodford on NRR a few weeks ago - took out a chunk of his holding. I don't think that can have happened here).

[ph1ts] 29/4/2019 14:23

@SpectoAcc That would be over 14%. Will need an RNS if so.

[spectoacc] 29/4/2019 14:12

@pH1TS - seems that's a 2nd 15m, perhaps matched with the one at 71.5p earlier. Could all be delayed-reported too, by quite a few days.

Woodford had 57m shares at last count (21st March) and I reckon c.37.5m gone through without that last 15m, or 52.5m with it, with the possibility of more to come. Isn't necessarily him but........ we all know what a state he's in!

[ph1ts] 29/4/2019 14:08

The last 15 Million was at a slightly higher price. share price is holding up well if they are all sells!

[spectoacc] 29/4/2019 13:27

Big trades today - looks like about 35m gone through in various chunks, all at 71.5p. Assuming all sells (not a mixture) - Woodford?

[spectoacc] 26/4/2019 09:00

Never get out of any of them in a hurry but agreed - VSL seem to have turned a corner last year, not that you'd know from the share price performance. Be "interesting" to see any of these (& more) tested in a downturn of course, but the discount is something at least.

[bench2] 26/4/2019 08:44

Annual results just out , I prefer VPC on a circa 11% yield to P2P , both risky in a downturn , but near 20% discount on VPC , however P2P much more liquid .

[davebowler] 26/2/2019 08:51

Liberum:VPC Specialty Lending Investments Q4 report highlights the improved performance of the fund in 2018. NAV total return in the 12 months to 31 December was 9.0% (7.8% net of IFRS 9 impairments). The portfolio produced a gross revenue return of 11.4% net of operating expenses and fees. This was reduced by -2.4% of capital returns, mainly relating to loan losses and FX hedging costs. The manager reports strong credit performance and no signs of a weakening in credit fundamentals. The top ten investments account for 70% of the overall portfolio value. Elevate Credit is the largest position, representing 20.2% of NAV. Liberum viewVSL's performance has materially improved in 2018. The 9.0% NAV return (before the impact of IFRS 9) compares to 3.1% and 0.9% respectively in 2017 and 2016. This has been achieved with limited leverage (16% debt-to-equity ratio) following the portfolio re-positioning and de-gearing in 2017.  Given the improved performance and the 10.1% dividend yield, we would expect the discount to narrow from -14.8%.