Vpc Specialty Lending In... Share Discussion Threads

[davebowler] 12/2/2020 08:17

Stifel summary-In our previous note (here) we mentioned our scepticism of the underlying collateral (consumer unsecured) which can behave in a homogenous way reducing the perceived subordination in a deal (10-25%). The first line of defence to mitigate these concerns is the manager's ability to monitor and quickly analyse the underlying data to capture issues early. Following a web conference call to better understand the risk systems in place and the on-boarding to ongoing monitoring process of a borrower, we have increased confidence in the manager's ability to pick up potential problems early. Hence, although the shares have had a good run of late (+12% over six months), we think the discount of 12% has further room to narrow and maintain our Positive rating. One of the largest risks to our rating (outside of a US recession) remains the intentions of its largest shareholder who has reduced their position by a half over the past year. However, further clarity could also be the catalyst for a share price re-rating.

[skyship] 08/2/2020 09:59

The revaluation continues apace. Sadly only bought an 8.5% allocation; may have to pay up for a few more...

[killing_time] 08/2/2020 09:48

The Director is still buying £48k a month.

[badtime] 05/2/2020 18:52

Nice to see a move up

[yieldsearch] 03/2/2020 23:24

Saw some reference to this in the fixed income chat: quick look at the platforms backed by this, it seems to be subprime lenders?

[davebowler] 31/1/2020 16:29

Liberum:Specialist FinanceVPC Specialty Lending Record year for NAV returnsMkt Cap £251m | Prem/(disc) -13.4% | Div yield 9.9%EventVPC Specialty Lending Investments' NAV per share at 31 December 2019 was 93.3p, representing a NAV total return of 0.7% for the month of December and 11.3% for the year. This 12 month performance is the highest achieved by the company since its inception in 2015.Performance for the month was driven by income from the balance sheet investments. The company has maintained a strong level of performance from the beginning of 2018 and we expect an eventual re-rating in the discount given the ongoing high monthly returns

[wskill] 31/1/2020 07:44

More than happy with the growing net asset value and 10% yield myself may the buy backs continue.

[spectoacc] 31/1/2020 07:39

@soundsplausible - "Does this cost really justify the outcome?" sums up what we're trying to explain. There is no "cost" per se. Only insofar as there's an Opportunity Cost.

For a trading company, that opportunity cost is usually investment - is there a better return to be gained from investing in the business, than from "investing" in its own shares. In a low interest rate environment, often not. (Notwithstanding the point I made about buybacks above).

For an investment company, can VSL earn more from lending than it can from buying its own shares, balanced against such factors as company size/cost base. As @Chucko1 says above, buybacks save paying the dividend on the shares bought back.

It's an easy calculation with ITs, assuming the NAV is accurate, particularly when buying at a discount.

[cwa1] 31/1/2020 07:20

Monthly NAV:-



Net Asset Value

The Company is pleased to provide its monthly net asset value per share ("NAV") update.

As at 31 December 2019, the unaudited estimated NAV (Cum Income) per Ordinary Share (ISIN GB00BVG6X439) was 93.33 pence.

This NAV has been calculated by Northern Trust Hedge Fund Services LLC.

Performance

The Company also announces the cumulative NAV total return performance as at 31 December 2019 as follows:

Monthly Return

YTD

Return

ITD

Return

Ordinary Shares

0.73%

11.34%

27.47%

Monthly Investment Highlights and Factsheet

During the month of December 2019:

v The Company completed 2019 setting a record with a total NAV return of 11.34% for the year;

v The Company generated a NAV return of 0.73% for December 2019 and remains substantially fully invested with a robust pipeline from new and existing deals; and

v The gross revenue return was 1.15%, the net revenue return was 0.80% and the capital return was -0.07%.

[rambutan2] 31/1/2020 03:30

soundsplausible "Still do not like share buy backs." !!!!!!!!!! lol

[chucko1] 30/1/2020 23:49

But they are saving a 10% plus dividend yield on all the shares they have repurchased. 10% risk free. All for the benefit of remaining shareholders.

[soundsplausible] 30/1/2020 23:28

Still do not like share buy backs. VPC announced in 22/12/16 that the buy back would start to narrow the %diff between NAV and share price. That was then when the NAV was ~94p and a share price of ~77p. Here we are now and having bought 72,000,000, a quick calculation would indicate that the total spent ~£55M. The latest NAV was 92.65p and the share price was 78.6p @ 31/12/19. So hurrah the discount has narrowed by ~2%. Does this cost really justify the outcome?

The money spent works out ~14p/share. Knowing all of the above would you prefer the money as a dividend or the cost to deliver a small narrowing NAV? Even better put it to productive use and lend it out and get more income in. They are pretty good at doing this.

[spectoacc] 29/1/2020 07:35

Disagree if (a) there's a seller to buy out; (b) it's highly NAV-accretive. We're not talking about a Diageo or GSK buying back shares to mildly improve EPS and help hit management incentive schemes. We're talking about a discounted IT, where every share they buy back marginally improves NAV for the rest of us.

Has limits - wouldn't want them to buy anywhere near NAV.

The flipside - I also see little wrong with ITs issuing shares when they're trading at a premium, to satisfy demand.

[soundsplausible] 28/1/2020 22:27

I must admit I do not like companies buying back shares. If they have spare cash and no good reason what to do with it (investment wise) then give it back to shareholders. I know why they do it but, I can't think of one company where a share buy back has delivered higher returns (share price wise). That said I have only invested in this one for the dividends. I am thinking there is a small chance of capital appreciation but every chance of good regular dividends.

[wskill] 23/1/2020 12:58

We will just have to live with the 10% dividend when they stop buying, pity though with the buying they are increasing the asset value of our shares.

[chucko1] 23/1/2020 12:54

Dunno, maybe Man U start winning again.

[eeza] 23/1/2020 12:50

What happens to the share price when they, eventually, stop buying?

[redhill9] 23/1/2020 12:43

VSL seem to be buying back c.100k of shares each day at the moment.

As noted above by A0002577 this suggests spare cash so hopefully they are confident of maintaining the level of dividend.

[spectoacc] 17/1/2020 18:39

NAV-accretive down here still.

[a0002577] 17/1/2020 17:41

They seem to have a lot of spare cash at the moment and are continuing their share buy back - interesting.

[2wild] 11/1/2020 16:33

I've sold out of SQN due to continuing falls in NAV and increased VSL.
Over 12 months SQN nav fell 3.81p from 97.49 to 93.68p.
7.25 Div-3.81 = 3.44.
3.44/83 = 4.1% net adjusted annual yield.
Over last 6 months nav fell 2.76p from 96.44 giving 2.1% net adjusted annualised yield.
Although SQN NAVs declines could reverse, given the falls have excellerated over last 6 months this seems unlikely.

[chucko1] 10/1/2020 18:53

I’m more inclined to focus on the recent performance numbers, but it’s all heading in the same direction.

SQN looking ready for a move higher as well. Both of these have been suffering from an excess of risk aversion. The REITs (some of) became rich in comparison.

[skyship] 10/1/2020 16:44

Happily topped-up @ 79.05p when I read the "Holdings" RNS stating a close associate of Richard Levy had bought 61,301 @ 79.0p

Chart suggests a break through 80p takes us into a new trading range up to 84p:


free stock charts from uk.advfn.com

[2wild] 02/1/2020 20:14

These still look good value with 10% yield and 14.3% discount to a rising NAV at the closing offer price.