Looks like a large purchase this morning at 26.40, I think. Almost £200k. Otherwise, I guess we're still guessing at a bottom. |
Reassumed the position; back in at +/- 28p.
Penciled in a 15% dividend.
Must be mad as an early March hare.
;) |
Thank goodness for VPN! |
If it were clearly "money good", the share price would be very unlikely to be this low. There is clearly some risk, and some ECL was accounted for in Q3/24, though none in Q4. It is valued under IFRS9 which at least means some degree of governance which had been missing in, for example, KKVL (its predecessor, that is).
The revenue returns in Q3 and Q4 amounted to an average of 10% per annum, based upon NAV and so indicates a reasonably performing debt portfolio. Given the magnitude of Deinde/Integra, the Q4 update would have made reference to any interest expected, but not paid. PIK interest, to the extent it makes up the total, should be added to the loan balance but I have to say that this level of detail is not available.
So in IFRS9 we partly trust. |
Agree VSL looks very good value. I paid 27.75p at the opening this morning. Have also brought ADIG, asli, GABI and RMII today, following receipt of 100% cash allocation in Asia Dragon tender.
All of these trusts are in the process of closing down sales and collectively offer a fantastic risk adjusted return and decent dividendyield, whilst awaiting capital repayments. |
The integra credit one is most likely geo restricted |
Presume it's this one www.deindefinancial.com |
Deinde homepage seems curiously difficult to hold of. |
Deinde public face: "www.integracredit.com" |
What avenues are available with a private US company like that? Online reviews indicate it's very much business as usual with lots of new loans being issued every day and you'd like to think VPC would be required to make a provision in the ECL if the debts were doubtful (as they have done with Razor etc) but on the other hand if they've capitalised unpaid interest as other posters have mentioned this doesn't bode well... |
If I were a holder I'd be using every avenue to get a proper read on Deinde.If that is money good the margin of safety here seems very good. |
 I know little about Deinde! "Acceptable shape" has a very, very low bar when the share price is at a 50% discount.
As there is zero borrowing now, the share price is at a 50% discount to total asserts. Prior to the realisations, the share price indicated a 39% discount to assets, adjusting for borrowing where borrowing was valued as equal to negative cash (seems obvious/logical, but in distressed situations, it is not always so simple).
The lack of meaningful movement in the share price (it should have moved up 5p if the market assumed a uniformly poor portfolio) likely indicates one of two things:
1. The portfolio is NOT uniformly bad and those realisations were expected to be realised there and then in full, whereas the remaining assets are really bad.
2. Still sellers waiting for any opportunity to rid them of their plague.
A mixture of 1. and 2. is quite possible, but the small change in share price the past 24 hours indicates a firm "belief" in 1. to an extent I consider overdone. In particular, the full value obtained on the equity investment, albeit in Legal Finance was likely unlikely (if you see what I mean). In fact, if you look at the share price of Legal Finance stocks in the UK, they are all over the place. US will be little different even though the market is rather more developed (they even have brokers! - "want to sue someone, we'll find the best price/advocate."). |
Chuck, can you tell us more about Deinde or provide a link pleases? I'm intrigued. Thx.
Here's the latest AIC listing which has a dividend of 22% to 47% discount. It seems from what the bb is saying that the discount may no longer be justified in light of latest realisation?
Can anyone clarify the actual dividend as opposed to any return of capital - what proportion of that 22% is the simply derived from the latter? |
Back in June 2024, Deinde had to capitalise £10m of accrued interest into a non-interest-bearing loan. That doesn't seem like "acceptable shape" to me.
If the amounts being paid as dividends actually reflected the interest they are earning from the loan portfolio, this wouldn't be in wind-down - investors would be thrilled with a 15% yielding, albeit risky, investment trust. |
The level of interest they are accruing (whatever amount they are paying in dividend) is a window on the fundamental value of the debt. This is a crucial fact as one of the debt instruments, Deinde, is so large. If that is in acceptable shape, then the current market price of VSL is too low, perhaps even far too low. |
I missed the part in the quarterly report about generating liquidity from cashing out of a major debt position. No names were mentioned but the amounts matched.
Even so, it looked to me like one of the better debt holdings. So selling that at par in order to repay corporate debt looks mildly value-destroying, despite it probably being a sensible move in wind-down...
I think a lot of people have lost money, however, by treating these dividends as somewhat sustainable - rather than being tax inefficient returns of capital. If the remaining assets are actually paying interest, they should also be easily sellable... |
This is more in my "gamble" bucket than "investment" bucket! Nevertheless, I like the odds, but must keep to a sensible level of exposure owing to the inherent extreme risk.
Most loan fund run-offs are reasonably analysable (even if borrower names are not available), but this one has not become so, even in wind down owing to the fact that all of a sudden (negative), things went wrong. Almost everywhere, including even, in the non-equity stuff.
It seems to me, though, that the repayment of the FinAccel asset(s) at par plus accrued indicates non-distress over the general asset class which is encouraging. More so, the repayment of the Legal Finance Investment at its carrying value is excellent news as this represents 15% of the equity portfolio's remaining value. We had contemplated previously (not initially, but recently) analysing VSL on the basis that there would not be much value left in that portfolio, but all of a sudden (positive) we get "full repayment" of the second biggest item.
If we get more good news, I could even contemplate dusting off the original model I wrote which I abandoned after the flurry of unforeseen (from a statistical point of view) catastrophes. Any such "good news", and I would consider printing the RNS and framing it. The sort of thing people do with their Batchelor of Arts in Artisan Baking. |
Exactly Chucko, the rationale should say that they are cashing out of (some) positions at book value so we could expect to get somewhere close to the NAV (say 50p), plus the little bit of income it is still generating. But there is zero trust left with existing shareholders to buy any more because we invested in an asset-backed lender only to find that they largely bet the farm on the equity of fintech start ups! The lack of information, the lack of trust in the NAV, the lack of everything means I will ignore this as an investment no matter what RNS they issue.
A sad state of affairs. |
By the paltry volume having gone through so far (most being mine), it seems that no one gives a damn anymore.
They ought to - those repayments are equal to about 1/3 of the shrivelled market cap. When you get that amount back at flat to NAV and the share price is at a 50% discount, there would have been quite a few buyers had it not been for the revulsion many must feel about this sorry episode.
But we are only a part of the way through. It's like a movie where most of the murders occur in the opening scenes, while the consequences of these murders are explored as the main focal point thereafter.
Still a risky proposition given the concentrated nature of the portfolio, with DEINDE being roughly 80% of the value of the market cap.
As said, at this level, 1p dividends (if adequately earned from income - they just about are) equates to 15% yield. That's not irrelevant although hardly lavish compensation for the trials one has to bear in owning/[analysing? - ha ha] this thing. |
Who else thought that RNS was going to be bad news.. ;) |
Interesting. Debt fully retired. Be nice to get a sense of value in what remains. |
Epitaph: ‘Extend and pretend’. |
Threw in the towel today. Good luck to anybody still holding.
I was hoping that there might be a bit more of a bump from the latest update - or hints of a bigger-than-usual dividend - but not really...
I started looking into the biggest loan position, and realised that I would want to punch those people in the face if I met them. (predatory lending to super sub prime borrowers) It might be ok if that was profitable, but back in June 2024 they had to capitalise interest arrears into a non-interest bearing loan.
Write off that loan and Razor and any headroom to "NAV" is gone. Obviously no "asset-based lending" should really go to zero, but it's so hard to find enough upside here to compensate for the risks. Should have sold this months ago... |
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