Vpc Specialty Lending In... Share Discussion Threads

[davebowler] 29/1/2019 10:02

Liberum;
Significant improvement in 2018

Mkt Cap £275m | Prem/(disc) -15.4% | Div yield 10.1%

Event

VPC Specialty Lending Investments' NAV per share at 31 December 2018 was 91.0p, representing a NAV total return of 0.46% in the month. NAV total return in 2018 was 9.0% (7.8% net of IFRS 9 impairments).

The December return comprised 0.56% of income (including a 0.34% reduction from accrued performance fees) and -0.10% of capital losses mainly due to mark-to-market losses on equity positions.

The gross income return in the month rose to 1.1% from 0.9% in November following the deployment of cash and a drawdown in its debt facility. Most of this capital was deployed in a new secured debt and equity investment in Caribbean Financial Group, a non-bank consumer lender in the Caribbean.

Liberum view

VSL'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. Given the improved performance and the 10.1% dividend yield, we would expect the discount to narrow from -14.3% currently.

[harveydee] 03/12/2018 14:33

Despite hoovering up zillions of shares in buybacks, VPC is still way too vulnerable to these big plunges .. as i said, it's being viewed as a high risk junk bond that could go bad at any moment .. that's why u see some buying just before the xd date, followed by a plunge immediately after. No real share price support here.

[davebowler] 29/11/2018 09:19

Liberum;
Underlying income remains strong

Mkt Cap £282m | Prem/(disc) -14.3% | Div yield 10.1%

Event

VPC Specialty Lending Investments' NAV per share at 31 October 2018 was 92.11p, representing a NAV total return of 0.51% in the month. Returns comprised 1.4% of income gains (including a 0.49% uplift from the reversal of accrued performance fees) and 0.9% of mark-to-market losses on equity positions.

Gross income returns (pre-fees) in October were 1.0%. This included a small uplift (0.07%) relating to prepayment fees on its balance sheet investment in Curo Financial technologies. Cash represents 11% of NAV (10% at September 2018). The manager expects to reinvest the proceeds in the near term.

Liberum view

VSL's performance has materially improved in 2018. NAV total return to date in 2018 is 6.9% (8.0% before the impact of IFRS 9). The average monthly income returns (net of fees and losses) is 1.0% in 2018. Given the improved performance and the 10.1% dividend yield, we would expect the discount to narrow from -14.3% currently.

[wskill] 22/11/2018 10:52

XD on 22nd Nov a good 10% growing yield whats not to like unless you think the pound will move higher against the dollar.

[harveydee] 04/11/2018 13:22

Because this stock continues to be seen as a dangerous junk bond by many -ie, all is rosy in the garden until suddenly one day it's not - with no time to exit before the share price crashes.

[a0002577] 01/11/2018 08:55

Why "we would expect the discount to compress further" and not "we expect the discount to compress further"?

Whenever 'would' is inserted there is always an implied But...

[davebowler] 30/10/2018 12:21

Liberum;
September performance benefits from prepayment fees

Event

VPC Specialty Lending Investments' NAV per share at 30 September 2018 was 91.65p, representing a NAV total return of 1.03% in the month. Returns comprised 1.2% of income gains (net of performance fees) and 0.17% of capital losses.

Gross income returns (pre-fees) in September were 2.2%, driven almost entirely from balance sheet loans. Early loan repayments resulted in penalty fees which boosted income returns by c.1% in the month. The repayment of balance sheet loans to Community Choice Financial and Curo Financial Technologies resulted in interest and prepayment penalty fees of 0.46% of NAV. The iZettle Capital AB balance sheet loan was also repaid at the end of the month, resulting in a prepayment fee of 0.58% of NAV.

Following the loan repayments, cash represents 10% of NAV (1% at August 2018). The manager expects to reinvest the proceeds in the near term.

Liberum view

Q3 2018 was the company's strongest quarter since inception with a NAV total return of 3.2%. The company's NAV total return to date in 2018 is 6.3% (7.5% before the impact of IFRS 9). The strong performance resulted in the accrual of performance fees in September as the annual 5% hurdle has been reached. We estimate the performance fee accrual in September was c.0.8% of NAV reflecting the catch-up nature of the performance fee calculation. Monthly returns have been in excess of 1% for the last six months and we would expect the discount to compress further from -13.8% currently (10.1% dividend yield).

[a0002577] 15/10/2018 16:07

Very quiet here - even with the share price sliding away - any reason?

[wskill] 29/9/2018 10:32

Excellent in the fullness of time maybe even a premium to nav where else can you get a yield of 10% one of my better investments.

[davebowler] 28/9/2018 12:38

Liberum;
Strong performance continues

Event

VPC Specialty Lending Investments' NAV per share at 31 August 2018 was 90.7p, representing a NAV total return of 1.01% in the month. Returns comprised 0.93% of income gains and 0.08% of capital gains.

Post month-end, repayments have been received for loans totaling 8.7% of NAV. Community Choice Financial has repaid all of its balance sheet loan representing 5.8% of NAV. The early prepayment came with a penalty fee. Curo Financial Technologies Corp has has made loan prepayments totaling 2.9% of NAV. Look-through gearing reduced from 10% to 8% as a result.

Liberum view

The portfolio re-positioning in 2016 and 2017 has resulted in significantly improved NAV performance in H1 2018. Monthly returns have been in excess of 1% for the last five months, and the quarterly dividend has increased by 11% (10% dividend yield). We would expect the discount to compress further from -11.8% currently.

[a0002577] 28/9/2018 11:15

Thanks, SpectoAcc:

Aren't the consumer loans made thru a third party who is responsible for the debt? I am a great believer in performance payments by the way. Might dip my toe in the water here.

[spectoacc] 28/9/2018 08:25

US consumer loans is the catch I guess! When does the upswing end?

I also see the performance fee is likely to become payable soon.

[a0002577] 28/9/2018 08:16

Decent Interims today. Nigh on 10% yield, discount to NAV close on 12%, Share buy back policy - what's the catch?

[davebowler] 28/8/2018 10:29

Liberum;
Strong NAV performance

Event

VPC Specialty Lending Investments' NAV per share at 31 July 2018 was 91.8p, representing a NAV total return of 1.15% in the month. Returns comprised 0.93% of income gains and 0.22% of capital gains.

Income was predominantly from the balance sheet loans which produced a gross income return of 1.06%. The balance sheet loan to Wheels Financial Group was refinanced in June resulting a repayment representing 5% of NAV. Look-through gearing reduced from 15% to 10% as a result. A new investment has been made in a litigation finance firm, representing less than 1% of NAV.

Liberum view

July was the third consecutive monthly return in excess of 1%. Performance has recovered strongly since the start of the year and the manager expects to begin accruing performance fees again in the coming months. The shares currently trade on a -10% discount to NAV and offer a prospective 8.7% dividend yield.

[davebowler] 25/6/2018 10:52

Liberum;

Performance recovery continues

Event

VPC Specialty Lending Investments' NAV per share at 31 May 2018 was 89.5p, representing a NAV total return of 1.03% in the month. Returns comprised 0.94% of income gains and 0.09% of capital gains.

Income was predominantly from the balance sheet loans which produced a gross return of 1.06%. Capital returns were largely due to a large valuation increase in a minority equity position in an emerging market portfolio company in Latin America, resulting from a series B investment.

Liberum view

VPC Specialty Lending's performance improvement continues with May's return being the highest monthly return to date. The cumulative NAV return over the past three months is 2.6%. The fund's performance since the start of 2016 has been impacted by a steady stream of capital losses, mainly related to investments in securitisation residuals and marketplace loans. These investments now account for only 6% of NAV and should have a minimal impact in future. Further confidence was demonstrated by the recent 11% dividend increase to 2p per share (we estimate this was covered 0.7x by NAV returns in the quarter after stripping out the impact of IFRS 9). The shares currently trade on a -11.7% discount to NAV.

[wskill] 14/6/2018 10:30

Not so sure that Woodford investments increased holding is a good sign but very happy with the yield thus far if they keep it at 2p per quarter lovely.

[davebowler] 08/3/2018 08:53

Liberum;
Event

VPC Specialty Lending Investments NAV at 31 January 2018 was 90.51p per share which represents a total return of -1.28% in the month. The main reason for the decline was a 1.7% NAV impact from IFRS 9. The return was 0.42% after stripping out the effect of IFRS 9. This was comprised of income returns of 0.99% and capital losses of -0.57%.

Balance sheet investments now represent 80% of NAV at 31 January 2018. There are 24 balance sheet investments in the portfolio with an additional four deals in the pipeline. In February, the company's balance sheet loan with Kreditech was refinanced. The position represented 3% of NAV.

73% of the IFRS 9 impact relates to reserves against an investment in Borro. A reserve of 0.55% was taken against the marketplace loan portfolio which includes the effect of IFRS 9 and additional reserves. Marketplace loans now represent just 3% of NAV.

The shares currently trade on an 11.6% discount to NAV.

[harveydee] 16/2/2018 12:32

From report today:

"Overall 2017 was an encouraging year, during which we completed new transactions and expanded our existing portfolio. Although our total return was not satisfactory, we feel that we have a strong portfolio that will drive higher returns in 2018. The marketplace loans and securitisations have proved to perform poorly, but we are proud to have successfully transitioned out of the majority of the portfolio’s marketplace loan facilities and into superior balance sheet investments. As we stand today, VSL has the strongest team and credit portfolio since inception and we look forward to improved performance throughout 2018 and beyond."

[harveydee] 16/1/2018 12:43

Nice to see some upward share price pressure finally.

[harveydee] 08/1/2018 11:58

Looks encouraging, slow and steady wins the race I hope ! And while we wait for share price recovery there is very nice consolation prize in the high dividend. Also, management told me that VPC execs from US will be doing some marketing "roadshows: in UK this year, perhaps as soon as January.

[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.