Vpc Specialty Lending In... Share Discussion Threads

[spectoacc] 02/5/2024 06:32

Thanks @chucko1 - many on there don't appreciate the IR chat of course, more fool them :)

@CC2014 - £20bn/yr for the taxpayer on BoE QE losses - maybe. But must be a lot on bank/pension fund balance sheets not as yet realised.

[cc2014] 01/5/2024 08:49

Which brings me to the thought process that the central bankers who printed excess money hadn't got a scooby. The money printing went on and on and on.

But I'm also left wondering who has taken all the losses

[chucko1] 01/5/2024 07:02

Not OT at all - helps to explain the very poor start to the unwinding of VSL. Rather like saying the discussion on interest rates is OT on the CP+ board!

[spectoacc] 30/4/2024 15:41

But with little certainty over timescale for returns.

That US bubble was nuts, think I read Oatly, utter sh*te co but with a decent product, is down 95%. I see Cazoo, the biggest load of rubbish imaginable, is down 99.96%. Just why would anyone have invested in it?

"List in the US, the UK market is dead" - I 100% prefer the UK. Go to the US for a great rating & executive pay, sure, but it's just continual bubbles.

Current US bubble also insane. Nvidia $2.1trn, up 1,800% in 5 years? Good luck with that.

Apologies for OT.

[2wild] 30/4/2024 15:01

BKKT was indeed bonkers going from 10 USD to over 50, before Falling over 90% to below 5, all within a few months. Recall seeing a dozen trades per second on NewYork stock exchange, during most days, for a while. At the time VSL Monthly reports said they were discounting BKKT value by 30%.

Net of next week's 4.26pps return. NAV around 74pp is about 50% above current 49p share price. I believe the loan book is around 77% of assets. Therefore, you're effectively getting the entire equity portfolio at zero cost. Plus a 10% discount on loan book valuation.

[nicholasblake] 30/4/2024 08:23

@riskvsreward VPC is well regarded and probably doing a reasonable job. But the tide has turned on Fintech and valuations are lowering. Being in realisation mode only makes the impact on valuations more transparent.

[riskvsreward] 30/4/2024 07:46

What reputation? A debt fund more than halved in value has no reputation to talk about.

[wilwak] 30/4/2024 07:24

Chucko. I totally agree that it’s very unlikely that it is actually ‘Ponzi’ given the managers reputation but the regular drops in monthly NAV does raise questions and bring the word to mind.

Fear and uncertainty usually create the best investment opportunities so I’m definitely keeping an eye on it. If the price drops a little lower I may well be back in again.

I think that a ‘plain English’ statement explaining exactly what’s been going on over the last few months may help to steady the ship. There must be a lot of small investors panicking right now.

I too am hoping for a more ‘level’ monthly NAV report going forward.

[chucko1] 29/4/2024 21:02

"Ponzi" is excessively harsh. That is not in their DNA - remember they run other funds and have strong reputations.

The costs are quite high, amounting to around 4% a year. After earning 13% Gross income, that leaves 9% a year to pay out, and on an NAV of around 80p, is not too far from the 2p a month. All pretty rough numbers, but you get then point. If the equity side had not been so poor, no one would give it half a moment's thought.

As for a once NAV of 120p, recall that was in the era of BKKT - an equity holding which went up 20 fold. But before they could sell any, it lost all of that. And, to be fair, there have been warnings in their monthlies about the issues growing in the eCommerce segment, and it was there that the recent revaluations have been front and centre.

It may still take a while for this to settle, and at least the credit side appears to be holding up. That said, compared with ADIG, GABI and even SLFR/X, the blended credit/equity assets are much more difficult to assess accurately. I am happier running far larger and longer term positions in one or more of those three than I am with VSL for now. That might change as we get further information from the next few (vastly improved) monthlies, but it is all pretty volatile for now. Great trading opportunities, though - and I expect there to be more in the future.

[wilwak] 29/4/2024 19:44

The word “Ponzi’ is exactly what came to my mind too with the continuous stream of 2p’s rolling in.

One thing that makes me feel a little better (as an accountant) is that every month they break down how the NAV movement is constructed. They always show around 1p of income per month which if fake would be a straight lie. That’s very unlikely.

Another thing…. I’ve audited many companies over the years and accountants are pretty prudent on valuations especially when they have to be re-stated at realisable values during a break-up. It could well be that they’ve been forced to write down assets to get through the audit so over the last few months they’ve been making sure monthly NAV’s correlate to the financial statements that were coming.

I did actually buy more of these in my ISA but sold them when I read the financial statements. Fortunately I made a 1p profit so got away with it. The price has since drifted another 3-4p lower. I still hold quite a lot from well back but may be tempted to re-enter for some more if the price gets silly low.

VPC deserve some bad press over all this. It’s not pretty.

[nicholasblake] 29/4/2024 15:27

@spectoacc Large parts of the FinTech investment market have acted like a huge Ponzi scheme - values keep rising so long as money keeps coming in.
But when the tide goes out...

[chucko1] 29/4/2024 15:05

Wilwak, can you expand on that - what concerned you specifically? I agree there are many concerns, but that is what may make it interesting. For now, after the 4.23p payout with negligible share price reduction, and then with the further 3.4p NAV kick, I have now resold all but 1/6 of what I held. It was a golden opportunity to reset and wait until the equity assets find some peace.

[spectoacc] 29/4/2024 13:22

Is a more likely scenario that the NAV was never what they claimed - it's not exactly a firesale, yet they've been having to walk it down continuously.

So whilst we'd all have preferred VSL to continue, and our 2p/qtrs to roll in, maybe it was always based on the NAV not being all there.

[dodger777] 29/4/2024 12:45

‘Best interest of shareholders’ remember all this wind down ..bloody disaster

[wilwak] 29/4/2024 12:08

The NAV graph certainly doesn’t make pleasant viewing. It peaked at over 120p in late 2021. It’s been a steady and regular decline to 78p ever since.

If the big institutional investors thought that winding up would release value it seems they were clearly misguided.

I read the latest annual report and spotted a few areas that concerned me. Definitely feeling less confident about the outcome now.

[johnroger] 26/4/2024 10:06

A.J.Bell confirms
"Your account will be credited with the cash proceeds on or around 10 May 2024."

[rogerrail] 25/4/2024 19:57

B shares will not be credited to shareholders accounts.

[johnroger] 25/4/2024 16:39

Pursuant to the authority received from shareholders at the General Meeting on 5 April 2024, B Shares of 1 penny each will be issued to all Shareholders on 19 April 2024 by way of a bonus issue at a ratio of 4.26159039 new B shares for each Ordinary Share held at the Record Date of 6:00 p.m. on 18 April 2024. The Redemption Date in respect of this initial return of capital is 25 April 2024. The B Shares will be redeemed at 1 penny per B Share. The Company will not allot any fractions of B Shares and entitlements will be rounded down to the nearest whole B Share. The proceeds from the redemption will be sent to uncertificated Shareholders through CREST or via cheque to certificated Shareholders on or around 10 May 2024.

I understood today

[waterloo01] 25/4/2024 09:40

Anyone seen the cash from the B shares as yet?

Edit: Says 10th May

[cousinit] 23/4/2024 11:42

Looks like the facilities they offer to the merged business are open and can have new lending funded.

Given the nature of these, you'd expect VPC to be able to specify the credit quality and other metrics of the underlying borrowers (either as a minimum or in aggregate). It looks like there is an expectation of a long stop of 2028 which is likely predicated on a refinance. The facilities may become more expensive or restrictive as time elapses, incentivising an earlier refinance.

As Chucko says, VPC should know their stuff and the biggest risk (IMO) with these kind of facilities is for the sponsor to fail or go into run off, so support/forbearance now is probably better if it enables a credible business plan to be executed.

[chucko1] 23/4/2024 09:56

No, and neither do I. This is what they get paid for, and why we assume a certain degree of risk no matter how hard (intensity and duration) we stare at the problem.

[cc2014] 23/4/2024 09:38

Question is has it stabilised the investment or kicked the can down the road? Answer is I have no idea.

[chucko1] 23/4/2024 09:17

There are circumstances whereby raising external equity (as suggested in their Update) and increasing the seniority of their holdings to protect what clearly were two troubled exposures, makes sense. The maturity extension to 2028 is the only avenue to achieve this value injection, but depends upon a stabilisation of the underlying business(es).

Sometimes, conversely, increasing risk, but with the benefit of much shorter maturity is a preferred route. It all depends on the context, so one cannot really generalise.

[cc2014] 23/4/2024 09:09

As far as I can work out the Razor transaction results in them adding to their equity investment and pushing the repayment of the debt out 3 further years to 2028.

It's the opposite of what a fund should be doing in wind-down