Your View on Managed Portfolios

Morally; I have no issue with lending to a pawn broker, though my morals feel a bit twisted by lending to a fast car seller or property developer (though to be fair, have we seen a managed portfolio from them yet?), still it could be worse I could have News International shares.

Financially; in terms of the rolling loan that seems to me to be a good way of extending the 6% you earn in 6 months into 12% over 12 months and hopefully 18% over etc.  I like the short term element of the risk and i like the ongoing nature of it.

Are the companies stable, well anyone who is borrowing at these rates over a long period clearly has a problem, I can see the logic for a Pawn broker for a certain extent as they are "laying off the bet".  I would be concerned if the car retailer was still using us in 12 months time as I suspect there is something wrong with their business model.  Still car sales are cyclic so maybe just watch the auguries and drop out as the FTSE begins to fall.

I'm glad to see Ed hasn't got into bed with some art dealer yet, I note that middle level antiques had a terrible year in 2015 and I'd hate to get into art just as they came to their senses bottom fell out.

I quite like the portfolios too, although if cash shop do go under I be a bit dubious about what the value of the items are worth, as has been put they are changing all the time so no real idea what is actually in the loan. I like the hands off approach to and pawns shop are usually pretty good at valuating items otherwise not be around for long.

On the tranches that include electronics , phones and tablets etc I would be more happy with 35%-40% as I have seen A1 refurbished / second user stuff at 50% ish or less  than new price on ebay in the past few weeks

I disagree with the ebay scenario. I think the cost of collecting, listing, packaging and sending 80% of the phones 'n' trinkets would be more than the items are worth. Many of us are in a loan on another platform where £4000 of computers and office furniture sold for £50 because the costs of disposal rendered the goods all but worthless.

I think the most likely outcome would be a trade buyer taking the lot at a substantial discount. To which end, I treat these loans as an all-but-unsecured revolving credit line.

Further, if cash shop is solid, why does it need to pay 15%(?) for debt? The reasoning that because they're lending at xxx%, they can afford to borrow at MT rates is a nonsense. I'm in them for the short-term, in the hope I can switch in to something better, or alternatively cash shop's business improves to the extent that they find cheaper credit.

The second hand cars look better to me. In a liquidation scenario, I'd hope that many of the borrowers would pay for the cars. After all, that's the general idea of the contract, unlike trinkets where the owner is free to not redeem if they so wish. And those cars which default would still have a value over and above the disposal costs.

Something to keep in mind, most pawn shoppers aren't shop around type people. They don't research like you and I might. My dad was a pawn broker so I know first hand. It's common for them to wander in to a pawn shop looking for something specific and buy it, even if it is overpriced. 

2 or 3 months ago I realised that around 70% of my MT portfolio was with Cash Shop loans, that got me a bit worried in case something happened to the company, since then I've not renewed some of the loans and now down to about 40% - I still think this is a bit high so I may not renew all those coming up this month.

I have no problems with MP's just not too much to one borrower