nick
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Post by nick on Apr 22, 2016 11:18:09 GMT
I've just noticed that IG offer CFDs and spread bets on the fund. Initial margining is 10% and IG funding costs for long position are 2.5%. Thus you can leverage 10 times a net yield of 6% per annum (net target dividend yield of 8-9% less CFD/spread bet funding cost), ie a 50%pa return. The big risk is that the share price discount to NAV widens from the current 0.7% discount to mid price. However, this should be less of a risk if the position is held for the long term, ie years which will also minimise the effect of the 2-3% spread in share price. Even after accounting for variation margin on adverse share price movements, a 25%+ IRR should be readily achievable. A long term trade worth considering as the fund approaches full deployment and starts paying out near their target yield.... I think that it is quite likely that the price to NAV will move around, and a 10% discount would be be quite likely. So you need to have 100% cash easily accessible, perhaps 200%. Which impacts your returns a bit. 25%-30% discounts are reasonably common (in investment trusts in general) This one had a discount of ~12% in March. Be careful or you will turn yourself into Northern Rock! It is hard to consider it a long term trade as you do need to find the variation margin. I think that the funding is LIBOR + 2.5% so pretty much 3%. And why is this fund going to yield 8-9% when the loans are randomly allocated and FC has a yield of ~ 7.1%. Oh and the 10% initial margin is only on the first £2k equivalent position. So if you had £10k it wouldn't seem sensible to buy much more than £20k (£6k3 initial margin and £3k7 for variation), which gives a return of about 8.5%. The anticipated return is better for smaller amounts. There are probably more liquid investments which have a lower margin requirements. For example, and this is just an example - I'm not suggesting it, the iShares IBOXX $ High Yield has a 10% margin up to $240,000. I hadn't noticed the higher margin requirement kicking in at £2k - it does kill the economics. I had modelled the trade assuming a widening of the discount to 10%, but you are right, the discount could blow out as shown by P2P Global Investments recently so you would need to hold sufficient cash to fund variation margin calls. I guess I need to think of an another way to blow myself up!!!
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SteveT
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Post by SteveT on May 10, 2016 8:13:55 GMT
I just spotted this investor presentation on the FC SME Income Fund website, given on 18th April. Makes for interesting reading, although the comparative UK market share figures on page 21 look a little kooky to me (eg. why exclude Lendinvest because their loans are "purely property related" but include Saving Stream, Landbay, etc.?) www.fcincomefund.com/media/1063/fcif-investor-morning-presentation.pdfI'd expected the share price to take a dive following the Lending Club news, but there's no sign of it so far. |
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Post by GSV3MIaC on May 10, 2016 13:54:30 GMT
Interesting presentation .. obviously the need for us is declining all the time. 8>.
Their presentation seems to have misplaced the 2010/2011 bad debt performance graph though .. hopefully not to be repeated!
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SteveT
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Post by SteveT on May 10, 2016 14:09:24 GMT
Interesting presentation .. obviously the need for us is declining all the time. 8>. Their presentation seems to have misplaced the 2010/2011 bad debt performance graph though .. hopefully not to be repeated! Yes, I spotted that "omission" too. Probably regard it as pre-history these days and, to be fair, their track record since 2012 has been fairly consistent .... (famous last words).
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nick
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Post by nick on May 12, 2016 8:46:14 GMT
One of those slides appears to imply (incorrectly) that lenders pay a servicing fee to FC. FC takes it from borrower repayments, not lenders. Whilst the 1% servicing fee is deducted from borrower repayments, it is still a charge on lenders and not borrowers. FC charge borrowers an additional 1% service fee plus the usual completion fee of 2-5% of capital. Nice business to be in although loan volume is critical to success.
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nick
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Post by nick on May 12, 2016 8:49:56 GMT
I just spotted this investor presentation on the FC SME Income Fund website, given on 18th April. Makes for interesting reading, although the comparative UK market share figures on page 21 look a little kooky to me (eg. why exclude Lendinvest because their loans are "purely property related" but include Saving Stream, Landbay, etc.?) www.fcincomefund.com/media/1063/fcif-investor-morning-presentation.pdfI'd expected the share price to take a dive following the Lending Club news, but there's no sign of it so far. I'm also surprised that the share price has held up. P2P Global Investments issued a press release on Friday stating they had no exposure to the issues at Lendingclub nor had any equity exposure - sure enough their shares tanked 7%.....
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Post by mostlywrong on May 12, 2016 10:58:28 GMT
I just spotted this investor presentation on the FC SME Income Fund website, given on 18th April. Makes for interesting reading, although the comparative UK market share figures on page 21 look a little kooky to me (eg. why exclude Lendinvest because their loans are "purely property related" but include Saving Stream, Landbay, etc.?) www.fcincomefund.com/media/1063/fcif-investor-morning-presentation.pdfI'd expected the share price to take a dive following the Lending Club news, but there's no sign of it so far. I'm also surprised that the share price has held up. P2P Global Investments issued a press release on Friday stating they had no exposure to the issues at Lendingclub nor had any equity exposure - sure enough their shares tanked 7%..... I am surprised at the behaviour of P2P, too. The RNS was quite clear that P2P did not hold any equity in lendingclub.com. The discount to NAV on P2P is now ~13%. It was wider for a few days back in February when the markets really tanked, and then recovered. I have left a cheeky bid for P2P in the hope of picking up some shares at a greater discount. MW
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ilmoro
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'Wondering which of the bu***rs to blame, and watching for pigs on the wing.' - Pink Floyd
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Post by ilmoro on May 12, 2016 11:54:40 GMT
I'm also surprised that the share price has held up. P2P Global Investments issued a press release on Friday stating they had no exposure to the issues at Lendingclub nor had any equity exposure - sure enough their shares tanked 7%..... I am surprised at the behaviour of P2P, too. The RNS was quite clear that P2P did not hold any equity in lendingclub.com. The discount to NAV on P2P is now ~13%. It was wider for a few days back in February when the markets really tanked, and then recovered. I have left a cheeky bid for P2P in the hope of picking up some shares at a greater discount. MW Im not. The RNS says they have investments in Lending Club loans (prime). Their foot may not be in the ordure but it is close enough for investors to be worried by the smell. More noticeable is that VPC Speciality also had to release a statement, has no dealings with Lending Club, but shares still dropped.
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ashtondav
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Post by ashtondav on Jun 2, 2016 8:10:54 GMT
Sam, those etfs are on the NYSE aren't they? So for me I'd have to pay 15% withholding tax, and that makes them a lot less attractive. Are there similar LSE listed etfs? I can't identify any
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