P2P Global Investments

I hold a position in P2PGI which I have built up it as its price dipped below 800 and its discount to NAV has widened to 20%+.  Its current NAV performance has been disappointing and is running at about 3-4%pa (its long term dividend target is 6-8%pa).  Recent underperformance has been blamed on rising impairment levels as its loan book has matured and because of cash drag from having to fund margin on forex hedges on its large US consumer loan book (about 55% of NAV).  Whilst the managers believe that impairment levels have probably peaked, I'm not so sure given the maturity profile of their currentloan book.  I would strongly advise reading their last quarterly newsletter which given a good summary overview of their activities, performance and risk as well a being a good general read (http://www.p2pgi.com/investorrelations/view/P2PGlobalInvestmentsDecember2016Newsletter).

At 800p, its current trading at about a 20% discount to NAV.  This provides a degree of comfort but its ultimate performance is going to be very reliant on the performance of its US consumer loan book which could go either way.  Increases in US interest rates may increase impairments as well as increase its own funding costs which could have significant impact given its 80%+ gearing.

It worth noting that the company is currently supporting the share price via a buyback pragramme under which has been buying back about 50,000 of its own shares daily over the past couple of months which has supported the share price from greater falls.

I hold VSL & P2P Global.

VSL has seen a 7% drop in NAV partly due to Funding circle loans, and a wide range of creative excuses. Current dividend is 7.5% if the 1.5p quarterly payout is maintained. Half-hearted share  buybacks should see some capital recovery (I am currently breaking even after the recent modest price recovery.

P2PG has maintained asset value, but is paying dividends out of reserves and seems to be waiting for something to turn up. Share buybacks have supported the price but the recent monthly report disappointed the market. I am showing an average 7% loss here, with a current dividend of around 5.5%. I am now buying through a monthly savings plan with Hargreaves Lansdown which minimizes dealing costs and goes some way to even out price fluctuations.

Having declared my interest you can evaluate my Strong Buy (please) recommendation.  The discounts on both funds are too high and should eventually recover, adding modest capital growth to a decent income. I would not buy if the discount fell below 10%.

The FC trust is currently trading at a premium. I am going nowhere near it. 
 

DEFINITION of 'Carry Trade'
A trading strategy that involves borrowing at a low interest rate and investing in an asset that provides a higher rate of return.
www.investopedia.com/terms/c/carry-trade.asp-0


Not sure of the connection between 'carry' strategies and P2P.

We did a quick overview on the five listed funds over 2016: www.bondmason.com/managed-p2p-lending-funds-review-and-comparison

Summary: decent NAV performance not translating into good share price performance.

Various reasons: some specific to the fund - gearing, cash drag, fees, costs, unproven dividend history, team, share illiquidity etc.; others general - market sentiment, relatively young asset class, UK concerns, etc

I've just exited from P2P Global (at a loss) and from FCIF (at a profit), making a small profit overall. I was getting a bit jittery about having so much exposure to the sector and to unsecured loans in particular. Now I just have to figure out where to put the money in the low interest rate/growing inflation environment. Keeping it in cash is a guaranteed loss at the moment, especially if inflation spikes.

The FT and other press has taken the review to mean considering changing the investment manager. Up 2% more today