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To deliver an absolute return primarily investing and trading in ABS and other structured credit investments in liquid markets, and investing in asset backed transactions including through the origination of credit portfolios.
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archy147; welcome! it may be a sp**** board but it's also waffle/agenda/ego free.
From the latest factsheet, which whilst hardly fireworks (it's a refreshingly boring investment), it seems very much business as usual:
"......For the Company, there was no notable change in the credit performance of the portfolios although we are tracking a couple of idiosyncratic credit stories that have emerged in September/October in the Portfolio Managers’ other portfolios. It is however not anticipated that these will have a material impact on the performance of the CLOs and are already priced into the risk......"
damofarl and others for your informative posts on here.
I've decided to allocate a portion of my SIPP to this stock. Whilst I don't expect capital appreciation, the yield here is about as juicy as they come (10% of NAV which is about 13% yield I believe) so it's in there for the regular income.
I had GSK for the same reason, but as this is about 3x the GSK divi it seemed like a no-brainer to switch!
latest factsheet suggests no concerns; highlights the volatility induced by the Truss non budget.
Yes NAV down 5% on the month, but this suggests business as usual, albeit not ebullient...."In Taurus’ portfolio there is currently no indication of any systemic deterioration in leveraged loans and the small number of idiosyncratic issues in the underlying risk remains unchanged during the month for the CLOs in which we are invested...."
SD235; TORG - can't answer that but as i pay no FX charge on TORO, has no interest to me.
As for being unloved, i really don't care! I suppose more interest/more small investors would drive SP/reduce NAV discount and create initial investment appreciation, but i don't think that would change the raison detre of this company, or crucially it's income (our income) or the reason i am here, namely yield and to a lesser degree, diversification. As for the companies they invest/loan to being weakened by covid, well, looking at TORO's regular reports suggests not. Paused progress as oppossed to detriment is how i read TORO's assessment. (see bottom note).
Gavster-NBC; - "I definitely think you should take the wide spread and buy TORG and I hope you'll enjoy posting your comments and start an engaging enjoyable discussion on that LSE page."
Brilliant!
Generally, this from the latest report says all you really need to know - business as normal (albeit i note the divvy RNS is late?) -
"During the August payment window, the annualised payment on NAV of the horizontal risk positions, TCLO 7, BOPHO
6 within Taurus was 13.1%, and 18.9% respectively. We continue to see strong performance in the underlying
portfolios in Toro and no deterioration in deal metrics. We also see some underlying prepayment in assets enabling
managers to purchase collateral at cheaper prices than modelled with loans trading significantly lower, this is also
enabling managers to trade out of weaker credits and replace them with similarly priced risk....."
SD235. Good point that should have read. "will not want interest rates raised". The Tories certainly didn't, and they're all resigning. What was obviously moronic was Crazy Kwarteng's budget making reasons for the hikes unacceptable by the population and market.
I definitely think you should take the wide spread and buy TORG and I hope you'll enjoy posting your comments and start an engaging enjoyable discussion on that LSE page.
https://www.lse.co.uk/ShareChat.asp?ShareTicker=TORG&share=Chenvari-Toro
Damofarl
"I don't care if it's unloved/misunderstood, as long as it is profitable. Cheers"
Yes you do care. You wouldn't be getting such tasty bargain if they weren't so unloved or misunderstood!!
I have only looked at chenavari it took me a while to understand there investments. I think I have the hang of it now.
If I recall correctly (an old report on Quotedata) the price of CLO fell over cliff but the income received did not. Hence the market got it wrong.
I also note Sequoia Infrastructure investment trust didn't have any defaults, at the time but have now. To me that means some businesses which appear to have made it through covid have not recovered.
Chenavari TORO should have had long enough for defaults to have come to light.
I note the same about VPC Specialty although significantly different companies.
Chenavari does surprise me VPC Specialty doesn't. The discount is part of the reason for the high dividend so I am tempted but I will be buying on the assumption that this time around there will be defaults. The Company’s they invest in must have been weakened by covid???
Opinions on the latter view?
Gavster-NBC
" Tory government generally does what's best for themselves rather than the country as a whole so IMO, they will not raise interest rates enough which might please those struggling with mortgages "
I note your moronic statement on interest rates and how the Tories will keep them low.
Bank of England sets interest rates. Suggesting otherwise means you should be investing in a building society.
Does anyone hold CHENAVARI in the GB line TORG they appear to trade on bigger spread.
I assume but don't know if the dividends are paid in sterling?
If you hold it in euro line do you pay any fx fees on your dividends?
They seem very reliable on the dividend front. During covid the value of there investments crashed but the dividends didn't, hence the market was wrong (about the risk).
CHENAVARI appear to be best in sector. There total returns are crap but it appears to be a product of the discount.
Dividend declaration soon? Last year was Oct 20th...
gavster/kentio; i am' over' in CLO's , and as you say they are not as complex/exotic as seemingly many think.
I was new to this arena, attracted by the dividends, and took my time understanding my first stock, their function/purpose/structure and from there subsequent stocks were easy to decide on - i actually find their reporting is both detailed and frequent and free of bumph/PR/spin.
One has to take the wide spread on the chin - i took the view , having seen their consistency, that the first year's divvy would cover the capital loss, and then onwards a 10%+ yield, and so it has transpired. What i didn't realise/expect is what a counterwieght SP wise they would be to the sort of malaise we are seeing in more mainstream/safe/vaunted stocks.
My 'mainstream' stocks, like yours Gavster, have dropped through the floor; this arena, for me has been the gift that keeps on giving. And counter intuitively, i monitor my CLO's far less than i do the rest of my stocks. And as for being a shame less followed kentio, well, in my experience - and maybe i'm just lucky - the less followed, evidenced by the few of us here and on similar CLO boards, the more succesful my investment has been.
I don't care if it's unloved/misunderstood, as long as it is profitable. Cheers
Well done Gavster NBC - I also. hold. quite. a lot in CLOs. Most investors do not understand them -It is · nt easy but there. is. plenty of info around. I am in FAIR, BGLF and MPLF and whilst I am currently suffering. a capital. loss, the. dividends received. over. the. many years. I. have them, I am well in the. black. It is a great. shame that more income investors. don't take a look at these.
Well so far so good as far as the interest rates hikes are happening and inflation is hitting us everywhere.
The SP here has been solid yet again, without even ex-dividend adjustment and not even a cent move whilst all around my portfolio large drops that over match the FTSE.
I do appreciate however that in the main FTSE market, the yields are still lower than inflation.
I increased my holding here in the past couple of months.
FAIR issues an update today on steps to reduce NAV dicount - basically share buybacks and a reduced (but still generous) fixed ongoing divvy.
I hold FAIR hence following, and what struck me in the commentary was therir assertion -: ".......The Board and Investment Adviser believe that recent movements in the market price of the 2021 Shares are not being driven by fundamentals and intend through these measures to demonstrate the Company's capital discipline and confidence in the Company's cashflows and NAV.""
as TORO's market movements (downwards) have mirrored FAIR's, as does their modus operandi, I feel a positive read across to stocks in this sphere.
The latest update shows a small increase in sentiment. The 2 things that caught my eye were than miniscule default rate is unchanged and the ongoing income from loans is 17% p.a.
The latter suggests to me, if no new loans are originated (POORLY), at some point there has to a run off/return of that income.
https://www.chenavaritoroincomefund.com/assets/Uploads/08da4e6dc0/Chenavari-Toro-Income-Fund-Limited-Factsheet-July-2022-EXTERNAL.pdf
scandiexpat; the number of individual trades, and their value is quite normal today; the constant low volume/value of trades has a disproportionate affect (for good/bad). The nature of those few trades magnifies the direction, up or down.
If the trajectory sentiment/economic wise is negative, as is the case currently, i think there is a flight to perceived safe havens, more liquidly traded stocks like Unilever and United Utilities, from on paper risky stocks like this.
Yes, the fundamentals are affecting SP, across this specialist sphere - (these stocks are basically the business equivalent of the bundling/packaging of housing loans that precipitated the banking crisis) - but i think it's more a flight to quality/capital preservation driving it down than an underlying concern. just my tuppence....
Any perspectives on today's drop? Volume was very small. Cheeers,
just revisiting this.......the NAV has dropped about 7% from January to latest evaluation, June.
Frrankly, to be expected, and i actually think that is pretty good mgmt of their markets, considering the wider mkts, and certainly compares positively well against wider more mainstream stocks. It is still at considerable discount to NAV which to me gives breathing space to further retrenchment/underlying loan default, although i don't see it doing so, of note.
From memory (being lazy), the divvy is is set at 10% of NAV so a lowering of next divvy to reflect such, but frankly, still in excess of 10% (my benchmark requirement for such esoteric/specialist stocks), so not concerned. Business as usual methinks, and frankly , feel performing consistent and reliable, contrary to what the high risk inherently associated in such a stock would suggest.
Many thanks damofarl !
gavsternbc; well you ask the million dollar question there, how will they fare in rising rates? My personal view on TORO is fine; yes maybe some retrenchment but i don't see any falling off of a cliff; interest rare rises have been well signalled for a year, and materialised significantly in the last 3 months and the upwards trajectory is quite clear. Against generalist stock drops (say FTSE 100), TORO has fared well in the general market drop/nervousness.
With regard to a one off risk assessment Scandiexpat, whilst i get your sentiment, i don't think will happen or really that appropriate - TORO's monthly factsheets pretty much outline that already; the annual report is very detailed on the risk profile of investments; the latest monthly factsheet highlights increased risk/volatility but in a controlled measured - not panicked - way. I read the monthlys religiously and i sit comfortable with their highlighting of constantly rotating into the current market condition/pricing as highlighting their proactiveness in managing the portfolio; that said the annual report did highlight an increased concentration/correlation risk of the portfolio, and also mgmt's desire to exit residential related loans, which in itself reassures me rather than concerns me, exampling to me, their professionalism.
Gut feeling, this company manages the margins, and whatever the new rate/risk, they will recycle such margin into that.
https://www.chenavaritoroincomefund.com/assets/Uploads/09c95f570a/Chenavari-Toro-Income-Fund-Limited-Factsheet-April-2022-EXTERNAL.pdf
With regard
Good idea, I own several funds like this and have the same concerns. Is it possible to ask the managers to publish a one-off risk assessment with description of their potential hedges/decision? I don't mind risk obviously but as an ex FX option trader I always went home with a "war risk report" which 'smiled" at me at extreme volatility events.
Hi all. I'm looking to start a discussion on how Chenavari will do with the looming cloud of high interest rates set to appear in the coming months or years.
Are they a company that now exists in the wake of low interest rates ? Will they survive or thrive when the interest rates rise, the mortgage defaults start, businesses suffer and unemployment rises again, or are we in new uncharted waters ?
As far as when rates could rise, it's down to government and timing.
We know that the current Tory government generally does what's best for themselves rather than the country as a whole so IMO, they will not raise interest rates enough which might please those struggling with mortgages but they will not help to feed the millions suffering with increasingly low wages. This road leads to a Labour government in a few years time that will be raising rates.
Scandiexpat; for US google marketwatch, type in say IVR (no recommendation), and if you scroll down the left side you'll see 'competitors' which will give you an idea of the plethora of businesses in the mortgage loaning REIT sphere. This site will lead you to comparative levels of info as the UK - i would thoroughly recommend reading the earnings transcripts, which aid understanding of how these vehicles work - and the risks.
I'm not concerned with $ changes per se, i feel these things go around; good luck, and hope that site helps
Damo, many thanks for your perspectives! I especially appreciate your UK/US assessment as I have been wondering why the trading characteristics were so different. Clearly the lack of liquidity in the UK has been worrying me, especially at execution, but I have grown more comfortable as time went on. In the 9ish months I have been building these portfolios I have found myself gyrating towards the UK. Because of the US characteristics (portfolio under water since exception) I have become more cautious. I am also worried about the USD... Also I appreciate your discussion about the "single owner" UK shares and I had suspected that it was driven by tax however I did not really have a view about the pro/cons of this situation. I will run my initial portfolio with minimal changes this year and try to set up a better system for monitoring the portfolio. I find this web service quite helpful but struggle to get the same type of info from the US...
Many thanks & Good Luck!
The latest monthly factsheet is out; as ever, technical, concise. Solid.
Commentary shows volatility in the collateralised loan market due to interest rate/inflationary pressures, and a reduction of issuance pursuant to such; NAV continues to rise; notable was mention of (continued) income from a number of their loans, and no mention of non/under performing loans. i.e. business as usual.
I do find it (encouragingly) perverse that this supposedly risky/specialist stock is so stable in uncertain times when considering supposedly safe stocks such as say Direct Line, are volatile/drop on events which in reality should have no impact on their business? What do i know? Except my experience here is that this is a wonderful counterweight amidst any balanced/spread portfolio.