Chenavari Toro Share Chat (TORO)

Couple of observations....

They are at the limit of their leverage , which can be interpreted many ways, but to me means they are advantaging opportunities, being well below their maximum sector/individual holding limit.

Their market commentary of an increase in distressed debt was notable, in that such is the first time I've seen such stated in their factsheet, albeit it should be noted, they appear to be commenting generally rather than TORO specific

Boringly great results. Still boringly bullish on TORO after 10 years. Long may her stampede of Income continue......

Gavster-NBC; Bravo, you succinctly summarised the results.

Having digested the whole thing, these are my thoughts -

Earnings per share were 8.73c and dividends were 6.76c, rather dispelling the frequent concern some have that this type of stock is eating itself, unsustainable, in it's high yield. It is clear, it is earning well in excess of it's dividend, and as I don't see any change to the current dividend policy (ever), that excess cash is obviously allowing them to advantage further contributing opportunities.

'The best contribution came from ABS/CLO risk retention strategies.......reflecting a high annualised NAV return of 46%'. This statement suggests that previously originated product has generated great margin, and TORO's mgmt (gambling?) on not trading such has bore fruit, which I see as a great positive as to their diligence/ability. I think for investors in this sphere, this is really important to appreciate - that there is a life cycle of commitment and obligation, upfront depreciating risk/cost, whilst appreciating reward/income.

Income of €1.1m from SRed, the Spanish property investment. I've said before SRed has been a drag on performance (albeit still marginally profitable), but they are now 90% out, and expect closure in 18 months. Whilst analytically you could consider this proportionally a poor investment for TORO (it is/was), their patient mgmt of this, to achieve cost +, I see as this as a great demonstration of their mgmt ability, and long term view. They could have, some would say should of, fire sold this, but rather than take that hit, they have curated it to a profit.

'although the discount to NAV narrowed......the Company intends to continue efforts to reduce it further....' well, as a seasoned watcher here, bar them stating such a couple of times previously, I'm not sure they have done anything to support this statement.if you increased the dividend, it would raise concerns of a basket case, so do they do buybacks? Not a fan, but even at the reduced NAV discount, still obviously accretive. Their assertion of action specifically on that point is spurious - their actions in delivering excellent performance/results isn't, and their continuance of such will naturally reduce the discount, as this years performance has demonstrated.. They highlight that 'credit losses will see an uptick '. This doesn't concern me remotely, both because they factor in a percentage of failure, and because of the very fact that they highlight it so matter of factly - ie business as usual but we are monitoring. The only thing that caught my eye, headline negatively, was, total operating expenses increased from €4.3m to €6.4m which is a substantial increase. Didn't observe any director/staff largesse, so can only presume that reflects higher financing/trading costs linked to increased proactivity on margin procurement. Frankly if you keep delivering such performance/dividends, to me, that's a barely noticeable smudge. Borin

Gavster-NBC; ha ha, you did make me chuckle. Yes loads of boring stuff, but thanks for the synopsis, as I haven't read yet. I often find boring stuff (stocks) very rewarding!

I'll have a look later, and add my thoughts, but as I've posted here recently, I do think TORO are really excelling at the moment - and I've been here 10 years, so I don't suggest such lightly.

Also being responding on the FAIR board, as quite a few thoughts on that, which I've also held for 10 years.

Https://www.rns-pdf.londonstockexchange.com/rns/2620O_1-2025-6-24.pdf

Had a quick read and so far good :

"The profit of the Company for the Period was €27.2 million (31 March 2024: €15.8 million), or a profit of 8.73 cents per Ordinary Share"

"The Company delivered robust gross returns over six months, up 13.64%. (with dividend reinvested in security) surpassing the 12 months NAV target return of 10%. "

"The Portfolio Manager believes the next 12 to 24 months will continue to present significant investment opportunities in Public European ABS and CLOs.

Although the discount to NAV narrowed to around 16%, the Company intends to continue efforts to reduce it further and capitalise on market strength."

Not sure I'll manage to stay awake until the end, but I'm betting it's full of reassuring boring investment choices and a good outlook.

Still discount to NAV... Still a buy IMO

Bearraider; great story.

Damofarl glad I gave you a chuckle, had thought of changing my name since my objectives are now very different than 40 + years ago when I began trading. In the good old days when we posted on BB's (Bulletin Boards) do you remember those? somebody called be a bearraider and the name followed me around so I adopted it. Had a few hostile receptions over the years on various BB's /share chat rooms the best was when I was accused of collapsing the SP of a FTSE 100 company all on my own! so I could do a bearraid on the shares and buy up the company ! I had about £7k at the time to invest.

Bearraider; welcome aboard. Did make me chuckle that - a bear buying a bull.

Seriously, I've received over 10% dividend every year for the last 10 years - I'd consider that more than a 'decent' track record......

Looked this over seems to have a decent track record and offers a good dividend so have bought today for my LT income portfolio as needing a new home for cash as several of my holding are winding up, under offer etc. Sold ESP as the offer price was just a few % above SP and mainly shares.

Following the winding up of BGLP I reinvested here. and. am very happy.!

Hi Damofarl. Yes, this is

Still my largest holding of this type of high yielder. Very stable too, in fact in my SIpp I sold completely out of TORO in Trump tarrif week to trade the low prices elsewhere. It was the same SP whilst everything else was tanking, I then make my profit and bought all my Toro back at the same price with a few extra, all in time for this divi announcement. A great team is running this as you say. I'll look to DRIP and increase in the coming weeks

The increase in NAV here is really impressive, considering each healthy dividend, being NAV linked should reduce/hold the NAV.

Stocks like this, where well managed, thrive on volatility being able lo lock into better rates, and with the truity of the NAV constantly demonstrated, the SP NAV discount provides opportunity to lock in a great yield.

Still bullish on TORO after 10 years

Very much business as usual here, having read the annual report.

Couple of things caught my eye -

A concern in this arena is that the high yield is in part merely repaying capital, so good to see they paid 6.58c as a dividend but earnt 7.87c

And the comment that they had been reducing their position in (the very troubled) Altice debt holding is a positive.

Yes.. Reassuringly boring and now with a slowing increasing SP too.

Recent volume has been very low, in fact I couldn't even DRIP smaller amounts with the dividend last week. Then I needed to sell some of my holding. My limit buy was ignored for a few days at 55 cents which caused some worry, so yesterday I cancelled the order but was able to sell with an instant quote at 55 cents anyway, around 3.30pm.

I guess this is the kind of experience we all have with low trade volume shares, I guess the fact that it was hard to buy small amounts but easy to sell larger amounts says it all about the sentiment here, despite the continued discount to NAV.

Gavster-,NBC

Reassuringly boringly rewarding.........

Hi all.

I expected more of a slow rise as interest rates eased, and perhaps a closing of the gap to NAV, but I'm fine with the dividends instead. Next ex-div date should be in a few weeks, early November.

TORO is now my largest holding by value in my ISA.. It was gold miner PAF before but I took profit on their dramatic rise, in hindsight too early, but feel comfortable for cash and value preservation. That in itself is the amazing attitude of opting for the relative safety of this investment compared to the market casino of the FTSE's and AIM.

Latest factsheet is out.

Noticed they have rejigged the format, which more distinctly shows/breakdowns the credit ratings of their underlying loans, which is helpful.

Cash is back to 11%ish and Spanish property has reduced from 8- 7% in short time.

Note in the breakdown of "assets" that 45%ish is in equities - could a more knowledgeable mind than mine, explain what such equity might actually be/represents? I can't track it's appearance from previous factsheets.

Been on my watchlist a while - bought c3500 shares to test the water. Might top up but we shall how I feel when the dividends come in.

Now gone through the whole 50 odd pages.

3 things struck me.

The removal of the cash cap, from 5%, (with optionality to 10%), totally. Supposedly to allow flexibility to invest into opportunities. Whilst the gearing of 102.69% is modest , I do find a cash buffer reassuring, to meet commitments, to meet targeted dividends through fluctuations in performance, and the removal of such, less reassuring.

TORO declared 3 defaults, stating their position is small, but potentially larger (through it's BOSPURUS fund). Intrum, is struggling, but looks like maintaining, Ardagh, has agreed a refinancing loan with Apollo, to clear near term debt at 6% to 9% at a pushed out pay bet date. Not sure whether this is good for TORO or not - depends where they sit on the credit tree - with Ardaghs secured debt trading at 70-90%, and it's unsecured at 30-40% of face value. Altice defaults are a game of poker, but Altice has considerable room to move out of their debt obligations and are leveraging such to demand a haircut on rates.

SpRED, the Spanish property portfolio that has long been a drag on performance, is suggesting an exit in 12 months time at an ARR of 5%, suggests hardly a disaster on something that obviously didn't do great, being based on sales target prices, less 10%.

Not overly concerned as to the debt defaults, as a default % are factored into the returns, but the lack of preciseness on the 'greater' exposure of the BOSPURUS fund does make me alert. Why so vague on that exposure?

Not overly concerned, but that vagueness has instilled the first thought of concern since holding.

I've not analysed it yet, but the stand out figure is that profits were 50%+ higher than the dividends paid out.

As akways, boringly reassuring.

Highlights are great IMO

The net asset value (“NAV”) total return (with DRIP) was 8.16%and the share price total return (with DRIP) was 26.84% (1 October 2022 to 31 March 2023: 5.07% and -0.65% respectively).

NAV per Ordinary Share (“Share”), excluding dividends distributed, increased by 2.95%

(1 October 2022 to 31 March 2023: 0.01% ) to close at 66.44 cents (31 March 2023: 64.06 cents).

The Company’s mid-market share price at 31 March 2024 was 52.50 cents (30 September 2023: 44.30 cents), representing

a discount to NAV of 20.98% (30 September 2023: 31.36%).

The profit for the Period was €15.8 million (31 March 2023: €9.8 million profit), or 5.13 cents profit per Share (31 March

2023: 3.2 cents profit per Share), taking into account recognition of the following significant items:

total income of €20.2 million (31 March 2023: income of €11.2 million) total operating expenses of €4.3 million (inclusive of €2.8 million performance fees. 31 March 2023: €1.4 million, €Nil

performance fees)

At 31 March 2024, the NAV was €205.0 million

Still going through the rest, 50 pages in the pdf.

Cheers all

And another 3.18% Return for the quarter. Great stuff.

I've increased my holding here recently, the discount to NAV very attractive.

Cheers all ))

I would see it as you wont receive any "special dividends" had there been excess cash - instead it would be re-invested.

Am not sure. I read it positively as a potential return enhancing policy but then again, the exact opposition interpretation is possible. Share price has been quite positive the last few months however.

I note the latest dividend rns of 0.0162

Also noted the following footnote in the same rns, under the title 'Diviidend policy update':

"The Company continues to rebalance its portfolio towards tradable securities and has been able to make attractive investments within the Public ABS and CLO sector as opportunities arise within the market. To that effect, the Company plans to remove the previously announced cap on maximum cash balance, so the portfolio manager can have more flexibility to continue to re-invest based on prevailing market conditions, with excess cash being reinvested."

Not sure what to make of this....but do feel they are flagging expectations of lower divvys, in the short term to maintain/grow future yielding opportunities.

Canetoad; you make a fair point, and one that I consider with ALL stocks that have a large concentrated holding. It is a possibility, but actually FAIR has a concentrated (concert?l holding too. With the exception of BGLF which has the least concentrated and most diverse (mainstream) shareholders, I think it's part and parcel of this arena.

Most of these stocks to my mind are set up for primarily for high net worth individuals/family trusts etc, pursuing tax efficient income through the long term and the likes of you and me are merely riding the coat tails of that expertise/oppurtunity. So yes they could low ball us, but the counter balance is what is the incentive when the mandate (high income) is continually delivered and to buy out would merely concentrate their risk?

What advantage is there to the concentrated holders over the status quo? To capture the NAV discount? Well they could do that by using the Company's own money (aka the FAIR way) rather than using their own money.

Yes, it's a risk, and an important consideration, in a number of stocks in this arena. Personally I don't see it

I've spent some time looking at TORO vs FAIR. The possibility of a mandatory low-ball offer is what worries me about TORO. There's nothing that could be done if that happened? That looks far less likely for FAIR.

Agree all that......the flip of larger director hdings is I'd like to see the concentrated holdings fall below the concert party level. Probably my only concern here is that they could take private at SP with no reconciliation of NAV discount for bought out individually holders. Losing any appreciation and yield would be quite a double whammy.

Hi damofarl

I admit that I've been favouring TORO in my regular investing and use of dividend income since the gap increased between NAV and SP.

The standout highlight for me was of course the the €26m income (over 8 cents per share) compared to the previous years loss.

On page 52, I found it refreshing that all the expenses except Audit fees were lower than last years. It says much about the directors attitude with respect to responsibility to us holders IMO.

It's impressive to see the income driven from Taurus, page 13.

An increase in the directors holdings wouldn't go a miss here but overall I'm happy to hold through, and collect these attractive dividends.

Results out today, just of which, they made €21 million last year, and NAV is near identical to a year ago.

One of the (many) concerns people seem to have with the high yields of TORO/these kinds of stocks, is that that income isn't earned, and is in part a return/sell down of assets, ergo unsustainable. That the NAV after a year's dividends is identical shows it is earned. Yes, the SP has lost about 15% this year but when the dividend is fixed at 10% of NAV, if that is static/increasing, i rather ignore SP gyrations.

Of Interest in the commentary....

The Spanish property origination (which has held overall performance back) is now 80% sold, with an 18-24 month timeframe to exit totally. Really happy that they have patiently managed this rather than firesaled it, indeed, they are currently exploring renting out the remaining properties in the interim. Of particular note, through mgmt and natural retirement of loans, this now represents around 10% of NAV as opposed to 16% previously. They are guiding for it to better break even.

They are guiding to less profit/income this year, reflecting their view on the market (lack of opportunities) and a conscious decision to drive up quality of holdings hence lower returns.

They are also considering the sustained NAV discount/SP fall, and any actions to rectify such. I hope this is just a monitoring thing and doesn't herald it's winddowm......

Happy New Year to all TORO'oids!

Gavster NBC;

Early in the year we were discussing TOROs dip; these presentations refreshingly highlight that whilst their performance was not directly impacted by CS AT1s performance was strongly impacted by their proactive (but wrong) repositioning to safety, thus losing the upside.

Couple of take outs from the commentary....they see high single digit income going forward, which makes me contemplate that current NAV based yield is partially returning assets rather than purely from income.... presumably the leverage bridges the gap between income earned/dividend paid? More positively, I do like the explicit conservative/capital protection investment style they promote (albeit that caused a drop in performance earlier in the year).

Chenavari Investment Managers

https://www.chenavari.com › ...PDF

Lyxor / Chenavari Credit Fund

https://www.google.com/url?sa=t&source=web&rct=j&opi=89978449&url=https://www.chenavari.com/wp-content/uploads/2023/10/20231018_MI_Chenavari_UCITS_New_Paradigm.pdf&ved=2ahUKEwiHwey1uryCAxWTQkEAHYXXBOUQFnoECBAQAQ&usg=AOvVaw3b6VL8tdyDFZ78_9P027P5

Hi Damofarl.

Wouldn't worry, I've registered many times with my company name, that in reality has nothing to do with investments, for all kinds of different webinars/calls etc and I've even asked questions and had them answered without appearing unprofessional. I make a fair chunk of my living from investing, I guess many on here do, which is a basic definition of doing something as a profession. I see it as they are just trying to filter out the herd of un-researched quick profiters.

I'll be away for Thursday, but are we really expecting anything drastic ? I doubt it...

The thing of note for me with TORO is the seemingly slowly increasing discount to Net Asset Value of the market valuation.

A bit peeved that the upcoming quarterly webinar is for institutional clients only.

Whilst it does give one a definitive steer on who this stock is aimed at, I do think it's poor form not to acknowledge, allow access, for small investors.

Irrespective of target investor, surely you would want to promote yourself to as many investors as possible. Niggled me a little, so may register surreptitiously anyway!

Of note in the fact sheet was this I thought...." We have been selectively adding risk in recent trading sessions to deploy cash and remain invested including adding AAA positions"

They certainly seem to be trading up to quality.

Another good factsheet with no alarm bells and doesn't give away any details we really want to know.

32.5% discount to NAV. Roll on the dividend.

I've replied, same board.

GavsterNBC - BGLP

Aye, I had the same problem, due to my work position!

Hi Damofarl.

I'm hesitant to write my email on this forum as I can't delete posts.

Hi Gavster-NBC, thanks your thoughts....

'I did read this article at the time, thanks for posting. But for me nothing in it pointed towards a 10% drop in SP, in fact it showed an insulation against any impact, also currency movements this year have not figured such a drop.'.

Well, I think we interpreted this differently - I saw it as a blunt admission that had taken a haircut in AT1's, but I agree with your view that THEY considered it was not impactful within the context of the whole portfolio, spoke to me that that was part and parcel of their (risk) mgmt, basically, business as usual.

I don't have an answer for your point about the non correlated drip,drop, drip drop, rather than immediate with some bounce back as per SMIF, but I often find TORO (and it's ilk) uncorrelated both up and down, and whilst I agree selling has pressured this, the last time I looked 3 institutions owned 60%, and the nature of them is they are interested in long term (tax efficient) income, rather than short term SP fluctuations/gains, so those sales have probably come from individual small investors lie you and me, taking a flight to (perceived safety/cash) in the current negative general market environment - where relatively small sales (or purchases), due to the low liquidity, can have a disproportionate impact on the SP.

Yes, interesting the NAV hold up against the SP drop, and that here as with others I hold in this sphere, is actually what I watch, not the SP. When the NAV drops materially, that is when I get concerned, and through all my holdings in this sphere, including TORO, whilst seeing, seemingly worrying SP drops, I've never seen notable NAV drops - and they have all consistently paid high dividends, hence my awareness of TORO's S drop, but lack of concern to it.

And yes, good luck, albeit I believe, timeframe is what matters uhere

Hi Damofarl.

An AT1 discussion was touched on the SMIF board, I didn't contribute. Where the SP chart clearly shows the dip at the same time as the Swiss Banking crisis.

https://www.chenavari.com/assets/Uploads/97fc21b1ee/2023-03-Lyxor-Chenavari-Credit-Fund-Positioning-and-Performance-on-Monday-20-March-2023-v2.pdf

I did read this article at the time, thanks for posting. But for me nothing in it pointed towards a 10% drop in SP, in fact it showed an insulation against any impact, also currency movements this year have not figured such a drop.

If there was any sort of Swiss AT1 impact, I would expect the kind of drop and recovery as SMIF at the same time, not the kind of dismal downtrend we have seen since February.

Anyway.. The latest NAV is out, finally, which with respect to the current SP I expected it much lower, but is more like the kind of level expected after reading that notice.

FEB SP €51, NAV €65.77

JUNE SP €44, NAV €63.60

IMO this points to some sort of seller, forced or cashing in to counter losses elsewhere maybe, who knows, but this is a hold, and continue my DRIP.

I noted that TORO (and FAIR, and also SMIF) were some of the few shares within my portfolio in positive territory during yesterday.

Cheers and GL.

Hi Gavster-NBC, hope your well/investments doing well.

As promised I've dug out the post that I summised from, below.

I don't recall you posting about the CS meltdown and impact on TORO at the time, maybe on another board, so I can't (didn't) respond to such. With regard to your 'bad taste' with regard to being under SP, even with DRIPS, aye, it never feels good, but I do think it is part and parcel of the beast, and you have to accept such in a considered manager. By example, my first stock in this arena (BGLF) was SP negative throughout the first 4 years I held it, only going SP positive for the first time in January this year. It is currently SP negative 10%. Mindful of Captain-Value's valid question (is this just repaying capital), that holding AFTER current SP loss has generated about 10.5% a year since acquisition, also after the Initial 5%ish purchase spread loss, and the approx 10% strengthening of stlg to the $ in the last 6 months.

As for your perspective that at current SP it represents 7years of divvys , I do think, that's how you have to think here, and to that end, from a pessimistic view you have to consider, will they continue for 7 years (yes), and from an optimistic view, if they were to only last 7 years, how much of that NAV discount will be unwind into returns, as the contingency for delinquency of the underlying loans is unwound, expires? (To this end you only have to look at FAIR's realisation shares (FA17), and their SP against FAIR's SP, SA17 holding only historic loans winding down, and with such extinguishing the liability/risk whilst realising the embedded value).

I keep banging on about it, but TORO and it's ilk, aren't for a trade or a six month buck, you have to hold for 5 years, and not ignore SP fluctuation, but neither be overly focused on such.

I do think they've taken a recent hit, got it wrong, but by the same sentiment, in the time I've held them (4,+ years) they have also spectacularly outperformed in the odd year, but throughout they've paid a handsome consistent dividend.

Increasingly I feel the Spanish property loans are dragging this (it's 15% of the portfolio that isn't performing/contributing) but on that I personally am happy that they are (slowly/patiently?) managing to a break even, which if achieved, will remove a contingency, realise funds for reinvestment in performing loans/ and or distribution.

Yes, they've missed a beat lately, but they still tick all my boxes.

It's the first 22/03/23 media post I referenced -

https://www.chenavari.com/press-and-media/

Hi damofarl

I seem to remember discussing AT1 bonds and TORO at the time of the Credit Suisse meltdown.

I've got the bad taste with TORO this week due to these recent drops, that weeks ago were preceded by a welcome sense of immunity to the AC! crisis at the time. It's changed sufficiently for my investment to go back in the red after quite a few DRIPs and months in the black. I guess a positive is that the DRIP in the coming days will be at a very cheap price.

It's a waiting game for the bulls to return all over again.

April's NAV was 65 cents.

One perspective, the current SP 44, represents 7 years of dividends.

Capt value/Gavster-NBC;

Captvalue; yes I do consider it a buy, as whilst I feel a sell down was justified, the level overdone. Personally I feel the whole market drop is overdone, but the nature of TORO and it's ilk is that any impactful events are very much magnified by the nature of their leverage, and, I do feel, a reactive flight to 'defensive' stocks/cash, compounded by the low liquidity here.

Gavster-NBC;, Firstly, took the AT1 details directly from Chenavaras website, paraphrasing one of their regular and hoc commentaries to market/fellow professionals (when I have time I'll try and post a link). As for releasing to the market, well I don't agree, in that, there is nothing that has had a material impact that is not within the normal spectre of their business, and risk/loss thresholds.

Timing - I get your point, and I'll be honest I didn't do a linear track of SVB/CS collapse/default/takeover timeframe against TORO's reducing SP to validate a direct singular correlation/explanation, mainly because I felt the delay from SVB to CS, to the Swiss regulator invalidating CS's AT1 bonds wasn't a single moment, but an extended drip drip drip down, unfortunately, including a delay period where the bond market incorrectly felt their AT1's had some recourse (value). I think the immediate in step drop timing wise at CV19 was because everyone (except me!) sold pretty much everything everywhere immediately in fear of the unknown, and as such the disparity you infer I don't feel is valid.

Generally - I focused previously on the AT1s as I felt that was a major factor, but as I posted before, not the only factor. The rotating into higher quality debt (lower margin?), the Spanish residential loans (about 15% of portfolio to memory) not contributing , and the general negativity from rate rise/inflation concerns are all drip dragging us down. My view is that the market is perceiving this as a basket case because a number of areas are either not performing or underperforming without considering that all of these currently negatively impacting factors are part and parcel of their risk tolerance, their normal business. With stocks in this era, it is not unusual to see a NAV drop of 10% in a year, with a 21% rise the very following year & it's just part of the beast you have to be willing to accept.

I continue confident here, confident that for TORO its a blip, and that it is oversold within this specialist market - by example take BGLF which I consider the gold standard - despite no definitive statements of defaults/reducing income, their stock is down 15% since February.

Just my views, I'm no expert, but hope it helps.

Hi Captain/Gavster-NBC,

Captain;

"What is it with this share, it’s done nothing but drift down for the last year, and the longer term trend is equally bad.

Are the dividends enough to compensate for the capital erosion here, and is thhere any hope the trend might reverse?...."

Well that's the million dollar question isn't it? I number crunched through the last 3 years, and if you bought at the (spiked) peak 65c, without reinvesting the received 21c's dividends you would only be at break even. If you took a month either side of that peak a more typical high was 56c which after replacing SP loss, has yielded 6% net. Not the headline yield that flatters/interests so many granted, but neither the capital destruction you allude too. Trajectory? You have to decide, and whilst I share your jist, I do think that one has to consider the period I've used has weathered COVID/Brexit/Ukraine/bank failure and inflation-reccesion, which is quite a lot in such a condensed period. And as I've highlighted before when querying capital destruction in this sphere, 1) nobody should buy/hold with less than a 5 year time frame, and 2) one has to compare against the capital reduction in more mainstream stock, DLG and Persimmon for instance, to make a decision on whether this stock is singularly failing, or actually representing/holding up well compared to the market generally.

Gavster-NBC; I don't see (or feel) there is a loan defaulting from the latest update. Indeed, a read across from BGLF's latest update is that whilst Euro loans are earning less (than US), euro default rates are less, and reducing.

The 3 factors affecting this downwardly I see as

1 -The rotation into higher quality loans, which whilst reducing the risk, must also be reducing the (profit) margin generated.

2- An erosion of margins, due to rate rises, and to some extent loss, albeit transient whilst their loan base is reset into the future.

3- the Spanish residential loans are definitely impacting NAV/SP, having not generated the returns expected; these aren't generating, they are managing to end, to avoid a fire sale loss, a prudence which at some point should reinforce it.

Not overly concerned but definitely keeping a watching eye. The % of cash at hand and low leverage reassure whilst not inspiring/indicating that a catalyst for outperformance is imminent.

Hi Captain and damofarl.

Yes, I'd like to know what's going on, especially the SP going down two days before ex-div.

Is it the continuing effect of high inflation on companies that we discussed might happen back in 2021 ?

I've been a TORO champion until now, having now seen all my reinvested dividend profit wiped out to round about breaking even or less on my 12 month holdings, and slightly down on my 24 month.

Can't see any particular clues in the March factsheet, could one loan be going south ?

https://www.chenavaritoroincomefund.com/assets/Uploads/8b5a670f53/Chenavari-Toro-Income-Fund-Limited-Factsheet-MARCH-2023-EXTERNAL.pdf

What is it with this share, it’s done nothing but drift down for the last year, and the longer term trend is equally bad.

Are the dividends enough to compensate for the capital erosion here, and is thhere any hope the trend might reverse?

Positive noise from Morning stars recent update

https://indexes.morningstar.com/insights/index-ip/blt450367154896e3f7/index-ip-us-leveraged-loans-liftoff

Good call!

It'll be tommorow, as being 2.5% of NAV it normally follows that notification.

Notice that the NAV keeps dropping marginally, which suggests that income earned has dropped marginally below dividend paid out, but within the context of the rate rise environment, consider this to be good, albeit unspectacular.

Possible divi declaration C.O.P. today?
It came in after hours for the last one in Jan....

'looks like a hold and pray'....

I prefer to think, hold and pay (the dividend)!

Looks like a hold and pray...

Commentary from the latest factsheet highlighted that European corporate defaults were at very low levels which is reassuring. Also of note is their trading up the credit quality to 'improve the overall credit quality of the portfolio as we move into an environment with potential for elevated credit stress'.........

Quick read across from BGLFs factsheet - their Euro CLOs performed well (as opposed to US which had a slight loss), which has relevance here as TORO is more euro dominated so should bode well

kentio; yes of all the CLOs, BGLF, all things considered, is my favourite. They are currently extremely bullish, and could pay a dividend considerably in excess of the 10% they do. It is the one CLO that has considerable and wide institutional share ownership. If you are thinking of buying your first CLO stock, it would be the one, as it was for me 5 years ago.

Scandiexpat; the illiquidity and spread here, as with most CLOs is a problem. I've found you have to place an order and sometimes wait a week before it gets executed. Obviously if you needed to exit quickly, that's a major problem with such liquidity, hence my advocating that you need to be prepared to invest and forget about for 5 years..The flip of that illiquidity is that when stocks dropped sharply at the end of last year, this barely moved.

Gavster NBC; i think a lot of these CLOs are continually undervalued, but it is that cushion that reassures me. TOROs factsheet did highlight profitable trading of BB rated loans, that they bought in 4q opportunistically and have subsequently sold, which is probably the cause of the NAV uplift and a growing confidence in the CLO market generally, also highlighted d by BGLF and Morningstar coverage of this arena (which is excellent, link below). I have found both NAVs and SPs rising recently (alas I'm not seeing such in my mainstream stocks!), aided by this more positive sentiment (of a soft recessionary landing) generally, and Co specific pronouncements (BGLF bullish and consulting holders on what to do with NAV discount beyond buybacks, FAIR buying back whilst reassuring fixed 8c divvy easily covered, and TORO demonstrating trading agility with it's BB transactions and NAV uplift).

Generally, as well as holding for 5 years, I do think you need to take a stance on share ownership. Whilst BGLF is widespread across well known institutions, others like TORO are held by a myriad of anonymous companies which might concern some, so to some extent you can't be sure whose interests are being considered. I've basically took the view that these unknown, always offshore domiciled limited cos, are basically high net worth individuals wanting the same as you and me, high fixed yield, to forget about, and I'm happy to ride on their coat tails.

TORO specifically; they are very much Europe predominated, which is actually the strongest market currently, whereas most of the CLOs are US dominated, and I value (within this arena) that diversity. They are sitting on £17mill in cash which covers the next year's divvy, but I do wonder what there considerations are to reduce/realise the NAV discount, on which they have long been silent.

https://indexes.morningstar.com/insights/index-ip/blt450367154896e3f7/leveraged-loans-liftoff

If CLOs interest you, I would recommend BGLF (or the. sterling version BGLP). Latest. monthly. report shows. NAV increasingly. 1.5% and they recently increased their. dividend. target. to. 8 to 9 Euros. They consistently receive more. cash. than they pay. out and. put the rest into reinvestment. and buy backs. I. would. def. recommend and. I believe. our. fellow CLO investor Damalfi like. it, too

Am also looking to load up a bit more as my dividend portfolio yields the next month. My main concern is really the lack of liquidity in the stock.

IMO Looking decidedly cheap at the moment. Increased 3 holdings today into ISA's/trading. Can't imagine anything is particularly up compared to last week or last month, unless there is default/problem somewhere within the labyrinth, the factsheet not exactly full of clues.
Cheers and GL

Latest factsheet......err, they seemed to have nothing to say! The least informative I've read yet!

Well, I'm going with the adage, no news is good news, business as usual, nothing to report....

Holders here might want to note the recent RNS from BGLF. A tacit admission that their 3 year buyback hasn't reduced NAV discount but also a confidence that it is true.

Have to say, I think the mood music from TORO of late has been less than certain, whilst not panicked, so be interesting to see if they proclaim confidence in their NAV discount, ongoing success, that both BGLF and FAIR seem to be highlighting.

from the latest factsheet.....

'Credit remained broadly stable in the portfolios invested in the Toro fund with no new loans becoming distressed during the month and a significant improvement in pricing and tone for the weaker names we are tracking in the portfolios with several of them up 5-10pts during the month.'.....

gavster-NBc; indeed! I do keep chuckling when i think of this constantly labelled high risk/professional investor only whilst looking at my mainstream/FTSE 100 high yielders that have taken a full on basin haircut this year!

Hi Damofarl
"Seems all very much boring business as usual..."
Which is exactly why we all like being invested in TORO, all things rollercoaster elsewhere as the weeks go by as we receive a high yield. Today was a smile as I did a bunch of trades across ISA's/Trading Accounts reinvesting the dividends that landed today.

noted this bit from annual report which i find reassuring: -

"The Portfolio Manager has raised the default rate assumptions to match the current recession risk and market expectations, and under those revised assumptions, the Company’s portfolio should deliver positive returns, at or above its target of 10% of NAV in the base case, and still positive in the stress case."

Also not they have increased cash back to 10% (despite not that long ago saying they would cap this at 5% and return excess), to take advantage, they say, of the opportunities in widening spreads they expect. Seems all very much boring business as usual...

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...."