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To generate an attractive total return for shareholders consisting of dividend income and capital growth through investments in specialty lending opportunities.
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A fall again today despite what looks like a reasonable good RNS?
Difficult to work out when to consider buying.
I suspect there will be gains to be made by a slow winddown.
Not just more dividends but an improvement in the value of the equity side of the portfolio.
It does seem like a guaranteed gain here even if you discount the equity at zero. But the share price is falling so there is no incentive to buy just now.
Good informative article -thank you. Question for long term (in loss) holders is whether to bite the bullet and (keep) averaging down or accept an unquantifiable loss. Think I'll go with the former
That fall looks like Wefox, Chry got hammered
Motörhead - thanks for that, I hoping the divi cut (which will certainly come), may be a bit bit further down the road but we’ll know soon enough
Might be worth waiting to see what the March monthly report has to say before making any decisions, which ought to be released in the next week or so.
The February report gives a 56% weighting to asset-backed lending and 15% to cash. January figures were 72% and 1%. The March, or possibly April, figure for Gross Revenue Returns should be of interest to see if this has had an impact on revenue. If there has, then VCP dividend cuts might occur earlier and/or be deeper.
Interesting to compare the maturities profile tables between the two months. Without having drawn in lines to get actual numbers, I think that it's fair to say that much of the reduction in lending has been in the 2025 maturities. And there is a brand new entry in the 2028Q3 column of around £25m. So some of the maturities look to have been extended - quite legitimatly, as was stated in various documentation as being a possibility. Related to the takeover mentioned below, perhaps? More of an irritation than anything, a payout delayed and to be added to the final 2028Q4 maturity - assuming that these are not sold beforehand. I'd be more concerned if maturities start to get extended beyond that quarter.
Note that as far as capital only is concerned, the NAV fell 6% in the month; the NAV TR has been trending down for a couple of years, now. The recent 5% capital return will be a further deduction to this. Also note that the 2023 annual report shows that asset-backed lending alone delivered a 6.6% NAV capital loss in the year.
The dividend has to be cut, just a matter of how soon and by how much. A reduction in lending and increased level of cash has to be a drag on income. Any view about the prospects for interest rates, mainly in the USA? Most of VSL's lending is at floating rates, so changes here are likely to impact income.
Short-term movements in the NAV will be guesswork, but a concern has to be the downward trend in total return - compare this with another IT now entering a similar wind-down mode, BGLF, where the trend in NAV TR has been upwards.
The capital return was based upon the NAV for end of January, so a just-over-two-months lag. Probably have to wait until the monthly report for April before the this reduction shows up in the NAV - which should be released in another month or so. From then on there might be an indication of the NAV per share numbers upon which the next return might be based.
The Razor Group purchase of Perch (two portfolio companies) has seen some of the lending replaced by preferred equity - a move lower down the subordinate food chain, and a potential increase in NAV volatility.
Google 'ecommerce aggregators' for opinion of these types of business. One is: https://www.practicalecommerce.com/amazon-aggregators-face-a-new-reality
Sometimes, searches on the names of some of the larger holdings can return a perspective of their prospects which could influence their future performance.
HL payment pm today
I'm trying to pick apart the details.
So. The asset backed lending (safest element) forms 73% of the portfolio with the investments in unlisted businesses and cash making up the remainder. If the latter were written off (highly unlikely) the NAV would reduce to around 58pps. The time factor also comes into play. Logically the capital repayment suggests that the next divi (June?) could be reduced to 1.8p. The investment portfolio is likely to take a long time to unwind hence the sp weakness. A c15% yield helps compensate for the uncertainty. One to monitor and maybe buy if you're feeling brave. Welcome any counter comments.
Does anyone know what will be happened after this retune of capital ? Tks
I’m half convinced it’s a deliberate tactic with HL very slow with a lot of payments… only a few days interest but if they have large sums….. do the maths
HL can be slow.
Reinvest here, not on your nelly...
I haven't received anything in my HL account yet either.
I am averaging 92p (!) with dividends down to 75. Also a disaster. My payment has not arrived but its not uncommon when running GBP portfolio with my Swiss Bank...
So the 64,000 dollar question is do we reinvest the capital return on the basis of the known information. The data says yes the price action says no. Any thoughts.
My payment has arrived. Thinking along the same lines as you Krusty. There seems to be so many unknowns along the road to conclusion. Even so the current discount to NAV seems very harsh. I'm still averaging 77p here. Disastrous!!
I agree broomtree, only 5% of the NAV returned to us so far. I'm hoping for at least another couple of 2p divi's, then maybe a couple at 1.5p or so? Who knows though, certainly can't be relied upon like it has been in the past.
Still a no show in HL to be fair they did say ‘roundabout’
On the divi I’m not sure the reduction will be immediate given the sale plans
Nothing in my account either. But in Switzerland it can be a bit slow.
9th April: "Shareholders are reminded that the issue of B Shares will not reduce the number of the Company's ordinary shares in issue. However, following the issue and redemption of B Shares, the NAV (and NAV per ordinary share) will be reduced by the total amount of capital returned and the share price is likely to reflect the reduction in NAV. The pence per ordinary share amount of any dividends is therefore expected to reduce as a consequence of the reduction in NAV and, over time, through the changing composition of the portfolio."
No sign in my account yet. Any benefit more than offset by sp fall. Will the next divi in June or July still be 2p??
‘Roundabout day’ tomorrow will be interesting to see how our brokers deal with this
Great, thanks broomtree.
Krusty - HL have confirmed B shares have been redeemed (not sure how that worked) payment in or around 10th May
That's my concern broomtree, that HL know nothing about it. I mean the RNS is clear enough but VSL still need to communicate with brokers, even if they don't intend "issuing" B shares. I'll contact them too.