Member Info for damofarl

Gavster-NBC - I don't think any director discord is at all related to buybacks, just as I don't think they are to facilitate an out for a major holder. My view is they were a judgement call at a time when markets were volatile, that compounding the yield/NAV of preexisting loans gave more certainty, more profit than new loans, at that moment in time. In the latest update, they specifically mention the preferential rate advantage pre existing loans have against the current market.

Very impressed with the results, surprised they were received so badly, looking at the SP fall.

To achieve increased revenue against a backdrop of currency fluctuations and a 25% reduced OP demonstrates their control on costs. The webcast highlighted that funding for MPNU remains in place from the original announcement although the answer as to whether it was at agreement rates rather than current higher rates was lost in broadcast. Roger did state on approval their would be some readjustment (cost) to reflect the income received by MPNU in the interim.

As Exxon don't break their accounts enough to identify what MPNUs income has been, it is notoriously difficult to accurately know, but my conservative back of an envelope calculation suggests since the effective date, January 2021, accumulated profit is $650 million. If we take that, add the deposit already allocated, and cash at hand, there would barely be any need for financing, but also explains why Roger is signposting a revised purchase price incorporating 'profit sharing' of that accrued profit.

Net profits at 22% of mkt cap.

Pipeline ensuring minimal loss of production due to Forcados.

Imminent Sapele gas capture yielding free money.

ANOH contribution from end year.

Gyrations aside, this is the investment gift that keeps on giving....

Raxfactor; I don't think Nigeria is any more volatile/high risk right now than it has perpetually been.

The reasons for concern you raise, for me are actually opportunities. That instead of subsidising people (petrol), the govt supports it's people by spending that money on growth rather than subsistence. Yes, I think there may be short term discomfort to citizens whilst adjusting, but I agree very much with seatanks, that this will stop money being siphoned out wholesale by both institutions and individuals, to the benefit of the nation's citizens.

We should all make decisions on the impact (or not) of our investments, I feel particularly (but not exclusively) where invested in extractive industry stocks a considered view is paramount.

Is being a holder of SEPL, subject to governance/stability concerns, more concerning than being a holder of BSE and their desire to mine a protected area, or PTAL and their impact on deforestation?

These are considerations/risks/opportunities we all have to consider. Personally, with regard to SEPL and Nigeria, I'm very comfortable with such considerations.

Primarily because of SEPL's governance, operation..Their predominance of local employees and procurement, their sharing the wealth of Nigeria's natural resource, not just with you and me, some Johnny come home sat in Chiswick enjoying their dividends, but with the source of that income (profit), Nigerians. The recent court shenanigans, highlighting both their governance, and the awareness of the source nation of SEPL's contributions, to Nigeria people as a whole and not to a connected few.

I invest to profit, but I invest believing, wanting my profit not to be singular, but for all along the creation of that profit, to share in the their contribution. I believe SEPL do that; believe SEPL's stable, considered, forward thinking, long term management is a clarion call, a totem, for Nigeria and it's people.

I won't be top slicing. I'm looking forward to sharing the growing prosperity to shareholders and citizens that Seplat represents.

Divi ànnouncement tomorrow at 0.159

Bottoms up; surely the AJB, HL and II shares are in public hands?

Had a look this morning at the May dated webcast, discussing the the 1q to end of March.

Four things struck me -

1) they are stress testing their loans from a base to worst case of between 4 to 8%, whereas the market is stress testing from 3-6%, suggesting their conservatism/mgmt to risk.

2) the sred portfolio, (the Spanish property portfolio), where they highlighted that they have sold some further properties, but don't expect to be exited until 24 months, stating they expect an internal rate of return (IRR) from conception to conclusion of 7%, based on selling remaining property at a 5% discount to original base case. In the context of their current statement of an 11.9% IRR, my take on this is that whilst not firesaling this, it has been a drag on overall performance.

3) The emphasising of rotating into higher quality, and the retention of cash to opportunistically purchase/originate new loans.

4) The absolute calm, and the positivity that the next 18 months would offer excellent entry opportunities.

If I'm honest, I looked in on the webcast to validate my investment here, as I do spasmodically with all my holdings, and came away wanting to add, frustrated that my prudence restricts me from doing so, being so top heavy in these sphere of stocks.

The webcast just shouted business as usual, with an unstated but definite commitment to a dividend of 10% of NAV, ergo SP gyrations aside, for the medium to long term holder here, the gyration of NAV is my focus.

Agricore- thanks your mum xcellent posts here. With regard to your comprehensive post of 19th June, I'd add the following....

The concerns voiced here by some, with regard to EPC compliance, and the costs therein, were covered comprehensively by Inglis in his video podcast, where he specifically addressed such, explaining that the costs were included WITHIN the ongoing budgeted upgraded/maintenance costs, so no, no unexpected hit due to EPC. The same interview he also outlined their continual focus in offloading those properties where EPC can't be met, and/or where occupancy/letting rates aren't what they want, into new uses, such as leisure,/student let.

These actions just compound your commentary, and my belief in the agility and ability of RGL mgmt.

As for LTV being breached, agree can't see it, and neither do I see the dividend changing, down or up.

Only the SP. Up

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

The commentary on currency devaluation/appreciation identify a very pertinent contributor to the SP's drop - made me examine a $ denominated stock I own who's SP is static..Despite it's SP being unchanged since January, my holding when translated back to my £ denominated account is down 11%.

If we take a baseline SP of £1.10, then deduct the regular 10%ish up or down sentiment gyration, down, then deduct 10% for currency strengthening/weakening, a further 1% for inflation/recession concerns, 1% for increased debt servicing costs, and finally 1% for low product demand this year you get to where we are today, which actually shows how efficient the market is in pricing DEC currently.

I don't see any imminent pronouncements on the current investor presentations, to me that is just part of the rounds of a well run organization, and notwithstanding DEC's excellent communications, nothing new or newsworthy to warrant an update. Neither do I think it's a precursor to a US listing.

I do think, the voiced concerns over DEC's drip drip drip drift down here recently are overdone. I hold numerous fossil stocks, AIM listed/in jurisdictions with questionable governance/subject to tribal agreements or disagreements/impacted by river tides/misunderstanding of operations -fundamentals/political infighting etc, and with one exception, they are ALL well adrift in the last 3-6months, my point being, is we need to look at DEC not in isolation, but within the prism, of the market around us, the economic concerns generally, and specifically to fossils, which in my view are both overdone.

Many on here have generously explained the loss, the 'oppurtunity' loss/IFRS accounting requirement, that the market seems to focus on, and my view is that (in no small part due to those contributions), actually fewer in this board than in the market generally, misunderstand them at all. Some like me, yes, question the level of hedge deployment, but if the market is punishing DEC for those 'oppurtunity' losses, surely soon it will reward it for the current 'oppurtunity' gains. Interestingly the only other stock I hold that has similarly high levels of hedging (not in the commodity sector), often has the same misunderstanding of how it operates, and the same drip drip down of SP. It can rebound 50% in 6 months, when the next hedge induced IFRS accountimg leads to an enormous profit, and I do believe DEC will rebound similarly.

The thing the 2 hold in common, is that the bread and butter of what they do is well managed, profitable and their hedging/IFRS reporting misunderstood. For the patient, the SP will correct, whilst being handsomely paid to wait.

My views on the level/danger of hedging/leverage I have voiced before, but never have I thought, wished or desired a fall to 60p, being my second largest holding, and only ever having added, and to even suggest/desire such is lunacy, beyond any of my concerns or negativity.

I totally understand the hedging, to cover costs/debt obligations/dividends, to eradicate the volatility/risk. What would make me really happy, and I believe the market generally, would be to focus their efforts on long term fixed offtake price agreements, which would affect the same certainty without the transaction/admin cost of hedges, and the negative headline grabbing negativity of IFRS 'oppurtunity' loss accounting/reporting, the very same hedges that should imminently show tremendous 'oppurtunity' gain.

Personally I don't feel an acquisition is imminent, or even the reason for the borrowing. I feel the borrowing, was as a contingency to shore up the balance sheet, to ensure no panicked responses/reduction in capex due to low season/low prices, and to a lesser degree, to increase capex to bring on stream more of their current acreage.

If I'm blunt, whilst it achieves the above, I don't actually think it was really a loan at all, more of a way of securing an offtake agreement with Trafiguria, structured as it is, that the entirety of the loan/interest can be repaid by production.

That's not to say that I don't think it might be deployed optimistically, just that wasn't the primary purpose.

As stated in CGEO's last update, the ongoing buybacks at BGEO are causing it to sell some of it's BGEO in order to maintain is preferred level of holding in BGEO.

Surely beyond BGEO's continued success adding to the NAV here, the necessitated sales must be adding cash to the balance sheet, as CGEO's last update suggested progress in all its investee companies. Will they use that to deleverage, or potentially a maiden dividend?

Hi Agricore; with regard to the redemption shares, they are held not exclusively by large holders/BOD at all, and were available as an option to all existing shareholders, before we were split into 2021 and realisation classes. I HAD the oppurtunity to take up the Realisation shares and/or mix and match, but chose not to. Have to say, I wish I'd gone 50/50, albeit I'm not that perturbed.

With regard to the Realisation buybacks, err, I get your point in that they are getting full price for that small percentage, but then that was the point , to allow an out, and as such that is why FAIR wouldn't be able to buyback below NAV - because holders know what is already on the table. That said, it does remove/save the divvy from that small part repurchased, this year, and each subsequent year, as did the previous capital return......

Https://seekingalpha.com/article/4611939-buy-jackson-financial-while-the-valuation-is-low

Agricore; off message FAIR wise, on a personal note just want to thank you for your considered forensic contributions across a number of boards, on stocks we obviously mutually own (RGL, IPO, DEC to mention a few) amongst others. Really value your observations (positively or negatively), and your addressing, focusing in/attacking the fundamentals whilst never attacking the messenger. Your contributions wherever I see them are valuable, insightful and respectful, and I thank you for that, and their refreshing counterbalance to the preponderance of pumping/dumping/personalisation/poster assassination so omnipresent on these boards.

On a light note, very impressed at yesterday's RNS, and the purchase at 0c! Whether at 0c or 49.3c, this remains a bargain stalwart of any balanced portfolio.....

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 SD235; I disagree. Yeah there is a lot of promotional waffle and image positioning, but what they do is there. Have a look at pages 67 and 68 of their 02/03/22 presentation for starters.

As for paying their dividends? Well page 66 gives a clue - the structured debt (the old Honeycomb) is valued there at £550 mill, yet provided receipts in the preceding 12 months of £266 mill.

Yes there is a lot of fluff on their website - astute investors will also disseminate the detail therein.

Agricore; you did well to get that price. I always advocate holding the kind of stocks in FAIR's sphere for 5 years, and one of the reasons for that is you lose 5% on the spread on the way in AND on the way out, due to low liquidity (and potentially more due to currency fluctuation lose), and you seem to have been the rare beast to not suffer the spread!

When I first invested in these CLO type stocks, I always factored these costs in, and considered instead of the headline grabbing (bucket case alarms?) yield that over that timespan, they would still produce a real 10%+ yield.

I still think FAIR is a buy, but I'm top heavy CLO type stocks, and particularly FAIR. Interestingly, amongst those I hold, FAIR's SP has held up best, and maybe that's the buybacks kicking in, or they were less impacted by the banking/Credit Suisse loans malaise.

The accretive affected these buybacks is unquestionable, being from cash, and not flattering performance related mgmt share options (which seem absent), which is one of my biggest bug bears with buybacks.

Whilst I now like the certainty of the fixed 8c divvy, and the confidence that shows, in the sustainability of income, I think the performance of the realisation shares shows that the NAV is true, and the reality of what winding down historical assets/liabilities does for the SP. I say this not because I believe they will do another realisation share, but because I believe they are generating income comfortably in excess of the fixed dividend, and still believe there will be a special.

Agricore; it's a fixed 8c so more 16.6%, but we will not fall out over the difference!

Good to see still ticking IC's number chrunchers, but it's ineligibility for the top 10 is probably a blessing in disguise for those in the know!

On the buybacks, they seem to be increasing the daily amount (albeit from a low slow start), and I note the last was at their lowest achieved price, being mostly at 48c.