The latest Investing Matters Podcast episode featuring Jeremy Skillington, CEO of Poolbeg Pharma has just been released. Listen here.
I notice this sale RNS, which suggests sentiment is stabilising/improving....
'Custodian Property Income REIT PLC - Leicester, England-based real estate investment trust focused on smaller, regional properties - Sells 16,869 square foot office asset in Derby, England, for GBP2.1 million. Notes that the sale is 36% ahead of its valuation at September 30.'
Agricore; BSE
Is today's pandemic of piffling purchases some kind of market signal?
New year, new announcement, new (Toliara) licence?
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 Canetoad; nice to see you dropping in. Welcome.
No FAIR is not in wind down, albeit about 18 months ago, acknowledging the NAV discount at that time (well over 20%) and prior to it's daily buybacks since then, it gave holders the option to choose between carrying on, or choosing exit through a new wind down share (FA17), or a mixture of both. The wind down FA17 shares, in theory, receive the income from one of the major loan obligations which is nearing fulfillment/wind down, but not the new ongoing originations. Bearing in mind that stockholders who chose the redemption (FA17) shares did so on a like for like basis, and considering the relative SPs of both, and that FA17 has received identical dividends since inception, I would argue FA17 is actually receiving disproportionately more return that it warrants - indeed arguably the FA17 offers an arbitrage opportunity. Hope that helps.
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!
Agricore; a while ago you asked on my views on China generally, but specifically to it's underperformance impacting wider to the kind of CLOS we hold. I didn't answer that at the time, because, while my gut feeling was inconsequential, I didn't really have any thing to evidence such.
I subscribe to John Authers Bloomberg mail out, which I invariably find instructive, on wider market impacts. He recently mentioned the bond/debt markets and whether they were prone to a fall, in which he (and a footnote link to a colleagues article), stated that actually far from being a potential precipice, they were becoming an increasingly important, influential and integral part of the lending ecosystem. Basically becoming mainstream.
You have to subscribe (free for the newsletter) but the article is John Auther, Bond Market, Not Banks, Dominates a World of Looser Lending..
Meoryou; I agree with you totally on BASF; yes it is well known they are exiting from 'dirty' stuff, but they take a long term view on things, so i don't see them selling out in a rush - maybe 18 to 24 months, selling down into aggressive HBR buybacks.
A great deal - but still think they could swallow Serica too. Now rather than later.
Kenton, I was about to post on BGLF about that. The wind down/return of equity was pencilled for December 2023 at earliest, but today's cancellation of treasury held shares shows they are tidying up all the loose ends to enable such. Personally, I think first return will be 6 months away (when some loans close), and certainly not before February as they will want, for cleanness, to issue the 4th 'variable' dividend first.
I hold 4 of your holdings (I can't buy MPLF for some reason), and have no concerns about any of them.
I see that buybacks in treasury have now reached 5% of issued shares, so half way there, and another year of buybacks to come.
And another 8c dividend.
And another enriching stress free boringly predictable year.
All hail FAIR, the gift that keeps on giving.
Agricore/gavster -NBC;yes I noticed the low NAV discount, and whilst not sure what has caused such (buybacks/less 'risky' investments/realisation share cancelling ) not concerned remotely. If it gets to par, that will end the 50% investment mgr rebate and the buybacks.
I agree with you Agricore on DEC - when I think about my retirement, I work backwards. What do I want/need, where am I know, and what do I need to do to get to that point. I long ago worked DEC backwards, looking at a given lifetime production (based on no new wells), a capping cost of $35k a well, retiring all debt, and paying the current dividend. I got to about 2035, not the duration DEC suggests. But then, conservatively, 12 years at an 8% yield would give you your capital back, and leave you with a capping business, which frankly I think is actually the £500m freebie that oakbloke refers too. That they won't cap all their wells in 12 years is irrelevant, that they will have the accrued funds to do so isn't. If DEC metamorphosises into the pre eminent well capping business, of which there is a shortage of trained operatives (making $2k a well) and you have a company not only with a mkt cap potential greater than DEC, but in a more regulated/predictable business with truly positive environmental credentials that could be championed rather than lambasted. I do think holders are listening to the noise, not focusing on the numbers, but for me the numbers to look at in the next accounts, are the rates of ABS amortising - I believe they will continue to be over amortised and clear well before 2030, and then people can see the (free cashflow) money. I think DECs assumptions are overly optimistic, but I also think holder's fears that there won't be enough money are equally pessimistic.
Agricore;.on CGEO (and BGCO), your welcome. Glad to repay my thanks for your highlighting of AA4 which I bought a few weeks back.
CGEO and BGEO continue their slow and steady rise of late. Be interesting to see your take in due course, the former for me in the deep value camp, the latter, high yield.
The share price has been moving for quite a while, but yes, plenty more upside.
Personally I'd prefer a maiden dividend. The CGEO buybacks are already accelerating not only because it's major holding BGEO is maintaining a relentless buyback ( so CGEO is selling to maintain it's % holding and thus realising cash) but because their other businesses are starting to build scale/cashflow/profitability too. Yes there are a couple of inconsequential non performing companies in the portfolio, but there are some interesting holdings here (pharmacy?) Which are all contributing to a considerable discount to NAV.
I may prefer a dividend to a buyback, but do agree, one or t'other will happen once they have further deleveraged, which they are doing at some rate.
This has been such a successful investments for me, so much so that ordinarily I would have sold out. Successful because I saw deep value here when it was ignored/out of fashion, and that value has started to shine through. Despite it's appreciation, and portfolio progress, it is still ignored/out of fashion, still offers a deep discount to NAV and deep value. So I'm staying put despite it being proportionally more than I would like.
I think a listed spin out of the pharmacy co may be the catalyst (for greater appreciation) and me moving on. I see that happening within 18 months.
Seplatwinner; yes nice to see that report albeit I didn't see anything in its 40+ pages that our very own 'analyst' here hasn't previously highlighted, in about 3 posts......
Affirmation of posters belief, understanding, patience here is always welcome though! Thanks for posting.
Kentio; interested in what view you've taken here, knowing you own a chunk.
I've made a decision to hold to the death; I had a look at the loan durations, and whilst, without proactive closing, there is about a 7 year year tail here, a major chunk of loans close in the next 6-18 months. As they close, the associated contingencies will close and the true unencumbered value will be realised. Looking at the pace of their (in) action, since announcement, suggests to me both that there will be no firesale, and it could be protracted. But I do feel through that elongation is likely to yield 10% for 18 months more, and that closed loans will realise back as capital returns, towards the upper end of the NAV discount.
Retired banker; agree re the impairment. When that hit the accounts (for land rehabilitation) I thought 2 things - 1) that they were being a responsible operator and 2) that they had rather kitchen sink the costs of restoration......I.e I think they are being conservative in overstating the costs of such.
Disagree on the dividend. Whilst BSE have always been exceptionally proactive in the importance of repaying the rewards of Investors investments, I don't see anymore, beyond a token one. The last couple of dividends, as stated by mgmt, have been tempered down by the need to preserve/build cash for Toliara, and as kwale cashflow ends, that income will be kept for Toliara. That said whilst income will drop drastically as product quality and volume drop and unit cost rises and margin falls, there may be a 'final' generous dividend, to reflect release of their stockpiled product.
All that aside, considering the recent RNS, this is a nugget of oppurtunity hidden in plain sight. Yes there will probably be a farm out/equity issue, but my in the context of the current mkt cap and the cash at bank, 10% of that pot will still enrich us all here. A link up with KMR for instance, would propel prosperity for both, and I do believe there should be consolidation to allow different mine time periods to generate the upfront cost for new prospects.
As for Toliara, within the context of these jurisdictions never rushing anything, I think it's a done deal, will happen.
Jatw; agree all that. It was floated cheap so there was always upside even if the business stood static. The yanks love their buybacks, do could see that going on for ever here.
See we've crossed the $50 threshold. Where to know? I'm holding tight. There is definitely more to come.
Sd235; you've gone from 90+ to 80ish in a coffee break?
That aside I totally agree with you, on the loss of another regular sustainable high dividend yielder, VSL, BGLF and seemingly far too many others.
I think we are aligned in appreciating, long term (sustainable, predictable) yield. And out angst at their dissapearence
The structure of the major shareholdings means a buyout here is just a pipe dream.
Today's RNS is merely a replay of the interim dividend delay, due to tax considerations. As then, now they are working out the most tax efficient way to pay. Note the RNS reaffirms that the dividend was out by. As with the interim, we just have to wait. Patiently. But it will come.
If someone wanted it, they would have put a bid in yesterday, at a 50% premium to SP and took it out at 82p. If someone wanted it, saw the value ,they would have put an approach in, irrespective of an up for sale sign...if it wasn't attractive enough at 82p, why would it suddenly make 90p+?
Wishful thinking. 80p maybe....