Member Info for manfor

Would not be surprised to see 40p

Would not be surprised to see 50p

Would not be surprised to see £4

Damofarl

Can you or anyone else here explain how FAIR can pay a 14% yield when it is trading at a NAV discount of only 2% when other companies in the same AIC group (Debt - Structured Finance) have a lower yield but trade at a higher discount to NAV?

For example Blackstone, Chenavari, EJF, Volta, all trade at NAV discounts of over 20% but pay lower yields than FAIR

Volta for example is trading at a NAV discount of 26% but it only has a 10% yield

So If Volta was trading at the same discount as FAIR the yield for Volta would only be about 7%

So how is FAIR able to give a yield of 14% when trading at par to NAV and why is Volta only able to give a yield of 7% when trading at par to NAV?

Presumably all of these companies are invested in similar kinds of investments and CLOs?

So why is there such a huge difference in the yield between Volta and FAIR if both were trading at par?

Are investments in CLOs not supposed to provide income at levels of about 15% when trading at par?

So why is Volta only able to offer their shareholders a yield of 7% when trading at par to NAV?

This seems to be an extremely low yield for a company investing in CLOs

Why are Blackstone, Chenavari, EJF, Volta, not able to offer their shareholders a similar yield to FAIR of about 14% if trading at par to NAV?

Are these 4 companies not as efficient as FAIR or are their investments and CLOs of lower quality or higher risk than FAIR?

Do you have any thoughts on any of these 4 companies as an investment?

Do you think any of them are good value?

The Georgian currency is a very big risk here and if the GEL was to return to the same average exchange rate against the USD and GBP as in 2021 then these shares would fall by about 30%

In May 2021 the USD bought 3.45 GEL but it only buys about 2.75 now

And in May 2021 the GBP bought about 4.80 GEL but it only buys about 3.50 now

There does not seem to be any good reason for this huge rise in the GEL gainst the USD and GBP in the last 3 years and so it is likely that the GEL will return to a more normal level against these currencies

This would mean a fall of about 30% in the shares

The dividend would also fall by about 30%

The Georgian currency is a very big risk here and if the GEL was to return to the same average exchange rate against the USD and GBP as in 2021 then these shares would fall by about 30%

In May 2021 the USD bought 3.45 GEL but it only buys about 2.75 now

And in May 2021 the GBP bought about 4.80 GEL but it only buys about 3.50 now

There does not seem to be any good reason for this huge rise in the GEL gainst the USD and GBP in the last 3 years and so it is likely that the GEL will return to a more normal level against these currencies

This would mean a fall of about 30% in the shares

The dividend would also fall by about 30%

The Georgian currency is a very big risk here and if the GEL was to return to the same average exchange rate against the USD and GBP as in 2021 then these shares would fall by about 30%

In May 2021 the USD bought 3.45 GEL but it only buys about 2.75 now

And in May 2021 the GBP bought about 4.80 GEL but it only buys about 3.50 now

There does not seem to be any good reason for this huge rise in the GEL gainst the USD and GBP in the last 3 years and so it is likely that the GEL will return to a more normal level against these currencies

This would mean a fall of about 30% in the shares

Easy Livin

Thanks for the answer.

Does anyone know if these have US Withholding tax deducted on the dividend?

Manfor - why do you think it would test the 2008 lows?
Do you understand how vastly different the situation is for the large home builders from 2008 compared to now? Their land bank, cash in bank, forward sales, margins and total ability to stay afloat?

Because a huge economic crash will unfold over the next few years because of rising interest rates and the housing market will be at the centre of it. All of the forward sales and margins and cash will disappear over the next few years and housebuilders may struggle just to stay afloat.

Remember the banks in 2007? RBS and all the others were making record profits, and then within two years their shares had fallen by over 90%. The same thing is likely to happen to housebuilders. The housing market will basically collapse with UK interest rates at 6% and above, and there will also probably be large rights issues from the housebuilders within the next few years.

So that is why I expect housebuilders to test the 2008 lows, and for Persimmon that is about £3.

“Whats your price target? I'm tempted at this price for a SIPP play with cash I can't touch for 20 years anyway.”

I have posted previously that UK Housebuilders will probably test their 2008 lows, and so you should wait for an entry price for Persimmon of about £3.

This should probably happen some time next year when UK interest rates are eventually raised to about 6% or higher. This level of interest rates will completely crush the UK housing market and UK house prices.

Don’t try to catch a falling knife !

Still a very long way to fall on all the Housebuilders. Inflation crisis, energy crisis, stagflation, and WW3 may begin at any time.

Still expect this to test the 2008 lows of £2.40.

It will not mean much what their profit is if Credit Suisse collapses.

RBS was making huge profits before the 2008 Financial crisis. The share price then went from £7 to 10p.

Credit Suisse looks like it is possibly near to collapse now, and this will be a huge negative for the market.

Expect another big down day tomorrow.

Still expecting to see a testing of the 2008 lows here, and a fall to about £3.

Credit Suisse also looks like it is near to collapse now, and this will be a huge negative for the market.

strictlybricks,

I hear what you are saying but it sounds a little bit like one of those “it’s different this time” arguments for always being bullish on the stock market or on a particular share.

The main problem, apart from the UK housing cycle now turning down, is the S&P is vastly overvalued according to almost every metric, and when the S&P bubble bursts it is going to bring everything down with it including all of the FTSE 100 and 250 companies.

And when all of the stock markets have lost another 50%, UK interest rates are at about 5%, the credit and derivatives markets are exploding, etc etc etc, where do you think housebuilders shares will be? All of the figures that you are quoting now for strong balance sheets will simply be blown away.

But you may be right of course. This time when the housing cycle reaches the bottom it may be different.

So what do you think are the best value housebuilders at present, and what is your expected low price for them in the next five years?

And you say you only invest in housebuilders? So how did your housebuilder shares perform in 2008? Did your portfolio value not collapse?

A shortage of property will do nothing to stop a UK housing crash.

As the man says, it is all about price, and the price of houses in the UK is absurd.

https://davidmcwilliams.ie/people-think-because-theres-a-shortage-of-property-we-will-not-have-a-property-slump-theyre-wrong/

I remember what happened in the 2008 crash and so I know what can happen when the housing cycle turns. The top of the housing cycle has clearly been reached now.

I think that housebuilders profits will collapse over the next five years, and any dividends will be greatly reduced or stopped completely. When the UK housing cycle has reached the bottom in about five years, I would be quite interested in buying housebuilders.

My entry price target for Barratt is 80p.

I remember what happened in the 2008 crash and so I know what can happen when the housing cycle turns. The top of the housing cycle has clearly been reached now.

I think that housebuilders profits will collapse over the next five years, and any dividends will be greatly reduced or stopped completely. When the UK housing cycle has reached the bottom in about five years, I would be quite interested in buying housebuilders.

My entry price target for Redrow is the 2008 low of just below £1.

I do not hold any housebuilders now but I do remember what happened in 2008 and so I know what can happen when the housing cycle turns. The top of the housing cycle has clearly been reached now.

I still think that housebuilders profits will collapse over the next five years, and any dividends will be greatly reduced or stopped completely. When the UK housing cycle has reached the bottom in about five years, I would be quite interested in buying housebuilders.

My entry price target for Persimmon is the 2008 low of just below £3.