The latest Investing Matters Podcast episode featuring financial educator and author Jared Dillian has been released. Listen here.
Last week they sold all of their Treasury stock in their absolute return fund and had (still are?) planned to reinvest in bank debt.
EBA have now come out with a statement about AT1's
'In particular, common equity instruments are the first ones to absorb losses, and only after their full use would Additional Tier One be required to be written down. This approach has been consistently applied in past cases and will continue to guide the actions of the SRB and ECB banking supervision in crisis interventions.'
CS AT1's, although not completely unique, are unusual that they can be written down to zero. It is more common that there is equity conversion although it is down to the details in the bond prospectus.
AT1 prices are likely to remain depressed for a while but it may not quite as bad as it first looks.
I am not sure that writing CS's AT1's to zero over equity was a great move.
AT1's are going to get hit which will affect the CET1 ratios. Going forward bond holders will want a larger coupon for AT!'s which will reduce the amount of cash the banks have .
Just because they take it does mean that they need it now. Lots of firms took up our governments loans during covid 'just in case'.
There was an interesting discussion on this on one of the corporate webinars this week. I think it almost entirely rolls back all of the QT that the Fed have done to date!
Hopefully this has now removed some of the uncertainty around the Terminex merger.
The management team at RTO can be relied upon to deliver, they showed this during covid and looked to have done the same with this takeover.
This statement also answers some of the questions over the valuation of the cartel cases (although a bit more granular detail would have been nice).
'The judgments on the British Telecom and Royal Mail cases were handed down on 7 February 2023. The Company's retained competition law case value experts (Fideres Partners LLP) have accordingly updated their valuation of Manolete's 22 cases and the Board is satisfied that, subject to audit, the current carrying value in the balance sheet of £13.2m is materially correct.'
The rns feed here lags on this IT. It is now targeting a 2p per quarter divi with the potential for a final larger balancing divi.
In addition -
'As at 31 January 2022 (and before the most recent Bank of England base rate increase of 0.5%), the Company’s portfolio had a Forward Yield to Maturity of 15.22%, a Mark-to-Market Yield of 15.71% and a Purchase Yield of 10.14%.'
For comparison ,MTM at this time last year was 7.3% with a purchase yield of 7.9%
With at least one more interest rate hike here and probably more on the continent, providing defaults don't run too high, TFIF is looking to be set for a good run.
It is not one of my most exciting holdings but it helps to pay the bills!
FinnCap-
'Elixirr continues to gain market share in a very large end market and, reflecting
the continued growth potential, we have upgraded our FY 2024E EPS by +9%. Elixirr has evidenced
it is not seeing the slowdown others in the wider consulting market have described that has
recently impacted its share price materially, providing a significant value opportunity.'
Well they provided a nice set today which should steady nerves.
Probably, the current and forward looking statement is key-
'FY23 revenue expected to be £85-87m, with Q1 currently trading ahead of this and a record revenue month in January 2023. Growth trajectory expected to continue into FY24'
Also 'proposed final dividend for FY22 of 10.8p per share, an increase of 160%' will do no harm.
I got this one wrong! The fall looks to be in response to the Kin & Carta update flagging a slowdown in the sector coupled with McKinsey saying that they are making 2k redundant.
I know someone in another firm in this space and they have been expanding and are still very busy, however a full year update with an outlook statement from Elix is needed.
Another step-
The Times
‘Europe’s market-leading lorry manufacturer must pay Royal Mail and BT about £20 million as part of a landmark cartel damages ruling that could pave the way for further compensation orders.’
‘……the figures are estimated as the tribunal has instructed the parties to attempt to arrive at a compensation deal. If they cannot, the case will return for a further hearing.’
Rab added that the ruling was “likely to embolden other trucks cartel claimants whose claims remain to be heard and fuel the growing momentum of competition damages claims in the UK”.
''we have excluded a one-time gain of $1.9 million in 2021 for the forgiveness of a PPP loan granted at the onset of Covid in 2020. This loan forgiveness was treated in our 2021 audited accounts as profit before tax.''