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To generate attractive, risk-adjusted returns, principally through income distributions, mainly invests in US and European CLOs or other vehicles.
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.....on that count I note that the NAV a year ago was 57.24c and it is now 55.85c.
Considering we've received 8c in dividends, a 2c reduction, ignoring year to year market vagaries/investment success, demonstrated that they are 'earning' in excess of 10% a year against SP, which for me, is a reassuring place to be.
The commitment extension is just FAIR demonstrating their belief in their ability and current/future market conditions and opportunities.
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kentio; currency here is usd
gavster-nbc; note your comments on the massive sell/charting, and whilst such aren't particularly relevant to my investment style/focus, one of the stated purposes of the buybacks was to allow greater liquidity, hence ability to sell so whilst i don't think you they were set up cynically, for that or any specific seller, it has achieved that purpose and yes allowed sellers to sell into both the buybacks and market. this hasn't changed/impacted the primary purpose to capture, compound the nav discount into the sp. don't think that sale has any reflection on fair's ongoing viability, just a market decision, selling into a gain, just as you did.
jun-man; the master fund iii extension is pretty much just a procedural thing, and whilst a short question, it isn't a short answer to "p****" - a great word, which as a lover of the lexicon of our language, was new to me, and i had to look up!
when the co was set up, it set up different investment funds, which specific different end dates. master fund ii was june 26, iii is june 28, on the basis that at those dates, capital would be returned to shareholders. the end date is not the same as the ',commitment period' date which is what has been extended here. the commitment period is that in which the fund is still deploying funds (loans) that lenders can call down/use, and as such means fair is still proactively investing anew (lending) rather than managing previously invested cash through interest payments/repayment. as such, it's a positive action, on both their belief in the opportunities in the current market, and their (unencumbered) cash at hand.
to clarify on the realisation (2017) shares, this happened because the master fund ii end date of 2026 was approaching (the commitment period having already expired) and effectively, investors (the company) would, according to the setup rules, be closed, and shareholders investment ended. the realisation shares allowed holders that invested on the original timeframe to realise that investment by the end date, but mostly, allowing the same holders to remain invested on an ongoing basis. a very astute way of delivering on promises, without detriment. in theory, at the end of this extended 'commitment period ' their rules would suggest a realisation ii share, albeit personally i think there will be a motion to change the stock to an ongoing rather than fixed life, with new master funds (each still with fixed lifes to ring fence liabilities) created as a preceeding one expires. as such each funds end commitment period may still prompt a compulsory capital return, but to the company (for ongoing reinvestment) rather than to shareholders.
generally; i'm invested here for the long term, for the income, and as such i'm not overly interested in sp movements. what i do watch, is, is the high income/yield being earned? or is it being massaged by partly returning your own investment? on that count i note that the nav a
Can someone advise if the. sp quoted here 0.54 0.55 is in. USD or sterling?
Massive sale yesterday (1.565m shares) sending the price down into oversold territory chart-wise.
A one off or the last one for now.. I have to wonder if this is the same seller that's taken advantage of the buyback which then paused when NAV was reached so now sell in the normal market, or the cynical among us might say the reason for the buyback was to allow this seller(s) in the first place.
Well looks like I bought back in too early.. Annoyingly I'm getting use to trades going well then finding they could have gone so much better, normal life of an investor I suppose.
Thanks Gavster. My instinct was that it was a procedural update, I just wasn't completely clear on it.
Hi Damofarl, so I executed buys at 55.1 and 54.9 to buy back my holdings, pretty pleased with the trade, I'll be holding and DRIP the divs until or unless there is another moment I deem the price overbought. Of course there is always the possibility the SP will carry the slide and go back to a discount to NAV, at which point I would expect buybacks to once again be deployed.
Jun_man
I honestly don't know, and to be honest my feeling is that it is not greatly significant and if they decide to purchase shares, I would expect at NAV, that would be OK, I'd just take the cash.
I'll endeavour to look at this more in detail though once time allows.
Slow mover this one.
That word was 'P' 'A' 'R' 'S' 'E' but apparently it needs to be blanked out
hi all,
hoping that someone wiser than me can help me p**** today's rns. i had thought the life of the master fund iii was out to june 2028, so i have failed to understand what today's announcement is driving at. it appears to be suggesting there would be a compulsory capital return in 12 months?
i guess in any event there will be a similar redo like was done for the 2017 shares in due course, but grateful for any insights as to the significance of today's update. tia.
GavsterNBC; always nice to do a good trade, so good for you.
Glad my thoughts on BGLF/P were useful - be interesting to see how the SP responds to the return of capital, and in a month, the 'adjusted' NAV. Irrespective of any anomalies of such, for the patient, I strongly believe it is free money to be had.
I have held TORO for the same duration as both FAIR and BGLF, and remain a constant fan. I particularly like the dividend linkage to NAV, meaning as long as the NAV remains constantish, you can just ignore the SP.
And you make a good point, on the sentiment building the longer you hold, which is why I have never sold these 3 stocks, and indeed both as a sector, and individual stocks, I am well over the proportional allocation 'recommended' by experts/advisors, albeit constantly reducing due to the dividends.
Hi Damofarl, so I did sell out of my FAIR ISA holding at 59.8 just before the div. The $ rate has gone up, and if I buy back today with an instant quote it would be a successful trade (5% holdings increase despite missing the divi) but I've put in a cheeky order at $0.55 for the coming days. We'll see.. Thanks for your shared confidence of BGLP. Toro is still my largest holding of these type of investments currently due to it's ongoing discount to NAV and the personal sentiment that builds the longer one is invested in these trusts. Cheers and GL
Hi GavsterNBC, hope you, your investments are well.
I can see your point, as this is the first time any of my investments in this arena has gone to a NAV premium. I haven't crunched the sums but I certainly won't be seeling FAIR whilst still boringly predictably delivering a c14% yield.
I've always found this stock type large NAV discount a comfort buffer. Whilst I don't blindly think they are full, I've always felt the truth was in the middle, and FAIR being at a premium does remove that buffer. But in my time here, (I think about 8 years now), that buffer has been replaced by an increasing understanding and appreciation of the quality of the team running this. I believe they will continue delivering (that sort of yield). Boringly. Constantly.
On large NAV discounts, and yes I know what you mean, there is loads abound at the moment, not sure whether you are in BGLF, but the recent rns's on increased NAV/capital return in winddown are worth a look - for the patience there is great upside as much of that discount is unwind through winddown.
Hi All.
FAIR is now currently at a few cents premium to it's NAV.
I hovered over the sell button today as my other investment funds are still at a large discount to their respective NAVs. The FTSE also seems over bought by several hundred points, which though doesn't directly effect us here, there is always the selling of everything as people pull out of investments to cover losses during a general market downtrend.
I may wait for the looming DIV announcement we're expecting in a week or more.
Anyone else thinking of taking profits with this NAV announcement ?
Hi damofarl, and today was also ex-dividend day, and a 2% drop back to NAV, 57.25 cents.
Wow, this company makes money on every angle.... I'll buyback shares at at a discount to NAV to be accretive, then I'll sell due to demand the shares I just bought at 55c for 57.5c, whilst reaffirming buyback plan (rinse, repeat?).
The gift that keeps on giving
I'm assuming this is because we are now at NAV. So how about an increase in dividends then ?
Hi all. The buyback seems to have stopped, but no announcement.
They have bought 24,019,083 (which are held in treasury) which does not equate to the original $20m buyback intention.
Indeed, Happy New Year all FAIRies.....
Boringly, reassuringly, very much business as usual here.
On the buybacks, generally I'm not a fan, but I feel it is irrefutable they have worked here (because they weren't done at the top of the market (to inflate performance fees/renumeration etc), but done for the reasons stated - to reduce NAV discount. And in that it is quite noticeable than from being daily, without fail, they are now far more sporadic, and whilst nowhere near the totality of their mandate, with, amongst other things, currency fluctuations, they have obviously come up against breaching that buybacks should be at less than NAV.
The discipline in such, just reinforces the proactiveness, professionalism of FAIR to me, and my belief.
The spread is striking - minimal for this kind of stock, and indubitably a consequence of the buybacks.
And I have to say, I am now a convert to the fixed 2c quarterly dividend. Itt gives continuity/security, and must surely release mgmt from making short term decisions for a quick flattering return to making long term strategic income yielding.
And arguably BB's have returned in addition to yield - and whilst this may discount my long believe that there will be a special, in fact, the accretive nature of those BB's only reinforces my view.
I chuckle every time I think of FAIR - this supposed high risk/specialist/professional investor stock has been for me, a constant worry free rewarding bedrock.
Until the next update/divvy, good luck all FAIRies
Agricore; John Authers' 'Points of Return' today rather reinforces my view on China - and the rise of others, such as India.
Good to see FAIR being consistent with their buyback, and high dividends (next ex-div expected mid Feb), starting the new year in the same way they finished the last. What's not to like ))
Thanks for the clarification.
That makes more sense, now that I've studied the company some more.
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.
Those. are the. Realisati0n. shares not the. current. Fair Oaks. 21 shares
Newbie question. Is the company being wound up?
I noticed several RNS mentioning 'compulsory partial redemption':
=====
8 Dec 2024:
'The Company announces that it will return US$2,100,000.00 on 20 December 2023 (the "Redemption Date") by way of a compulsory partial redemption of Realisation Shares (the "Third Redemption").
The Third Redemption will be effected at 57.15 US cents per share, being the NAV of the Realisation Shares as at 31 October 2023 of 59.15 US cents per share less the dividend for the period to 30 September 2023 of 2.00 US cents per share.'
=====
That looks like a 10% repurchase of shares @ NAV, which is barely above spot atm?
Hi Damofarl,
That was an interesting article.
It contrasts with the article I included in my FAIR article, here:
https://theoakbloke.substack.com/i/140055091/so-clos-are-bad
https://blog.clarion-capital.com/clos-endured-the-great-financial-crisis.-will-clos-suffer-the-fate-of-cdos-in-the-next-one
The reconciliation in my mind is that general debt default levels doesn't equate to CLO default rates due to overcollateralisation, diversification and active management a CLO manager conducts on our behalf.
I hope I've done justice to FAIR. As I say in the article it was a tricky one to cover, and not to fall into the "it's complex therefore it's very risky, therefore impossible to write about" narrative I've seen in other articles. Nor did I want to leave it at "take the yield and hold your breath, it's been ok so far".
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..