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Post by hooky on Apr 27, 2020 10:32:44 GMT
Hi All,
Long time lurker, more recent poster.
I bought FCIF shortly after launch when it was slightly at premium, and have mostly held my holdings, re-investing dividends back in. My last re-investment was Feb 2018 before Halifax decided it was too complex a product to let me buy any more holdings in.
SCRF, as it now is, is trading at a significant discount to last published NAV (which I think gives pause to consider how much market adjustment discount FC would have to give to the secondary market, to make it fair, on re-opening - yikes!).
If I could buy SCRF at this price (50p ish), I think I probably would take a bit of a punt and increase my holdings (recognising the risks in this unknowable world).
What are other's thoughts? Is this SP more downtrodden than it should be, or am I missing some significant risks above and beyond standard FC loans I hold directly through FC? Or is it really that a "fair" haircut on an average FC loan book should be about 30-40%.
Finally - does anyone use a share trading platform with access to buy the share, or is it now purely Institutional Investors allowed only?
Thanks!
Hooky
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Post by nooneere on Apr 27, 2020 18:03:21 GMT
Hello hooky - always a pleasure to meet a fellow investment maniac. Of the three stockbrokers I use (HSDL, HL, SC), none recognise SCRF since the name change. If I held SCRF I would consider it a 'hold' - too cheap to throw in my cards, but too risky to buy more. This forum's threads on FC should be considered a due diligence for the risks with an FC loan portfolio, and I won't repeat all their criticisms of the platform. The FC-associated risks compound those faced by REITs, direct lending and securitised debt investment trusts, all of which have reacted even more severely than the general equities markets. They are faced by tenants or debtors potentially suspending rents or interest, or going bust completely, and the markets are very nervous about them. SCRF is tonight on a 46.48% discount and a 10.39% yield. Wow. My nearest match is the ESP REIT on a 43.09% discount and 7.11% yield - its dividends are already suspended, but I have actually bought more because I have faith in their market. A happier REIT I just bought is SUPR which I managed to catch in the dip and have made a good profit. Everyone loves supermarkets at the moment ... As an alternative to SCRF in the direct lending space, I prefer RMDL, which has secured loans and trades tonight on an 8.82% discount and yields 8.33%. My favourite securitised debt trust is RECI, currently on a 24.83% discount and 10.71% yield - it has extremely competent and well capitalised management. Please note I own all the shares I have mentioned. They are on extremely negative ratings that are excessive in my view, but they face unquestionable risks.
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Post by hooky on Apr 29, 2020 11:44:54 GMT
Thank you for all the other ideas for similar investments, I shall give them a look. Caveat emptor and all that noted, and thanks for the disclosure on your own holdings but I doubt the value of any purchases I make will shake the market
I suppose what I'm musing is that there is a lot of frustration on this board that FC has closed the secondary market, (which I do understand having been trying to sell a tranche of my loans since May 2019, although thankfully sold out about 80% of my holding in January/February 2019 when I noticed the sales time taking longer than previously), but if there aren't significant differences between the quality of the loans held via SCRF (I know there are some non-UK loans held by SCRF) and the loans held by individuals through standard FC accounts, then it indicates that the market would devalue FC loans by 30%+ (if there could be an active secondary market)?
I wonder if FC re-opened the secondary market but imposed a 30% market adjustment passed on to the buyer, if there would be many sellers or not.
And yes, I'm definitely holding SCRF, if I could find a way to buy a little more I would, but I'm not selling at such a discount when dividends are still, for now, forthcoming - much less about sunken cost, I'll take a paper loss when needed, but I do think they are undervalued.
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