marktime1231
27 Sep 2019
SSE a buy-and-hold again? Well the SSE update ahead of H1s was not great. Net earnings will be hit by underperformance in the regulated networks business c. £25M, and a lot depends on SSE getting about £140M due from the govt for standby capacity auctions ruled illegal by the European Court of Injustice. If you needed a reason the cheer for Brexit there is one. Also something to do with balmy conditions not being ideal to make or sell certain types of energy … lower demand, I think quiet Wind mainly … but things are picking up. The upshot is H1, typically the quiet 1/3 of SSE business might only be 1/4 of SSE business for the year. Which means H2 will have to be super. It remains confident, of course and so does the market … fairly steady sp. On the bloomin’ marvellous side is the deal with Ovo. So all the cash and more required to sustain the divi if necessary. Let’s hope the hard numbers in November confirm management confidence. Thanks to a windy September and if a Brexit deal is miraculously achieved we could be winners. Does SSE have anything else non-strategic to sell off?
marktime1231
25 Sep 2019
SSE a buy-and-hold again? Is SSE a winner again? A string of good news … In mid August the announcement of an intended disposal of Retail to Ovo for approx £350M net cash plus a 10-year £100M PIK note at 13.25% nearly double what the market was expecting. In early Sep a review by MoSt said the rebased 80p dividend was sensible achievable and attractive and said the sp could rise to 1350p. At the time it was only 1150p. On Monday we heard that SSE were winners of four large renewables auctions with offshore wind projects, so it is achieving its stated strategy and the economics look promising. Politically on point, for those investors with a conscience. The threat of a Corbyn clause 4 government remains pretty unlikely, under 25% approval in the polls and frightened off an early no-confidence election. Not heard much of the boring regulated networks side. I trimmed some of my overweight holding (snapped up some extra in the April-May trough) just after ex-div. Just ahead of this news of progress so now I am kind of regretting that defensive move. Am I confident enough to add some … maybe at the right price.
devonplay
20 Sep 2019
Ovo Loan Note marktime1231: Thank you very much for the link to the other chatroom which looks much more lively than here. Much obliged for the suggestions. No problem, you should join us. You’ll find some very well informed posters. There’s a very actice community over there and they don’t stand for any nonsense. marktime1231: The manager’s promises to recover the Suniva situation have not executed despite positive outlook refreshed at every juncture That’s my view. It’s priced about right I think, but I’m not sure I like the risk. marktime1231: RMDL is a uk-based equivalent to SQN, and you think a better bet? I do. I’m not looking for growth from these, but just to provide less volatility and more wealth preservation, so I’m build a portfolio of them at 25% of the value might normaly do. marktime1231: I will have a look at the detail of SWEF for example, which holds its NAV better than other reits which makes it a safer long term investment. Agreed. I bought LBOW in preference, I wanted the greater comfort of ICG, which has I beliew has £32billion AUM. It’s the go to provider for local government and public sector penions. At the present price I’d be a buyer of SWEF. marktime1231: NCYF My WiseAlpha portfio replicates their top ten holdings. Overall it has a higher running yield. marktime1231: EAT holdings marktime1231: IUKD I’ve bought both in to the weekness. IUKD is about neutral for me. I’m showing a profit overall on EAT, my last purchase was at 100.587 marktime1231: Are you hoping for LBOW to regain a premium or NAV recovery No, I’m hoping it’s decent value under 99, I’ve bought mainly around that price with the expectation that it’s the bottom and it will keep churning out it’s dividend.
marktime1231
20 Sep 2019
Ovo Loan Note Thank you very much for the link to the other chatroom which looks much more lively than here. Much obliged for the suggestions. I liked the view that SQN is where it is for all the reasons given and it is what happens next which matters. The manager’s promises to recover the Suniva situation have not executed despite positive outlook refreshed at every juncture … many of us have run out of patience. It might recover its discount though which is too wide now in my view eg a bargain. If US interest rates are falling the appetite for higher yields should get a boost maybe? Anyway I am going to hang on to my holding and hope for a recovery, and might even add on news of real progress. Approaching 9% yield monthly payments so I think worth the risk. RMDL is a uk-based equivalent to SQN, and you think a better bet? It seems diverse so I will study this one too. Some suggestions on that board are interesting I will have a look at the detail of SWEF for example, which holds its NAV better than other reits which makes it a safer long term investment. I currently prefer RDI of all the reits, the confidence in turning down a bid at c. 180p says the major investors see an outcome not reflected in the 115p price. Great income too at this basement even if the dividend is capped pro-tem so it remains one I am looking to add to again soon. Already trimmed my SMIF (off about 5% over the year should have added again at 90p but missed the bottom) and EAT holdings which were falling away the latter when I was hoping for growth, and sold out of IUKD completely for its slumping sp as UK high yielder stocks trimmed their dividends … can’t judge which way they will move in future, IUKD should recover short term? Holding on to NCYF (which someone dismissed as having too weak a yield for their high yield portfolio — strewth!) and IPE for the long term, and BERI in the hope of a recovery in demand for copper. Are you hoping for LBOW to regain a premium or NAV recovery, the two year downward trend is relentless.
devonplay
20 Sep 2019
Ovo Loan Note marktime1231: well, an adventurous toggle PIK retail bond or … Excluding “top-ups†to my existing holdings, mainly IUKD & BCPT recently, I’ve also been buying LBOW on a monthly basis, no commission deal. I just bought some LIV2, 5.25% Y, you could do better on the platform, but I’m told it takes time to get your cash working (it’s also another thing to manage) overall I like the business. I’m going to add more LIV2 and initiate another monthly purchase order on one of these: SMIF, SWEF or RMDL. I try to use trading credits and £1.50 deals if possible. On the very speculative front? R.E.A Prefs, I’d like to do that around 63, and ERO1 (on the Microsoft deal) 15% YTM DL
devonplay
20 Sep 2019
Ovo Loan Note Hi @marktime1231 marktime1231: I would appreciate a second opinion on SQN if you ever get a chance to look through its woes. I’m not convinced by it. I have looked at it before. You’ll find some discussion of it here ( and some old names from this site that have moved across): [link] [link] DL
marktime1231
18 Sep 2019
Ovo Loan Note I would appreciate a second opinion on SQN if you ever get a chance to look through its woes. Should have backed my gut instinct on RDI, nice kick up today on news it has exited a german retail investment at a 10% premium to previously assessed NAV, and which will provide net proceeds of £35M for a significant debt reduction or non-retail investment or whatever. Strategic shift away from retail to beds, sheds and desks in progress as promised. Still needs to resolve the Aviva trap where it is in breach of an on-paper 85% LTV covenant requiring it pro-tem to use income to pay down the capital rather than return income to investors. Might be just a temporary glitch or something which resolves itself with a shift in valuation or one where RDI are working on an exit even at a slight discount in order to move on. Anyway, the market seems content with the SSE-Ovo arrangements not sure whether the gov’t or OFGEM have an opinion but they do not get on well with SSE and they might see the promotion of Ovo to a Big 6 as a victory for their years of market interference in favour of newcomers (about half of which have gone bust in the last couple of years). SSE need to restate their dividend policy in light of the Ovo deal in order for me to remain an income investor, otherwise I might just take the capital gain from a sp recovery to say 1350p and reinvest in … well, an adventurous toggle PIK retail bond or …
devonplay
17 Sep 2019
Ovo Loan Note marktime1231: SQN I’ve been keeping an eye on it, not sure about it. I’ve been buying LBOW.L monthly for a while. I’m tempted to add some LIV1 in October. My portfolio is at the point where fixed income, top ups from the dividend stream and monthly plans make sense. I did a lot of the heavy lifting back in 2009/10. Not sure yet what my next monthly purchase might be. I’m interested in VTA, RMDL and a few othere, I’ve got a bit of time before I decide. I’m happy to hold fixed income vechiles at 25% of the value I would for my growth and income IT’s etc. DL DL
marktime1231
16 Sep 2019
Ovo Loan Note Thanks DL pretty much as I understood it, very helpful. 9% is some going, I set myself a 6% target across my fixed income holdings. You are obviously on the ball when it comes to snapping up high yielders at a bargain price. Doing a fixed income IT on your own! Spread the risk. The closest I come to that is SQN which has sunk to a big discount because the Suniva problems have not been resolved, if I was brave that is where I would add next … yielding 9% paid monthly. Or RDI yielding up to 9% depending on the H2 payout, and where the sp may bounce back if it can steer itself away from retail and settle its situation with Aviva. Enquest kicked up today.
devonplay
16 Sep 2019
Ovo Loan Note marktime1231: ENQ 22 PIK TOG 2022 “Retail Bond†That’s the one. The coupoun is 7%, it’s just over 8% running yield and just under 14% YTM (yield to maturity) It maybe you are looking at the original coupon, it was reset in 2016 I believe. marktime1231: The TOG means toggle so when the oil market price does not hit a certain threshold instead of paying interest out in cash the yield is rolled over actually I think it is paid out in additional stock. Under $65 you get more ENQ1, above you get cash. marktime1231: Can’t find an official looking reliable record of historic payments, I guess I could trawl the Enquest website itself but I will save that for a rainy day. You can find discussion on the payment history here: [link] marktime1231: I note that the bond is described as one for adventurous investors. That’s the way I see it. I hold as part of a portfolio of 49 bonds. Overall I’m nearly 9% yield and 14% YTM in that part of my portfolio. marktime1231: I suspect if this is as attractive as it appears on the surface it will be one of the holdings in the various fixed income ITs I’m sure it is, but it doesn’t appear in any of the top holding of my fixed income IT’s. marktime1231: On ORB? You can buy it via your broker (yes it’s on ORB) or you can buy “notes†in it here: WiseAlpha The award winning online investment platform liberating a multi-trillion market... Investment alternative to stock markets, Peer-to-Peer investments and corporate bond funds.
marktime1231
16 Sep 2019
Ovo Loan Note So on the London Stock Exchange ORB it lists ENQ1 as ENQ 22 PIK TOG 2022 “Retail Bond†unclear whether 7% or 5.5% nominal coupon, both figures are stated, I’m guessing the coupon was variable starting at 7% and since reduced to 5.5% but elsewhere I have seen that there are two 3.5% paymenst each year. The TOG means toggle so when the oil market price does not hit a certain threshold instead of paying interest out in cash the yield is rolled over actually I think it is paid out in additional stock. Can’t find an official looking reliable record of historic payments, I guess I could trawl the Enquest website itself but I will save thst for a rainy day. You can buy them for around £86 each with a face value of £100 As a punt this looks attractive you get an effective return about 14% for holding them two and a bit years, provided you trust them to repay, and price is rising to reflect that opportunity. Do they track the oil price? But the payment in kind toggle means … I note that the bond is described as one for adventurous investors. Well I don’t mind a bit of adventure but I would insist on greater clarity of what is going on before I am comfortable. And as an income investor it falls at the first hurdle if it is not committed to paying out. I suspect if this is as attractive as it appears on the surface it will be one of the holdings in the various fixed income ITs which I hold in a SIPP, but as a direct punt it is a no from me at this stage.
marktime1231
15 Sep 2019
Ovo Loan Note On ORB?
devonplay
14 Sep 2019
Ovo Loan Note By the way, I just bought some of those EnQuest PIK’s, ENQ1 ( I think it is) 14.4% YTM, income with a speculative twist! DL
devonplay
14 Sep 2019
Ovo Loan Note marktime1231: How is it good for SSE Because the business could fall back into their hands. It’s potentially a cheap short term way for a business to borrow, but it has much greater risks for both the borrow and lender. The more acquisitive stance bond holders/lenders are taking is new dynamic for corporate borrowers. They might just be lending at a rate greater than they could make running the busines and, someway down the line, if the borrower can’t repay…they get the asset back they previously sold Sell, get income, hope for a default. Maybe I’m just too cynical for my own good. LOL
marktime1231
14 Sep 2019
Ovo Loan Note Thank you DP for the explanations, and I will be looking at the example, mentioning Enquest has raised my heartbeat somewhat. The PIK basis detail of the SSE - Ovo loan not available as I can see, but I take that PIK is a bit of a misnomer … there is no payment and there may be nothing in kind either! But it is expensive protection of Ovo cash flow at 13.5%. How is it good for SSE if the loan debt just accumulates like when you don’t make your mortgage payments … it needs to be repaid after 10 years if not before. So what if the £100M compounds to £350M by 2029. If Ovo succeeds, because it has just been handed the scale to makes itself viable, we SSE shareholders do not get our cut. Ovo is privately held by the likes of Fitzpatrick and Mitsubishi. I wonder where it is getting the other £400M from, did Fitzpatrick offload another 20% and to whom? SSE could get our loan money back when Ovo does its IPO, but we shareholders do not get the boom from already having a stake nor the long term income. Before the SSE-Ovo deal the Mitsubishi investment signalled that Ovo was worth around £1B on paper. What would you value the combined firm if it floated now - actually not now, obvs too soo, maybe in 18-24 months after shedding what I imagine will be several hundred staff? £2B on paper now or £5B maybe when it succeeds If I am going to be an Ovo consumer I want to be an Ovo shareholder too, having been a long term SSE investor for the income.
