New City High Yield Fund Live Discussion

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Guitarsolo 23 Oct 2019

It's that time of year (again) So the Q1 dividend is held at 1.00p. That’s the first time it hasn’t increased (even by a smidge) in many a year if not since inception. It’s not surprising given the trend of falling EPS and even keeping the divi level is dangerously close to being uncovered. So I am not critical of the decision to keep it at 3 x 1.00p and hopefully 1.45p again for Q4. That said, I would like to hear from Franco what his plan is to reverse the EPS trend. If we’re not careful, the premium the market attaches to NCYF could erode and we’ll start having capital erosion on top of a flat divi, which would equal an unhappy Guitarsolo

devonplay 08 Oct 2019

It's that time of year (again) “Lastly, my mind was telling me NCYF had exposure to Pizza Express, and I was right:” So am I, I own the 6,625% and the 8,625%. Not enough to bother me. Overall I thought they were a little underwhelming. That premium still puts me off. I’m sure there’s better value, and defence, elsewhere. I hope you don’t get hit, looks unmoved as I type. Best wishes, DL

Guitarsolo 08 Oct 2019

It's that time of year (again) Hi Devon, Well the results were out today, but are a little underwhelming. EPS of 4.49p (lower than my complete guess of 4.65p) and down from 4.54p last year. This has now set a worrying trend as that is (from memory) three years in a row that EPS has nudged down. It is now dangerously close to being uncovered if the divi is maintained at 4.45p or indeed raised to 4.48p as predicted! I’ve read the statements but not all the bumf. Disappointingly there is no mention at all about this downward trend or what action they propose to take to change it. I feel there should have been because the dividend is about to be uncovered. They have 4pps in reserves but it’s not a good sign if we need to be dipping into that. Meanwhile, below inflation divi increased erodes the value of the divi anyway. All of this has not stopped them increasing their charges mind! I note the report says “The ongoing charges ratio for the year ended 30 June 2019 was 1.20% (2018: 1.17%).” Hmmm. I am guessing they point to the fact that the share price has persistently traded at a premium to NAV as justification for this (and the premium is particularly high now). That might mean that people think Franco is your man in this geopolitically dangerous world, but it might not. Lastly, my mind was telling me NCYF had exposure to Pizza Express, and I was right: PizzaExpress Financing 8.625% 01/08/ TOTAL: £3,159,000 I expect to take a hit here. But it is about 1.25% of the portfolio and will hopefully not be a wipe-out. I’ll probably hold, but not being encouraged to add. Guitarsolo

devonplay 07 Oct 2019

It's that time of year (again) Out of the 9th again? I haven’t yet invested in this one, but I’d like an opportunity. Most recent purchases have been LBOW & LIV2. I hope to start buying SWEF soon. Over on WiseAlpha my portfolio includes most of Franco’s top ten! MY YTM 14.3% (before fees). I noted they’ve been buying NRR. I’m also holding that for the long term. I’m holding cash back for NCYF and the racy VTA.L - which I’d like to buy at a basement price. VTA has a yiled today of 8.25% About us Volta Finance Limited is an Authorised closed-ended collective investment scheme. Hardman Report [link] Alongside IWRD, IUSA it’s on my - doomsday buy list… DL

Guitarsolo 07 Oct 2019

It's that time of year (again) So basically another 12 months on and I’ll play the same game again! Guess the EPS. Just re-read Franco’s Aug 2019 update…geopolitical problems still persist; Trump, Brexit, Italy…wasn’t that what we said a year ago?! NCYF has taken equity positions in NRR and VSL (two companies I also invest in). I don’t know the price they bought in at but both have been trading well below NAV and have seen 10-20% bounces in the last couple of months. Fingers crossed they bought in low. Last year’s EPS were 4.54p supporting a dividend of 4.42p for FY17, which was increased to 4.45p in the 12 months just gone. So, finger in the air, I’m going to hope for EPS of 4.65p which would give Franco some room to increase the dividend and maintain his impressive record. But again I expect any divi increase to be minimal (i.e. 3 x 1.01p and a final of 1.45p). They need to build up the delta between the divi and the EPS, even if they do have a year’s worth of dividends in reserve. As to how they do that, well over to you Franco, that’s what we pay you for! Guitarsolo - still sitting on what I’ve got. Not intending to add in this political environment.

marktime1231 21 Apr 2019

Stymied So FRTEB one year on my experience of pseudo-fixed interest trusts has been interesting. They are the basis of my first SIPP. I have held a spread of bond/debt trusts IPE, NCYF and SMIF which currently sit about 3% below par, but have been paying 6-8% dividends. NAV and sp are now recovering thanks to a lowered expectation of global growth / interest rates. BRCI paying 5% which cycles with commodity prices and hovers around par. EAT which troughed 20% on exchange rate movement and weakened Europe, but has paid out around 6% and is now recovering. Overweight here in the hope of progressive growth but it is sat well below par still. SQN which I doubled up in the hope NAV and sp would recover if management resolved problems eg Suniva, which it did so it is sitting roughly up 3%. It is different type of basket so I chose it to be a contrast to the other ITs, and it pays a top notch 8% yield, monthly. Added RDI for property diversity ahead of a possible deal while paying over 8%. As an anomaly, a good chunk of NAH at a bargain entry price on the conviction that it would pay terrific dividends and offer serious growth potential to counter the tendency of the ITs to be flat. This has indeed paid out terrific dividends, and my hope of a sp recovery is now gathering momentum while still yielding 7%. The result has been an aggregate income of 6.22% vs target of 6%, in the face of everyone saying it can’t be done safely from natural yield. Ignoring contriibutions year on year the total return has been + 4.8%, but I expect a much better outcome this year maybe +15% with an income of around 6.5%. I would happily add more of any of these choices, including BRCI which has not shone as yet. The next best income (and growth) IT is MYI but the yield doesn’t come close and performance has been flat.

devonplay 11 Dec 2018

It's that time of year (again) @Guitarsolo just noted this from the October (as of late September) fact sheet: Portfolio For the company’s portfolio, we sold SAS preference shares due to the danger of them being called below where they were sold, these were replaced by a new issue in Floatel, with a 9% coupon in US$, and VPC Speciality Lending equity on a prospective 9% plus yield. I also hold some of the Garfunkelux Holdco debt that it’s in the portfolio. I checked into see what the prem to NAV was on this one. I’m starting to think about my purchase for Q1 2019. Excluding REIT’s I pretty much have what I want and close to the capital positions I planned. I’m thinking of swapping out of a couple of smaller holding and adding this. Maybe. Hopefully with a tightening of prem against NAV. I’m moving on from ii, do you post on another site? DL

Guitarsolo 05 Nov 2018

It's that time of year (again) Well, I might have been wrong about the EPS but was spot on about the dividend…1.00p for the first quarter (almost certainly to be repeated for the 2nd and 3rd and 1.45p for the final quarter). It was pretty predictable. Still, the record of increasing dividends continues…for now. Guitarsolo

Guitarsolo 09 Oct 2018

It's that time of year (again) Oh dear…way off! EPS were (only) 4.54p - a long way down on my optimistic 4.80p. What does it mean? Well, NYCF will want to protect its record of increasing the dividend every year since inception in 2007. It has also made the point very clearly that it has cash reserves to be able to fund the dividend in the event that it is not fully covered. So I reckon they will increase the dividend again, but by as little as possible (again). I would expect 3 x 1.00p and 1 x 1.45p again. That is a below inflation increase but an increase nonetheless. There are clear problems in the bond market and the Brexit/Trump/Italian uncertainties are not helping. High yield bonds maturing without being able to replace with something similar will continue to make life difficult. But ultimately, “Franco” is going to have to find a way to increase EPS if he hopes to protect his dividend record for much longer. He should be OK for the next couple of years but beyond that, who knows? Guitarsolo - holding what I’ve got for income. Would add if cash available at below 57p.

Guitarsolo 14 Sep 2018

It's that time of year (again) With feverish excitement we approach that time of year again when I start to anticipate the release of last year’s earnings figures. To recap, for the year ended 30.06.2016 EPS were 4.50pps which supported a dividend of 4.39pps (if memory serves). Then, for year ended 30.06.2017 EPS were 4.66pps supporting a dividend of 4.42pps (3 x 0.99p and a final of 1.45p). So what about the 12 months to 30.06.2018? Well, I respect the fact that Ian “Franco” Francis will want to protect his impressive record of always increasing the dividend. Last year’s 16 basis point increase in EPS gave him a bit more of a cushion because the dividend was only increased by 3 basis points (4.39p to 4.42p …wow!). That’s much lower than inflation and I for one would like to see the dividend increase by at least inflation BUT that has to be supported by rising EPS. To match inflation really needs a 10 basis point increase to 4.52p but that probably means EPS need to increase by say 14 basis points to justify it. So, working backwards, if EPS are 4.80pps or better and the dividend is 4.52pps or better then I will be content. If not, it will be another year of income effectively being eroded. Not sure when the results will be released but perhaps about 3 weeks away. Guitarsolo - comfortably numb with excitement.

Guitarsolo 31 May 2018

Research note [link] courtesy of jonwig over on ADVFN. It might be a buy-side note encouraging investment but it still provides some reassuring info. Having read it I am content with my holding and would add a few more if/when funds allow. The dividend seems safe but I look forward to the next set of full year figures to see an improvement to EPS (4.66p previously, would be nice to see it breach 4.75p and allow for a small uptick to the dividend whilst also marginally improving cover). The downside currently of course is the slow erosion to the NAV (with a corresponding slight increase in the premium being paid for the shares). There are concerns about the bond market and if bond prices fall the NAV will go with it. Trust in "Franco" will probably keep a premium attached to the shares but for how long/how much? Still, I am here for the yield so if the dividend remains I shall probably as well. Guitarsolo


Re: Added Hi Marktime1231Good luck with your recent top-up and wish you well as you have been a fan for a while and a bit like me watching / debating from the sidelines.[link]

victor boson 29 May 2018

Re: Added dividends may be paid on slightly different days each year, to avoid weekends etc so in 365 days there may be 5 dividends payed or only 3 and the yearly yield will be calculated wrong.

budu 29 May 2018

Re: Added >>where did you get 8.33?Off the Factsheet on that day (7.26% just now). However, there was no dividend information for 2018 then, which makes me wonder about the value of ii's information service.

Windlesham Don 18 May 2018

Re: Added Agree, Marktime, I've held both IPE and NCYF for several years and the developments at IPE make them a slightly risky investment at the moment.With current sentiment and market conditions I favour 7.2% with NCYF over 6.5% with IPE.But DYOR of course,Regards,