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VPC Specialty Lending (VSL)

Closed-end funds and OEICs
yieldhog
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VPC Specialty Lending (VSL)

#660266

Postby yieldhog » April 19th, 2024, 9:19 am

Initial Return of Capital has been announced.
Details here:
https://www.hl.co.uk/shares/shares-sear ... share-news

Y

88V8
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Re: VPC Specialty Lending (VSL)

#660281

Postby 88V8 » April 19th, 2024, 10:30 am

yieldhog wrote:Initial Return of Capital has been announced.
Details here:
https://www.hl.co.uk/shares/shares-sear ... share-news

And here.

Hasn't moved the dial at all, perhaps because of the opaque methodology, even though it implies an NAV of c80p relative to today's 52p. Or perhaps a healthy distrust of valuations.

I hope the stupid liquidation works out, the more so as I put OH in here, back when it seemed a good idea.

V8

yieldhog
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Re: VPC Specialty Lending (VSL)

#660394

Postby yieldhog » April 19th, 2024, 6:33 pm

It does leave a few anaddressed questions, at least in my mind.
This distribution is described as a bonus, even though it's titled a Return of Capital. Do I log it as a dividend or return of capital, or is it a bit of both?
Another quarterly dividend is due in June. Should we expect another normal dividend or a reduced one?
As expectations of interest rate cuts have led to improved prices for fixed income assets, shouldn't we be seeing some improvement in actual NAV?

Y
88V8 wrote:Hasn't moved the dial at all, perhaps because of the opaque methodology, even though it implies an NAV of c80p relative to today's 52p. Or perhaps a healthy distrust of valuations.

88V8
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Re: VPC Specialty Lending (VSL)

#660413

Postby 88V8 » April 19th, 2024, 8:04 pm

yieldhog wrote:It does leave a few anaddressed questions, at least in my mind.
This distribution is described as a bonus, even though it's titled a Return of Capital. Do I log it as a dividend or return of capital, or is it a bit of both?
Another quarterly dividend is due in June. Should we expect another normal dividend or a reduced one?
As expectations of interest rate cuts have led to improved prices for fixed income assets, shouldn't we be seeing some improvement in actual NAV?

Return of capital, I think. That's how I will treat it for tax purposes, at any rate.

The dividend is backwards looking, and the ex date for the RoC and the divi are the same, so I would assume the May divi will be much as before.

One would hope for an uplift in NAV, but I wonder how many of the valuations are back of an envelope guesstimates of illiquid assets.

V8

Alaric
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Re: VPC Specialty Lending (VSL)

#660473

Postby Alaric » April 20th, 2024, 12:59 am

88V8 wrote:Return of capital, I think. That's how I will treat it for tax purposes, at any rate.


I think the treatment is supposed to be that the proceeds of the distribution are deducted from the original purchase price, rebasing it and thus deferring CGT issues until the ultimate disposal.

SebsCat
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Re: VPC Specialty Lending (VSL)

#660495

Postby SebsCat » April 20th, 2024, 9:03 am

Alaric wrote:
88V8 wrote:Return of capital, I think. That's how I will treat it for tax purposes, at any rate.


I think the treatment is supposed to be that the proceeds of the distribution are deducted from the original purchase price, rebasing it and thus deferring CGT issues until the ultimate disposal.

The rule is that if the distribution is less than 5% of the total holding or is less than £3,000 then it is treated as a "small capital distribution" and the distribution is deducted from the purchase price, deferring the CGT. If more than 5% & more than £3k then it should be treated as an immediate CGT disposal.

See https://www.gov.uk/hmrc-internal-manual ... al/cg57835

airbus330
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Re: VPC Specialty Lending (VSL)

#667844

Postby airbus330 » June 7th, 2024, 9:20 am

Interesting that HL put a ban on buying or topping up VSL shares yesterday. Odd to do that mid winding up the business

88V8
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Re: VPC Specialty Lending (VSL)

#667853

Postby 88V8 » June 7th, 2024, 10:14 am

The Oak Bloke thinks this still has legs.

...because the liquidation of assets is reasonably near term that in the next 12 months it’s likely that there’ll be a 10p-15p capital return and 8p dividend. So potentially 50% of today’s share price.

NAV discount analysis where he comments that the liquidation could stretch to 2028.

airbus330 wrote:Interesting that HL put a ban on buying or topping up VSL shares yesterday. Odd to do that mid winding up the business

I can still buy at ii, although I probably have enough.

V8

88V8
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Re: VPC Specialty Lending (VSL)

#668218

Postby 88V8 » June 10th, 2024, 9:15 am

And another snippet from the Oak Bloke, part of a musing about undervalued small caps.

.... a 72.5% discount to NAV.
With further capital, dividend returns, and equity holdings which might surprise to the upside, I reckon you could get to a <100% discount to NAV in due course.


scroll down.

'In due course' could stretch to four years, which is a long time in investment. I still reckon I have enough, but on the other hand...

V8


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