Tetragon Financial Group Trust

[bonrepos]

Has anyone any history or views on the above trust?

Many thanks.

[BrummieDave]

Not me, not that I'm an expert of course!

You have however triggered me into looking at their website and other Googleable items including a historic lawsuit that I assume has been settled. The recent share price drop and current yield look attractive, although without greater insight, mean little, and I couldn't immediately see how big they are, by market cap perhaps.

It looks like an interesting potential investment so thanks for raising it, and I too look forward to anyone's views or experience with Tetragon.

[SKYSHIP]

Herewith the June factsheet. Personally I prefer Volta Finance (VTA) due to the higher yield of 9%; though admittedly a lower NAV discount, but still attractive at 15%.

https://www.tetragoninv.com/~/media/Fil ... y-2018.pdf

[monabri]

Is the dividend covered with Volta - I'm not sure?

Tetragon seems fine though and appears quite "healthy" (and negligible debt - covered admirably and good earnings growth forecast) with good divi cover.

From the info I've got (limited!!) - I would feel more comfortable investing in Tetragon (div cover > 2)

The high yield of Volta and apparent low divi cover nags me.


Tetragon market cap is £1.3 billion and Volta is ~£231m (figures taken from LSE today).

[BrummieDave]

I've done a bit more digging around Tetragon as the OP interested me, as did various responses above.

The most interesting thing found was this:

1. Tetragon has exposure to infrastructure through its ownership of Equitix: https://www.tetragoninv.com/portfolio/infrastructure

2. Equitix, along with another fund manager, Dalmore Capital, are leading the consortium who last week put in a cash offer to buy John Laing Infrastructure Fund, causing the latter's SP to jump 18%: http://citywire.co.uk/investment-trust- ... h/a1138365

So at the very least, this links the Tetragon thread to the JLIF thread on this same board: viewtopic.php?f=54&t=8495

Anyone found anything else out, perhaps bonrepos?

[monabri]

There are 2 flavours of Tetragon, Tickers "TFG" and "TFGS".

TFG is in US Dollars and TFGS is the Sterling version.

[BrummieDave]

Indeed there are.

BTW my platform doesn't seem to allow either to be bought.

[monabri]

My account is held with SVS. The sterling version can be bought but not TFG.

(I note that TFGS can be bought in my non ISA account but they haven't migrated TFGS over so i could buy in my ISA account. I've had this issue with them before (BRNA and HDIV) and I've had to ask them to add the tickers).


(£7.95 to buy/sell + tax)

[BrummieDave]

TFGS is traded on the Specialist Fund Segment (previously known as the Specialist Fund Market), a segment of London Stock Exchange's regulated Main Market designed for highly specialised investment entities that wish to target institutional, highly knowledgeable investors or professionally advised investors only.

Hence some platforms, including mine, not offering it as they don't offer anything in this segment of the main market.

[IronPyrites]

Hi bonrepos et al

My interest was tweaked by this IT. So I too have done a little digging around and found Wexboy who writes a value blog and is invested in Tetragon reviewing his investments regularly.

The last time was in February:
https://wexboy.wordpress.com/2018/02/28 ... more-17062

Unsurprisingly he is relatively bullish:

management’s compounding value here: Tetragon’s return on equity was 9% last year & it’s averaged 12.4% pa since its 2007 IPO, it has a progressive dividend policy, it’s launched serial tender offers, and overall it’s returned a cumulative $1.2 billion (in dividends & share repurchases) to shareholders (since the IPO). [Last year’s return on equity was reflected in a +10% share price gain – which was more like a +16% return inc. dividends]. Notably, the dividend yield’s still almost 5.5%, enhanced by the opportunity to recycle it back into a cheap share price (via a DRIP). Not surprisingly, management eats their own cooking here – principals & employees now own 27% of Tetragon…which is pretty extraordinary for an investment company!

But regardless, Tetragon still sports a 37% NAV discount. Stripping out net cash, that widens to a 46% NAV discount. And topping that, if you strip out net cash & listed/liquid equities, you’re actually looking at an estimated/truly astonishing 58% NAV discount!? But again, after so long, I can’t tell you when & where this huge value gap finally gets closed/eliminated (as it deserves to be). But I can tell you management’s been working on it: They’ve commissioned investment research, made huge improvement in their IR communications, got out there & met investors in the UK/Ireland/N America, are planning a sterling TFG quote, etc.

But the TFG Asset Management unit may prove the real game-changer here – it’s grown spectacularly in the last 5 years, compounding almost 25% pa (mostly organically), with aggregate AUM tripling to $23 billion.

Regards
Iron

[bonrepos]

Thanks to everyone for their input.

Bizarrely, my interest in this trust was further stimulated by the proposed takeover of John Laing Infrastructure (JLIF)
which I hold. I looked into who was making the bid which lead me back to Tetragon.

I then read the financial report mentioned by SKYSHIP ( thanks) and the commentary mentioned by IronPyrites (also thanks).
I noted that Questor had recommended the share last November and the reasons why.

Overall, I have been looking for trusts that I found suitable to spread my investments more globally and away from a large
concentration in the UK equity income area of trusts. The trade off for me is always between income trusts and growth trusts.
I am in the income seeking stage of life but I am only too aware that income trusts don't usually have such a good total return
as more general trusts.

For anybody interested, my major global investment trusts are Foreign and Colonial, Bankers, Murray International, JP Morgan Global Growth and Income and Law Debenture and now Tetragon . My Uk equity income trusts are Finsbury Growth Trust ( thank you Nick Train), City of London, Lowland, Diverse and Henderson High Income.

I've got a hyp portfolio and quite a lot of infrastructure and utility trusts but that's another story.

[Tula100]

Can someone advise whether it is better to buy Tetragon as TFG or TFGS? Hargreaves dealing costs are the same, apart from the exchange rate on any particular day. Yield is shown as slightly higher on the dollar denominated TFG.

[Pendrainllwyn]

I have been accumulating TFG for a few years now. Looking at the LSE website it looks like TFG has a smaller bid offer spread and more liquidity (22,000 shares traded today) than TFGS (2,000 shares traded). Someone can advise whether that is always the case. If so, it's probably the better currency quotation to be in if you are OK with a USD denominated holding. They give the option of cash or stock for their quarterly dividends.

Pendrainllwyn

[BrummieDave]

I saw yesterday that Cannacord included them in their income focused portfolio https://citywire.co.uk/investment-trust ... e/a1196091

[GrahamPlatt]

Hi,

What platforms are you people trading this on?
I've just read the KID on Interactive Investor; 2.1+5.66% initial charges & 5.63% ongoing charges!

Had the same problem for some other instrument with Halifax a while ago - charges are just too high.

Thanks for any pointers.

[Tula100]

That seems very expensive. I use Hargreaves who are fairly expensive, but they don't make initial charges on Funds. But TFGS is not a fund so it would would only incur your purchasing cost (more expensive for the $TFG because you can't purchase it online) but a maximum charge for all your shares in an ISA of £45 per annum. You are not charged for holding shares outside an ISA. Although Hargreaves are more expensive than some platforms for larger amounts, their service and website are very good.

[Alaric]

I've just read the KID on Interactive Investor; 2.1+5.66% initial charges & 5.63% ongoing charges!

The 5.63% is 2.65% management and 2.98% performance. That would be the same with any platform. There's also a portfolio transaction cost of 0.03% making it up to 5.66%

I didn't see any mention of initial charges in the KID at ii, but I could imagine there's a sizeable spread between buy and sell prices. Again every platform is likely to have a similar spread.

It's a Guernsey based IT quoted on a specialist part of the LSE. The KID also warns of its lack of suitability for "retail" investors.

[GrahamPlatt]

I apologise for posting that. In researching TFG I'd read an Edison report which gave ongoing charges at 1.64% & re the performance fee referred to a 2.65% 'hurdle' which I took to mean triggering target. Of course, the broker platform's irrelevant. So what does hurdle mean in this context: 25% over Libor+2.65% hurdle?

[GrahamPlatt]

Ah, just found Skyship’s post about the Kepler Intelligence report on ADVFN (14/2/19) and now understand the charges and what the hurdle means. Thanks for that SS.