As you perceptively explain, this type of stock is quite difficult to explain in simple accessible terms, so well debunked! My simplifier of such stocks is they are marging makers. Where Tesco buys spuds for £1 and sells at £1.10, FAIR borrowed from institutions /shareholders at 10% and lend at 11%, with the margin leveraged. As such, I have never worried about interest rate changes, as new originations reflect both their borrowing and loaning changes with margin maintained. Far from complex it's beautifully simple, when managed competently, by the likes of FAIR.
Straightforward explanation, Oak. I hold VTA and Chenavari Toro. Any reason for FAIR as opposed to TORO now it has reduced its discount to NAV and TORO's still -30%?
Hi Oak, I recommend reading The Income Factory by Steven Bavaria to gain a good understanding of CLOs.
Thanks for that Tony, sounds like my kind of book.
As you perceptively explain, this type of stock is quite difficult to explain in simple accessible terms, so well debunked! My simplifier of such stocks is they are marging makers. Where Tesco buys spuds for £1 and sells at £1.10, FAIR borrowed from institutions /shareholders at 10% and lend at 11%, with the margin leveraged. As such, I have never worried about interest rate changes, as new originations reflect both their borrowing and loaning changes with margin maintained. Far from complex it's beautifully simple, when managed competently, by the likes of FAIR.
It wasn't! It's just that I've been catching up, and that's the one I happen to hold!
Straightforward explanation, Oak. I hold VTA and Chenavari Toro. Any reason for FAIR as opposed to TORO now it has reduced its discount to NAV and TORO's still -30%?
I don’t believe Toro was put forward as a candidate - or if it was I must have missed it!