A very short observation. It might be worth looking again at the biggest peer to peer lending fund P2PGI. Its share price has slid back again and is currently at around 780p again. That price could fall again, especially as the recent low has been below 750p, but I think not. The fund has undergone some big changes not least that Eaglewood (the funds’ managers) have now merged with Pollen Street (manager of the very successful Honeycombe fund). The management team are now midway through a big strategic shift, away from what I think were crowded trades into more specialised niches. If that shift towards more focused lending strategies does work – and it is still an if – we should see both NAV returns and the yield pick up.
So, some obvious catalysts for change in the near term and a NAV of around £10 a share versus a share price of 780p, which implies a 20% plus discount. If the underlying income-producing investments in the fund were vulnerable to changes in the interest rate maybe there would be some ground for more caution. But most of P2PGIs investments in effect have low duration risk as they are illiquid (compared to bonds) high yielding credits. My guess would be that unless the board intensifies its share prices we could see the share price push below 780p, possibly even hitting 750p again. But I also think the rebound will follow the recent pattern and we might see the share price back above 850p in the not too distant future – at which point I’d be tempted to perhaps get out again!