GL Finance (GLIF)

[wycombesian]

I've been averaging into GLIF for the past year or so, mainly for the dividend yield, which until now has been okay.
From my own research, I get the impression may be even better going forward.

At today's price of around 21, it suggests a prospective yield of approximately 12% along with a big discount to NAV.

Bearing in mind what people say about something that looks too good to be true, does anyone have any insight into this IT?

W

[UncleEbenezer]

Share price looks like a falling knife. Troubles, restructuring, sale of an operation to pay off debt. What about the new dividend policy?

Seems they have a leveraged structure, with ZDPs in there somewhere. Guess it's a high risk/reward bet on SME fintech, on surviving brexit, and on a management team that's halved the SP over the past year. Hmmm.

[Longtermyieldman]

IThere have been a few transactions along the way that felt to me like insider deals and perhaps not in the best interests of shareholders. I hold, but am not adding while current management remains in place. If and when they get binned, I'll add.

[wycombesian]

Unclebenezer/ Lontermyieldman

I agree with all your concerns about GLIF. It's certainly not one for widows and orphans. To put it mildly, results have been patchy and inconsistent.

However, even a falling knife eventually stops and I'm hoping we're seeing the low point around this level.

There are some encouraging signs, but nothing to completely reassure. Insiders recently appear to have been consistent buyers, although there do seem to be some odd transactions. All the analysts that follow this IT have consistently rated it a BUY, except one analyst that has most recently downgraded to HOLD. When all the analysts switch from BUY to SELL is usually the best time to buy some.

The thing that most concerns me is the leverage. I lived in the US for about 20-years and invested heavily in Closed End Funds, the equivalent of the UK ITs. Total returns were spectacularly good for many years, until the 2007 crash. Many of the leveraged funds were using very cheap short-term financing to boost yields but when the crunch came that funding dried up completely but they had no back-up plan. Without financing they were forced to liquidate large chunks of their portfolios at fire-sale prices, slash dividends and in many cases get taken over on the cheap by predators. I still have some of the funds and they still pay decent dividends, but in most cases the share prices still have some way to go before they show me a profit.

Good luck with this one.
I will be doing a bit more research before buying any more.

[wycombesian]

On a technical note, I just noticed this in Rives Journal:

"Traders may be interested in various technical levels on shares of GLI Finance Ltd (GLIF.L). After a recent check, GLI Finance Ltd (GLIF.L)’s Williams Percent Range or 14 day Williams %R was spotted at -83.71. Levels can range from 0 to -100. A number charting between -80 to -100 may be typically viewed as strong oversold territory."