Summary
- UK firms are now expected to borrow a net £19 billion this year for their businesses to survive
- Investment companies provide loans or equity backing to companies in needs.
- Such company stocks help one benefit from the off-market complex trades and instruments.
The pandemic created havoc for most businesses across the globe. While the smaller ones perished, some mid-sized struggled, some top companies had to drain all their resources to fight the unprecedented event. Though recovery signs have reduced the borrowing expectation, as per some industry estimates, UK firms are now expected to borrow a net £19 billion this year for their businesses to survive. Here comes the investment companies in play which apart from the banking institutions provide a major source for funds to the businesses.
The companies pool investments and provide securitised loans or equity backing to companies in need. Its shares are accessible to the common investors, which provide access to return on capital investment. Investing in such stocks helps the investors benefit from the off market complex trades and instruments. Return benefits of structured finance instrument is what investment companies offer to their shareholders. Such shares also offer dividend income.
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Let’s have a look at 5 lesser-known investment company stocks -
- Real Estate Credit Investments Ltd (LON: RECI)
It is an investment company engaged in debt secured real estate investments. It primarily invests in commercial and residential spaces in the UK and Western Europe. Its real estate loans and bonds are in the form of securitised units. It buys and holds investments via SPVs or subsidiaries.
On 10 May 2021, 11:30 am GMT+1, its stock pegged at GBX 143.50. The stock has given a 1 year return of 40.69 per cent.
RECI has been delivering quarterly dividends consistently since October 2013, amounting to 7% of its NAV. It portfolio has not defaulted and had Mark to Market recovery of 4.1p to NAV since March 2020. Its weighted average LTV is 64.9%. The company reported holding cash worth GBX 22.8 million as of 31 March 2021.
- Plus 500 Ltd (LON: PLUS)
The company has its origin in Israel and operates as an online trading services provider for Contracts for Difference across multiple asset classes. It has subsidiaries in the UK, Australia, Singapore, Cyprus, and Bulgaria. Its platform is for retail customers dealing in global financial instruments being equities, options, ETFs, cryptocurrencies, and others.
On 10 May 2021, 11:32 am GMT+1, its share was at GBX 1,461.50. The stock has returned 12.68 per cent on investment in the last one year.
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It commenced a share buy-back program in February 2020 and is again seen undertaking a lot of transactions in its own shares in March & April 2021. Group EBITDA in Q1 2021 was US $121.7 million with EBITDA margin of 60%. Customer income also remained robust at US $221.5 million in the quarter. The company has a lean, flexible cost base and an efficient business model. It has access to future growth through organic investment in technology and targeted acquisitions.
- EJF Investments Ltd (LON: EJFI)
It is a closed ended LLC from Jersey. It functions as a public instrument for EJF group to provide exposure to investments in equity tranches of EJF backed securitisations. It has a niche asset class and pays target dividends regularly.
The share pegged at GBX 128.00 on 10 May 2021, 11:35 am GMT+1. It has given a return of 2.40 per cent in the last one year.
It recently released its final results for the period ended 31 December 2020. Its portfolio was having a total return since inception of 53.0% though the return for the reported period was -7.0%. Its NAV stood at GBP 100.6 million. Mark-to-market declines in valuations in the portfolio were reflected as the result of de-risking by primary dealers in credit markets.
- Symphony International Holdings Limited (LON: SIHL)
It invests in consumer related businesses located in Asia, from healthcare, hospitality, lifestyle logistics and education sectors. The company aims to form long-term business partnerships with talented entrepreneurs of this region. Incorporated in the British Virgin Islands (BVI) in 2004, It is managed from Singapore.
Its share, traded at US $0.38 on 10 May 21 at 11:37 am GMT+1. It has given a one-year return of 19.37 to the investors.
As on 31 December 2020, it reported a decrease in cash balances worth US $7,395 thousand. Its NAV per share declined to US $0.74 during 2020 due to a fall in its hospitality investment values. It only monetised on its real estate investments in Japan in 2020. It is placed to benefit from the rise of e-commerce in Asia.
- Honeycomb Investment Trust PLC (LON: HONY)
It is an investment trust deploying funds in credit assets of non-banking lending firms with secured underlying loan portfolios. It operates in the UK as a medical imaging technology corporation. Pollen Street Capital Limited serves as its Investment Manager.
On 10 May 2021, 11:38 am GMT+1, its shares were near its six months high at GBX 970.00. It has given a return of 31.98 per cent in last one year.
It reported a stable dividend yield of 8 per cent for the year ended to 31 December 2020. It had a stable NAV per share of 1,013 pence per share. It reported resilient underlying earnings at GBP 26.2 million. The company also bought back 4,190,178 shares last year.
