Tuesday, 27 October 2009

Carfinco Income Fund Shines With Cash Distributions

Carfinco Income Fund
Units issued - basic & fully diluted - 23.3 million
Current monthly distribution: $0.015
Current annualized yield - 10.5%

"Cash is king" and so it is with the recent addition to The Howard Group's client portfolio of the Carfinco Income Fund. The Trust is an automotive specialty finance company with a focus on the non-prime sector.

The company wisely began taking steps in late 2007 to address credit and cash issues as it smelled the first signs of the pending financial meltdown. Not only did it make it through the chaos but its position in the marketplace was strengthened as competitors either left the business in Canada or adjusted lending policies.

In early 2008 management stopped monthly distributions to preserve cash with unit values falling from a high of $4.75 to a brief stop at $0.25. In August 2009 monthly distributions were resumed at $0.015 or $0.18/unit annualized with a resultant rise in the unit value to the $1.70 range.

Of course, this is a far cry from the unit highs but it does suggest there's a real chance of returning to those levels as distributions increase. As such this is a company that the market should be looking at very closely.

Below is a link to a detailed introductory commentary prepared by The Howard Group. We welcome your comments.

Please click here to view the full Howard Group Introduction