Tetragon Financial Group
Tetragon maintains its investing pace
3 October 2024
Tetragon Financial Group (Tetragon) reported a 1.3% return on equity (RoE) in H124, with its net asset value (NAV) per share increasing by 1.9% in US dollar total return (TR) terms, and further 3.8% to end-August. The portfolio continued to generate solid cash flow, predominantly from collateralised loan obligation (CLO) structures and through fees from asset management businesses, which Tetragon recycled back into the portfolio (mostly public stocks) and was a net investor in the period. Tetragon continues distributions to shareholders, with a dividend yield of 4.3% (above the peer average and on top of share repurchases). As a result, Tetragon increased the amount drawn on its revolving credit facility and its leverage at end-August 2024 stood at record-level of 13.1% of NAV. MORE »
FY23 growth driven by idiosyncratic factors
16 April 2024
Tetragon Financial Group (Tetragon) posted a 6.4% net asset value (NAV) per share total return (TR) in US dollar terms in FY23. Tetragon’s returns normally have a low correlation with broader markets, and therefore its FY23 performance was below the 26.3% return of the S&P 500 Index, which rallied on the artificial intelligence (AI) theme. Tetragon’s FY23 return on equity (RoE) of 5.5% was below its target of 10–15% pa. That said, its performance since listing was within the target range at 11.3%. Tetragon continues payouts to its shareholders, distributing US$83.6m in FY23 through buybacks and dividends (3.0% of opening NAV), with the dividend yield standing at 4.4%. MORE »
Muted performance in H121
1 September 2021
Tetragon Financial Group (Tetragon) reported an H121 NAV total return (TR) of 0% in US dollar terms. Gains on investments in asset managers, bank loans and hedge funds were offset by losses on its listed equities portfolio and private equity (PE). TFG Asset Management (TFG AM) has continued to increase its assets under management (AUM) to US$32.8bn (up 9% in H121) by attracting capital to existing strategies and setting up new managers (eg Contingency Capital active in financing law firms and legal proceedings). Meanwhile, employee ownership of Tetragon increased to 35.0%, further aligning the interests of management and investors. MORE »
TFG Asset Management grows in AUM and value
27 April 2021
Tetragon Financial Group (Tetragon) reported a 9.5% NAV TR in FY20 in US dollar terms. Its main value driver remains TFG Asset Management, which delivered a 24% return in FY20 as it continues to expand its assets under management (AUM, up by 10% in FY20 mainly assisted by Equitix). In contrast, Tetragon’s CLO and real estate investments were a drag on FY20 performance. Moreover, Polygon funds (the majority of Tetragon’s exposure to hedge funds) delivered positive returns, but below broader equity markets. As a result, Tetragon posted a 7.6% return on equity, below its long-term target of 10–15%. Still, its long-term performance remains intact with an average 13.7% NAV TR pa over the last 10 years. MORE »
Diversification limiting NAV decline
12 November 2020
Tetragon Financial Group (Tetragon) reported a 1.0% decrease in NAV in 9M20 in total return terms. NAV has so far proved resilient to market volatility, while Tetragon’s shares followed the market sell-off in Q120 and lagged the following market recovery. This resulted in a historically high discount of 61%. Tetragon maintained its quarterly DPS of US$0.10 after reducing it in Q120 (implying a 4.3% annualised yield). In the current economic environment, Tetragon intends to increase its exposure to CLOs, as well as continue ramping up its private equity investments through Hawke’s Point and Banyan Square Partners. Tetragon also launched a litigation finance venture (Contingency Capital). MORE »
Discount above peers despite solid performance
1 June 2020
Tetragon Financial Group (TFG, Tetragon) achieved a 13.6% NAV/share total return and a 13.4% ROE in FY19, in line with its long-term target of 10–15%. The main driver of Tetragon’s performance was its asset management business (TFG Asset Management), which comprises managers with a total AUM attributable to Tetragon of US$27.4bn and generated an EBITDA of US$59.5m in FY19 (up 51% y-o-y). The late-2019 investment activity left Tetragon with a relatively low net cash position (4.1% of NAV at end-April). The shares trade at a three-year average discount to NAV of 44% (currently at 62.7%), which is relatively wide compared to peers given the company’s track record of delivering a 16% NAV TR pa over the last 10 years. The recent market sell-off has so far resulted in a 5.1% decrease in NAV (ytd to end-April 2020). MORE »
Stronger NAV returns, but discount remains wide
14 August 2019
Tetragon Financial Group (TFG) achieved an 8.1% NAV total return in H119, with a 13.3% annualised return on equity (ROE), well within its 10–15% long-term target range. While its performance lagged global equity markets over the half year, the resilience of Tetragon’s NAV in H218 helped it to achieve a 14.3% NAV total return over the year to 30 June 2019, compared with 6.3% and -3.1% for the MSCI AC World and FTSE All-Share indices, respectively, all in US dollar terms. Despite strong NAV returns in 2019, Tetragon’s discount remains wide at 48.6%, offering significant scope for future narrowing to enhance shareholder returns, while its 5.9% dividend yield leads the AIC’s Flexible Investment sector. MORE »
Achieving superior returns from alternative assets
9 April 2019
In 2018, Tetragon Financial Group (TFG) proved its ability to generate positive returns from a portfolio of alternative assets against a backdrop of negative returns across more traditional asset classes (including equities, bonds and commodities). Tetragon’s 12.1% return on equity (ROE) in 2018 is well within its long-term target range of 10–15%, and its 10.3% NAV total return compares with the negative 8.9% and 14.8% returns of the MSCI AC World and FTSE All-Share indices, in comparable US dollar terms. While its NAV progressed steadily higher, Tetragon’s share price declined broadly in line with global equity markets in 2018 and its discount reached 48.8% in early January 2019. However, this was turned to an advantage via the recently completed US$50m tender offer, which was 2.3% accretive to NAV per share, and the discount has subsequently narrowed. Maintaining a progressive dividend policy, Tetragon has a sector-leading 5.6% yield. MORE »
Improved returns but discount has widened
6 August 2018
Tetragon Financial Group (TFG) delivered a strong relative performance in H118, with its +4.4% NAV total return comparing with the -0.1% and -0.7% US dollar total returns of the MSCI AC World and FTSE All-Share indices. The portfolio has been substantially diversified away from collateralised loan obligations (CLOs – now only 16% of NAV) across a range of other alternative asset classes in recent years, accompanied by lower returns. However, with positive returns from all but one asset class in the half year, Tetragon’s return on equity (ROE) moved up to an annualised 10.5% in H118, back within its long-term 10-15% pa target range. Recent discount widening appears inconsistent with Tetragon’s NAV performance, as well as its progressive dividend and peer group-leading 5.5% yield. MORE »
Diversified alternative income and growth portfolio
10 May 2018
Tetragon Financial Group (TFG) is a specialist closed-ended investment company, which aims to provide stable returns across economic and asset class cycles by investing in a diversified portfolio of selected alternative assets. Helped by the uplift to NAV per share from a US$65m tender offer in December 2017, Tetragon delivered a 9.0% NAV total return in US dollar terms in 2017, although currency moves held back returns in sterling terms. Tetragon’s share price discount to NAV has widened in 2018, with the share price declining along with the broader stock market while NAV remained stable, increasing the scope for a narrowing discount to lift future shareholder returns. The total dividend for 2017 progressed 4.1% higher to US$0.70, giving Tetragon a sector-leading 5.6% yield. MORE »
Diversified alternative income and growth portfolio
10 May 2018
Tetragon Financial Group (TFG) is a specialist closed-ended investment company, which aims to provide stable returns across economic and asset class cycles by investing in a diversified portfolio of selected alternative assets. Helped by the uplift to NAV per share from a US$65m tender offer in December 2017, Tetragon delivered a 9.0% NAV total return in US dollar terms in 2017, although currency moves held back returns in sterling terms. Tetragon’s share price discount to NAV has widened in 2018, with the share price declining along with the broader stock market while NAV remained stable, increasing the scope for a narrowing discount to lift future shareholder returns. The total dividend for 2017 progressed 4.1% higher to US$0.70, giving Tetragon a sector-leading 5.6% yield. MORE »
Positive Q317 performance; Q417 tender offer
16 November 2017
Tetragon Financial Group (TFG) achieved a 1.6% NAV total return in the third quarter of 2017, taking NAV total return to 4.5% for the first nine months of the year. A strong performance from ‘other equities and credit’ has contributed to this asset class increasing to 9.9% of NAV. TFG Asset Management declined to 19.2% of NAV, as a result of the refinancing of Equitix, while all five of the established asset managers saw valuation uplifts during the quarter. Tetragon commenced a tender offer to purchase up to US$65m of its own shares in November 2017 and, if fully subscribed, this would lift Tetragon’s NAV total return for the year to between 6.1% and 6.7%, prior to considering net income generated in the fourth quarter. MORE »
Positive returns from all asset classes in H117
10 August 2017
Tetragon Financial Group (TFG) reported a 2.8% NAV total return for H117, with positive contributions made by all asset classes in the portfolio. Although below the target 10-15% range, annualised return on equity for the half year of 7.2% was ahead of the 6.3% achieved in 2016. Tetragon’s share price total return was 7.4% for the six months to end-June 2017, with the discount narrowing by 2.1pp to 36.4% over the period. Dividends continue their steady progression, with the Q217 dividend increased by 4.5% from Q216 to US$0.1750 per share, and Tetragon’s 5.3% dividend yield ranks as the second highest in the Flexible Investment sector. MORE »
Celebrating 10 years since its market debut
15 June 2017
Tetragon Financial Group (TFG) achieved an 8.5% NAV total return in 2016, with positive contributions from all asset classes. Tender offers totalling US$150m considerably enhanced returns, with shares repurchased at a substantial discount to NAV. While still wider than average among peers, Tetragon’s share price discount to NAV narrowed by c 10 points over the year, reflecting its 32.7% share price total return. The 2016 dividend was raised by 3.9% to US$0.6725, equating to a 5.3% yield. April 2017 marked Tetragon’s 10th anniversary and its performance since launch compares favourably to peers, with an 11.3% pa NAV total return to end-April 2017. MORE »
Positive returns from all asset classes in Q316
28 November 2016
Tetragon Financial Group (TFG) reported fair value earnings of US$49.7m for the third quarter of 2016, with positive contributions made by all asset classes. NAV total return was 1.3% for the quarter and 7.8% for the nine months to 30 September 2016. Having completed a US$100m tender offer in June 2016, TFG commenced a US$50m tender offer on 9 November 2016, which should be meaningfully accretive to NAV per share given the current wide share price discount to NAV. Consistent with previous years, the third interim dividend was held in line with the second interim, confirming TFG’s 5.9% yield. MORE »
Global diversified alternative assets portfolio
12 September 2016
Tetragon Financial Group (TFG) is a specialist closed-ended investment company aiming to provide stable returns across economic and various asset class cycles through investing in a selected portfolio of alternative assets. Within each asset class, the manager seeks to outperform through identifying the most appropriate structure for investments, as well as selecting high-quality specialists to manage the underlying investments. Targeting an annual return of 10-15%, TFG’s NAV total return has substantially outperformed major equity markets and its peers over one, three and five years, and since the fund’s launch in April 2007. Steps are being taken to address a persistently wide discount, which currently substantially enhances the dividend yield on TFG’s shares. MORE »
