Blackmore Bond

Aretnap

Albermarle wrote: »

Like with P2P lending etc a critical point is what % of your investments are involved in these types of products
Taking a risk to get 8% return with 5% of your investable funds is one thing , punting 50% is quite another .

What is a sensible proportion of your money to entrust to the sorry of people who market ultra high risk junk minibonds in a way that suggests they are comparable to bank accounts? I would suggest zero. Taking a risk with a little money is one thing, handing it over to shysters is quite another.

The product is not really comparable to P2P due to the almost total lack of transparency over where your money is actually invested, what it is secured against, how much of it is being handed over to middlemen in commission etc. As we have just seen with the London Capital and Finance debacle.

jimjames

Realistic wrote: »

Look up Blackmore Bonds Plc at Companies House before you invest.

Actually Blackmore Bond plc (not plural)

https://beta.companieshouse.gov.uk/company/10273135/filing-history

Fascinating stuff including details of how much they pay Surge Financial for introductions.

"The loss of £7.6million has primarily arisen from the charging of distribution fees by our partner Surge Financial." and "If part of the fees had not been deferred the loss would have been £9.8 million"

https://damn-lies-and-statistics.blogspot.com/2019/02/blackmore-bonds-surge-financial-fees.html

(Edited - thanks to Malthusian below)

So on bond sales of £25 million, Blackmore Bonds paid Surge Financial £5.1[STRIKE] £3.2[/STRIKE] million. A substantial chunk of investors money going out before even being invested and means they need to grow their assets at an even higher rate to recoup the Surge deductions before getting 8% interest.

Malthusian

jimjames wrote: »

So on bond sales of £25 million, Blackmore Bonds paid Surge Financial £3.2 million. Not quite the 20% alleged for LCF

Actually they paid them £5.1 million. See page 34 of the accounts (page 36 of the PDF).

Which is pretty much dead on 20%.

jimjames

Malthusian wrote: »

Actually they paid them £5.1 million. See page 34 of the accounts (page 36 of the PDF).

Which is pretty much dead on 20%.

Thanks, I'd taken the £3.2 million from p23 as the distribution fees paid to Surge. The Blackmore fees are so much more blatantly shown than the fees to Surge from LCF.

Alexland

Albermarle wrote: »

Like with P2P lending etc a critical point is what % of your investments are involved in these types of products
Taking a risk to get 8% return with 5% of your investable funds is one thing , punting 50% is quite another .

Honestly it's not even worth putting 5% into a probable total loss situation. There is no proportion of you wealth that should go into mini bonds unless perhaps you are Richard Pryor seeking to rid yourself of Brewster's Millions.

Alex

Albermarle

What is a sensible proportion of your money to entrust to the sorry of people who market ultra high risk junk minibonds in a way that suggests they are comparable to bank accounts? I would suggest zero. Taking a risk with a little money is one thing, handing it over to shysters is quite another.

Yes I have to agree that the sneaky way these particular bonds are marketed would completely put me off. I was just making the point that there are products out there ( like P2P and less dubious mini bonds ) that can return 6 to 8% that are worth a dabble as an alternative investment as long as it is only a small % of your total portfolio.

jimjames

Albermarle wrote: »

Yes I have to agree that the sneaky way these particular bonds are marketed would completely put me off. I was just making the point that there are products out there ( like P2P and less dubious mini bonds ) that can return 6 to 8% that are worth a dabble as an alternative investment as long as it is only a small % of your total portfolio.

As I understand it P2P platforms are a lot more transparent in that you can see where your money is going and choose/accept the appropriate rates. The likes of Blackmore & LCF are more like a black box where you hand your money over and have no idea where it's going and what might come back.

JohnRo

Blackmaw..

Perhaps

So it appears Blackmore do actually develop property - see 'St Augustine's Apartments' of Stockport SK3 0JN (look at the old church building on Google Maps 3D, there's a Blackmore sign on it). Rightmove claim some of these are actually sold STC in 2018. However they're invested via Blackmore SPV 3 Ltd and further digging would be required to understand how that structure operates.

Of course, the usual risks of trying to sell luxury apartments in a time of a slowing housing market apply. I wouldn't be able to say whether they will achieve their expected prices. One interesting thing is Land Registry doesn't seem to record any apartment sales in that street - there's usually a few months lead time, but a still bit surprising.

So it seems the business model is:

1. Take your money
2. Pay 20% of it to Surge Financial as introduction fee
3. (Probably) invest the remaining 80% in housebuilding schemes
4. (Probably) Eventually sell such properties, (possibly) generating a return
5. (Possibly) return some money to bondholders, (possibly possibly) with some interest

Which is just like any other speculative investment - the only difference is the upfront interest rate promise, and the enormous upfront marketing payment to Surge. I don't see how this is better than investing in Barratt or Persimmon or another volume housebuilder. At least with those you'll pay 0.5% stamp duty on share purchases, not 20%.

At no point can I see that there's anything to suggest a higher chance of bondholders getting their investment back, and no evidence to indicate why investors should expect an 8% return on top. And thus far we haven't yet completed stage 4, so it's unclear what the real return (if any) would be.

sully1311

But aha, you get the Capital Protection Scheme, so you’re convered if anything goes wrong!*


*Capital at risk