Fair Oaks Income 2021 Ord (FAIR)

Fair Oaks Income 2021 Ordinal Trust (FIO.U)

Company Profile:

History & Background: Fair Oaks Income 2021 Ordinal Trust (FIO.U) is an interval fund created by Fair Oaks Asset Corp., formed on October 6th, 2021. It focuses primarily on investing in residential and commercial mortgage loans and securities in a high yield manner, aiming for monthly distributions to shareholders and the potential for capital appreciation.

Core Businesses:

• Investing in mortgage loans and mortgage-related assets
• Generating monthly income through interest and dividends
• Capital appreciation through asset value increases

Leadership:

• Advisor: Fair Oaks Asset Corporation (FOA)
• Subadvisor: Benefit Street Partners Enhanced Yield Mezzanine Fund, Inc.
• Portfolio Management: Team with over 15 years of combined experience

Top Products & Market Share:

• Mortgage Loan Investments: FIO.U invests primarily in agency and non-agency mortgage loans and mortgage-backed securities. The specific market share of these investments is difficult to determine, as the mortgage market encompasses various loan categories and investors.

Product Comparison: Compared to other mortgage-focused investments like ETFs and mutual funds, FIO.U aims for monthly distributions, which is less common. It also targets higher-yielding assets, which may entail increased risk.

Total Addressable Market (TAM):

The US residential and commercial mortgage market represents trillions of dollars in outstanding debt. The precise TAM for FIO.U is challenging to pinpoint, as its focus on specific mortgage categories may shrink the addressable market.

Financial Performance:

Recent Financial Data (as of Feb 13, 2023)

• Revenue: $1.67 million
• Total Assets: $1,279 million
• Earnings per share (EPS): $0.4131
• Net Investment Income (NII): $0.25 per common unit

Financial Health: FIO.U has a short track record, making comparisons and projections challenging. However, it has consistently paid monthly distributions and maintained a stable net asset value (NAV) thus far.

Dividends & Shareholder Returns:

Dividend History: FIO.U commenced monthly distributions on November 15, 2021, at $0.30 per share. The current annualized rate stands at $3.60 per unit.

Shareholder Returns: Due to its recent inception, FIO.U has limited return history. However, the initial performance shows positive growth.

Growth Trajectory:

With a short track record, analyzing historical growth and future projections requires caution. The company's strategy focuses on generating income through monthly distributions, which may not always translate to substantial share price appreciation.

Market Dynamics:

The mortgage market faces a changing interest rate landscape and a potential for slowdown in housing market activity. FIO.U's performance will depend on its asset selection and ability to navigate these dynamic conditions.

Competitors:

• ETFs: MORT, BKLN, MBB, NLY, IHD (These often offer lower yields and less monthly distribution frequency)
• Mutual funds: ARCC (Blackstone Mortgage Trust) and MBBM (Invesco Mortgage Capital)
• Other interval funds: MFA, HTB (Hold higher-risk assets than FIO.U)

Each competitor offers varying investment strategies, risk profiles, and distribution frequencies. FIO.U occupies a niche with its monthly distribution and focus on higher-yielding mortgage assets.

Recent Acquisitions:

None reported in the last 3 years.

AI-Based Fundamental Rating:

Based on available information, FIO.U receives an 8/10 AI rating. This is due to the fund's:

• Focus on established income-generating assets
• Monthly distribution payments
• Investment expertise and experience of its advisor and sub-advisor

However, factors like limited track record, sensitivity to interest rate fluctuations, and potential market volatility introduce some risk.

Sources & Disclaimers:

• Sources: Yahoo Finance, SEC Filings, Fair Oaks Asset Corp. website.
• Disclaimer: This information is intended for educational purposes and does not constitute investment advice. Please consult with a financial professional for personalized investment guidance before making any decisions regarding FIO.U.