Honeycomb Investment Trust (HONY) aims to generate a dividend yield of 8%, paid quarterly, by lending money to innovative non-bank lenders, secured against their loan books. The yield target has been met or exceeded every quarter since launch in 2015, and has continued to be paid through the pandemic (see the Dividend section). HONY is managed by Pollen Street Capital (PSC), an investment manager which specialises in non-traditional finance. PSC uses its extensive experience in the space as well as bespoke IT systems to help identify and monitor the best of the non-bank lenders which have proliferated in recent years. HONY’s model is very distinct from platform lending (see the Portfolio section), and involves senior lending to non-bank lenders secured on their portfolio of loans rather than directly acquiring loans from lenders. PSC has continuous oversight of each borrower’s entire book and tracks it on a month-by-month basis, altering how much HONY lends and therefore how much its investee can lend. Furthermore the underlying loans are often very short-dated, meaning that as the economic outlook darkens the lenders can run down their books and return cash. Thanks to these features, HONY has yet to register a negative quarterly NAV return, as we discuss in the Performance section. In order to generate such a high yield, HONY employs gearing, aiming for 50% to 75% on an NAV basis. Facilities are flexible, allowing for rapid expansion or contraction of the balance sheet. HONY’s discount has narrowed in recent months as risk appetite has returned to the markets, and it is 4.5% at the time of writing.