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Markets like stability and Labour is now the party of economic stability. 1/100 chance of the Tories making it back.
All signs point to a pretty exciting 3 years for our SP. Maybe a quick recovery from the oversold position we have now and towards something more sensible -even if not optimistic.
When GROW went public in 2016 and then joined the FTSE what should have happened in theory was that retail investors and funds who do not invest directly in unlisted tech would pay above the last round prices and the SP would trade at a consistent premium to NAV/share as the rate of growth (20% or so) would be unavailable elsewhere.
What we got was the above premium half the time and a continued dependency on the same type of funds that can and do invest directly in many of the unlisted assets GROW owns. Those funds will never pay much of a premium to NAV/share as they can buy the underlying assets directly -although they would need to wait for the next funding round to do so and don’t tend to buy into the seed funds GROW use for round A info.
I suspect once we recover the market will accept that the discount to NAV we had was overdone and will not repeat the discount at that level next crisis. A dip in NAV/share from circa 940 to circa 660 was plenty enough for a fast growing portfolio with few if any actual bankruptcies to average in. There was no need at any point for a discount above 30% for our SP.
From here I think we have a lot of hidden value that will drive very fast NAV/share growth over the next 3 years. I don’t see any problems reaching and exceeding our previous high of September 2021. We avoided frothy valuations on the whole an have been growing the portfolio organically ever since September 2021.
Good luck all
Well, well, well, we have an election ahead of us. This is simply observation that new governments are not voted in but unpopular governments are voted out. Markets hate uncertainty. Rachel Reeves has been on a 2 year mission to charm the City and has their confidence. Recent speeches and Labour Policy have been well received but what will this mean for GROW (or for that matter other shares in a portfolio)?
A step back and a read of her recent speech back in Feb this year gives a few clues. Changes will not happen immediately, they never do, but all businesses can have some confidence that the Labour Party with Reeves as Chancellor is likely to benefit the economy even though interest rates might not fall until August.
The mood of the UK, seems rather fed up with this administration, where, since 2019 there have been 4 Prime Ministers and no election.
https://labour.org.uk/updates/press-releases/rachel-reeves-speech-at-labours-business-conference/
Anyway, my reading of the entrails suggest a decisive win for Labour, that stock markets will rise in the run up to election as poll numbers are released (through certainty) and a rising tide lifts all vessels.
This is likely to be my final post to this board. I tend to take the keenest interest when worried on the future prospects OR if there are one or more bullying contributors. Opinions are like n!pples - some are pointed, others rounded. I'd like to pay particular thanks to steph whose determined optimism, depth and breadth of knowledge has been extremely useful. I have been averaging up in recent weeks and continue so to do in small chunks putting surplus dividends to work.
With interest rate cuts to follow, I hope. I recall reading somewhere in the last couple of years that 3% - 4% base rate was the sweet spot for Banks, Governments and businesses.
There is an interesting article published by KPMG, which although does not mention GROW is giving an upbeat future for Private Equity investment that has been in the doldrums. The contention seems that activity will begin to rise as dry powder accumulated over the last couple of years will be put to work.
https://assets.kpmg.com/content/dam/kpmg/uk/pdf/2024/03/uk-economic-outlook-2024.pdf
And again. Not a reliable partner. Just wanted to find a way to get out of Forward
Long run I expect this to be a better store of value than it has been for last 2.5 years with a favorable relationship between volatility and growth. IN other words the least possible volatility on the maximum growth potential.
We are not there yet but I think in time with market familiarity with our retail wrapper and history on our side we will emerge as a relatively safe way to take a punt on a fast growing segment of the economy. Some volatility of late not structural. Just difficulty in understanding a new asset class in times of stress. First time round over correction down.
In common with you, Gettingthere67, today, I too have added some shares. Always nice to average up.
Steph I think nice risk is still about right and one I am comfortable with. I think some of the portfolio are having trouble growing despite having the funds as I see the same technical and market expansion vacancies unfilled sometimes after many months, the exception still being Revolut.
I sincerely hope that you ignore my drivel, ripley94. Aside from being just another herbert with a portfolio built over decades, I am pretty binary with my picks where either spectactularly right or hopelessly wrong.
These days, I tend to make fewer mistakes but my average bargain these days is many times greater than when I started. Although the % loss may be the same, any £££’s written off is always disappointing.
Anyway, markets are gaining in confidence and, with particular thanks to steph, I have a better understanding of GROW than the research which I had made.
Nice risk and if you click on 3 month charts looks fantastic.
However when you click on 3 year chart it looks very modest indeed against what is needed to get back to previous sp.
For my money I think we are going back to previous sp. Whatever the permanently lower valuation multiples (Revenue to nav of portfolio companies) we might have are outweighed by fast organic growth of GROW portfolio entities (60% plus).
When is the million dollar question though. I have pencilled in 2.5 years. So a 5 year dip peak to peak. My head says 2.5 years but my gut says sooner. Anyhow good luck all.
Alas_Smith posts made me have a look , do not recall coming across this share before but found this note on main broker acc.
"Primary Bid inc placing @ 800 14th June "
No year 2021?
If they sustain this market cap will be back in 250.
Currently would be sitting about 100th place
Lucky enough to buy some at 221 four weeks ago - just sold 2/3 of them for almost same money. Got plenty left.
Aware that this time last year price rose over 300 and then declined again.
I hope that doesn't happen again, but at least some profit is locked in if it does!
Certainly share price has been perky this month. The 5 year chart suggests this to be a good time to invest.
FWIW, my wife and I had the review yesterday with the team that look after our discretionary account. We discussed our risk as we are the only one of their clients close to or who are retired to have our risk set to high. It is an easy point to address. We want our portfolio to last us through our retirement, which could be for 30 years or perhaps even longer. This is sufficiently long term where it is sensible to have a higher exposure to risk that could be reduced once we are in our 80's to medium as that might simply have a 10 year or so horizon.
Anyway, bear markets tend to last no more than 18 months im my experience and bull runs for 5 years. We are in a bull run and thus we should have very decent growth and can afford to accept the volatility that a higher risk profile has for capital growth investors.
Added some more shares here today.
Very glad I re-bought here recently!
Agreed that interest rates are the largest driver of our sp through the mechanism of no risk rate of return changes and the subsequent lowering of net present value of revenue far into the future. HIgh P/P multiples of growth stock demonstrate that there is a shortage of investable projects though and sooner or later our sector will get the inflow.
Yes our investment class is new (retail wrapper around unlisted tech) and having birthing pains an d subsequent volatility. Peak to trough NAV/share dipped 30% (pretty normal market dip) but our SP dipped 86% peak to trough. That differential is unlikely to happen next time as marekt get used to our asset class. Unfamiliarity and our black box information flows hurt us as did FSA regulation that treated us as a closed fund without a instantly correcting SP on market jitters.
We have had 2.5 lousy years and now I think we are at the beginning of 2.5 great years where our SP will catch our previoius high again and hold it.
OUr sector is naturally growing. BIg tech is not expanding as a % of the whole tech pipeline due to natural tendency of knowledge economy ideas to be birthed in smaller more agile entities. For innovation there are disadvantages of size (regulatory attention and bureaucracy). ALso small innovative companies have relationships to Universities so get a lot of free knowledge transfer that big companies do not. Public subsidy of knowledge creation.
Our core portfolio is in spite of the downturn in healthier shape than historically. We have always had a % failure rate and at the moment that is unusually low. So once confidence returns we should shoot up pretty quick.
Although the FED has put a dampener on interest rates coming down in the next month to 6 weeks, the Nasdaq has closed at a record high today. PEY (Princess Private Equity) announced upgrade to NAV for their holdings in March and, of course, since those announcements 3i produced results which were well received.
Of course, this IT is not really one for widows and orphans through the highly volatile nature of the underlying investments. I am sure that the key to NAV upgrade is in interest rates falling, which, as the Bank of England is rather ahead of the curve compared with US, we might just have another 6 -8 weeks as a window at current prices.
Yes, I know that the SP is showing a near vertical rise in a short time but it is simply reflective of the volatility inherent in this type of IT where the holdings cannot be valued with any precision.
Great long term hold this to be sure.
Shorter term I expect not much will happen until final results on the 12th of June and then we should get broker upgrades. A couple of broker guidance currently around 3.40 which is silly given NAV/share is stabilizing and should go up over the next 12 months.
I don’t expect us to get beyond 4 quid until October half yearly results. Any solid NAV/share increase in October will create a pretty swift drift up close to the new NAV/share. Beyond that we should move up aligned with NAV/share increases which in turn go up in line with (at a discount) sales increases. Maybe a few upside surprises where some of portfolio cash out at higher amounts than on our books or are credibly worth more via a price discovery funding round.
40 odd years ago, I was skiing in Switzerland with friends from University one of whom at the time was a very junior fund manager. His amusing comments that 10 minutes might be too long in the market and 10 years too short remains with me to this day. He also confided hat having cut his teeth in derivatives trading, long term deals were often a series of short term deals that had gone wrong.
The "smart money" drives the market and in recent years this is IT, healthcare and renewables.
As far as I am concerned, I want to have the greatest exposure to these sectors NOW and in the businesses that are identifying future market leaders. My worry is that the advance of IT has brought AI and while I am content with my investments in NVDA, MSFT, ADBE and ASML, I am not convinced that many companies are ready for AI let alone able to use AI except in industries that require vast amounts of data. Pharmaceuticals is one such sector but renewables thus far has been a huge disappointment.
What a surprise!
Big buy AH:
09-May-24 16:35:16 304.50 145,401 Buy* 301.50 303.00 442.75k