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Opportunity to top up for me. In my spread I’m at 1.8 leverage which is my voluntary max. In my isa almost 100% GROW.
In time the underlying value will show through and be priced in but not yet.
I have big hopes for a partial rebalancing on half yearly results in about / months time with nav correction and broker upgrades but it may take years for the 3.2 earnings used to create nav either to be ignored by the market (and thus we start trading at a substantial premium to nav) or corrected by the auditors to something closer to sector averages for fast growing tech stock.
Hidden gem I think
I believe is makeup of the shareholders of GROW that this is being dragged down indirectly as a rebalance (Baillie Gifford etc...). My other two EU tec stocks are just fine. Expect a big reversion back on trend after this volatile period. However long that takes.
I've had in the past too much leverage (3.0) and paid a high price on the sharp dip August 2012 for that.
These days I have never exceeded 1.8 hoping that any sudden dip would never exceed 50% on the portfolio I have. Keeps me awake at night, though, having anything more then 1.6 leverage on my spread pot. So as Grow goes up on half yearly results I hope that my leverage ratio will naturally come down and I don't plan to add once it does.
ON a rising share leverage is of course your friend. For a share like GROW which I expect 20% annual SP growth even just 1.5 leverage means 30% plus annual and if you must be outside an ISA the additional benefit of capital tax gains free as well.
Our banks are basically leveraged business models on loans. Why not us small fry.
I was similarly leveraged for the past 6 months and paying it off in monthly installments and have almost paid it off.
EU tech the correct sector and GROW the best bet within that.
Many black swans swimming about yet I am fully invested with nothing in cash. Indeed due to part of my positions on a spread I'm slightly leveraged. Across all the 3 pots I hold GROW my full position is roughly 125% of the cash that backs it up. Quite aggressively invested but I hope not recklessly.
Yet with Fed talking about not worrying about inflation targets, BOE printing money and talking seriously of negative interest rates and all global central banks roughly the same all asset classes are being stimulated. This must trickle down to global shares and will do so as long as this unprecedented loose money is about.
Unprecedented loose money means unprecedented P/E ratios for stocks and unprecedented earnings to purchase values for housing. I think it is a permanent new normal. I can't see 4% central bank rates for the foreseeable future. Certainly beyond my 10 year investment horizon.
Within that GROW who has private profit making EU technology stock ( that has not had the SP stimulus of being open market traded) is the cream. Valuations at 3.2 x earnings is silly in this environment but that is where we are.
So in spite of the black swans and poor political leadership I am all in and even beyond that slightly leveraged.
I think Biden will be good for global stocks. He will be just as fiscally loose as Trump but without the scary baggage. Boris is turning out to be a much worse PM than he was a Mayor but there are checks and balances in the UK system and there is only so much damage that his erratic leadership can do. Generally, expect for Brexit, he is pro business policies that help shares.
equally interesting who was the seller?
Half a million spent by a buyer today at 560.00p
thanks steph for that very compelling post. have just topped up again.the shares really are a screaming buy
GROW Consensus Price Target:
GBX 666 Today
GBX 666 30 Days Ago
GBX 627 90 Days Ago
GBX 685 180 Days Ago
I'm confident on half yearly we will get broker upgrades nicely beyond what we had 180 days ago pre covid. Unless there is a general market collapse I don't see SP below NAV per share beyond half yearly results and I'm expecting a circa 20% boost to NAV/share on results so 660 within 2 months.
Markets holding well in spite of idiots at the helm in USA and now UK. Just because our idiot can string a sentence together and speak a few words of Latin does not make them of a different cloth. Ours is just a more sophisticated cloth who you could imagine having a reasonable dinner table conversation with.
This Trumpian signaling by breaking international law is not governance but maybe as Boris says just a tactic. Stupid tactic though. Just makes us toxic on the eve of needing a large set of new international treaties.
Eu letting city of London off the hook and allowing clearing for a couple of years regardless of UK shenanigans and even no deal is good news. At least there is an adult in the room when Boris throws the toys out of the pram.
From an investors point of view I don't believe we will crash out. Some awful deal will be agreed at the last minute and the downside of that will be a long slow process not affecting GROW much in the foreseeable future. Indeed Dominic Cumming's vision of a subsidized high tech UK sector benefits GROW and we can expect market boosting announcements to come out.
Stupid because within the common market we were growing our high tech industry faster than any other EU country and had the highest proportion of inward investment in the sector plus we and were protected from state aid assisted retaliation from EU competitors.
Still high tech is so borderless naturally in or out of common market might not make too much of a difference to GROW plus GROW spans EU and so is a diversified bet regarding Brexit problems.
I would not want to be a worker in a car plant in the midlands though but hey they voted for Brexit so they had it coming. Never has there been a greater need for us all to be informed citizens. Twitter and facebook have given snake oil salesmen a platform they have never had before and until the new normal settles in we will have chancers successfully rise to the top promising anything to everybody.
Hi Steph. Some great posts.
I was looking to top up but failed to free up any funds due to the overall market correction recently and the fact need to make a small investment into my home. Listed Private equity in the similar sectors has faired better with HgCapital powered ahead of NAV at 16% prem now and I sold out of them weeks ago.
I am guessing a bit here but looking at the makeup of the institutional holders that Ballie Gifford funds has seen the most drop and I am speculating that this has been caught up either because of the sentiment of their (and NASDAQ/tech) drop or speculatively Ballie Gifford actually rebalancing into their nutty shares that fell.
NASDAQ up significantly today bodes well for GROW recovery. But alas no funds... maybe next month by which time this would have recovered.
looking back at NAV/share and SP on the day of year end the following emerges:
April 1 2017 NAV/share 108 SP 350
April 1 2018 NAV/share 253 SP 500
April 1 2019 NAV/share 510 SP 500
April 1 2020 NAV/share 545 SP 320 (which has risen to 530 as of today)
As you can see SP started in 2017 at 3x NAV/share then 2x for 2018 and for 2 years 1X (or worse if you only look at April 1 2020 in the middle of the COVID panic).
Is this deceleration of SP relative to NAV/share really justified?
Given that we have fabulous growth prospects of 20%+ NAV/share growth year on year SP at Nav/share seems a tad conservative. Surely some future growth should be priced in by SP having a premium on NAV/share. Then there is COVID 19 panic catch up as well.
I topped up a bit this morning but largely out of ammunition to do any more. Roll on half yearly results.
Topped up a bit.
Anything below NAV/share good for me given I think that within 2 months we will gat a NAV/share upgrade due to regular 10% NAv/share half yearly results plus some catch up to the overly conservative valuations made in the middle of the COVID 19 panic March 31 2020.
No deal or chaotic minimalist deal Brexit weighing down on UK shares relative to other markets. Maybe 20% effect. GROW not directly affected by Brexit but still suffers from general background market sentiment.
I don’t understand the benefit to the UK of Johnson threatening to break international law and the Anglo Irish peace treaty. Johnson seems to be in perpetual campaign mode with emotional signaling using legislation to his Brexit audience within the party rather than governing with an 80 seat majority in a centralized state. The buck stop sat his desk nowadays even if he has not noticed that.
Trade negotiations are a bit like COVID 19. Bluster is not governing. In the end the virus progresses regardless of the wishes of those in power.
Trade agreements are by definition between two sovereign nations and no progress can be made without compromise between them. They require delicate compromises sensitive to the sovereignty of others.
I fear Johnson is a throwback to the gunboat sprit of 1840 rather than the blitz sprit of 1940 he so often self refers. IN 1840 we simply told the Chinese what their trade agreement was to be with us and when they said no we just shelled them until they said yes. Easy to "negotiate" when your gunboats are militarily superior and you are willing to use them. In that "trade agreement" we insisted the Chinese allow us to legally sell massive amounts of opium we produced in India at great profit to ourselves and staggering social cost to the Chinese.
The Chinese remember that trade humiliation even if we have forgotten it.
The Americans under Trump are trying the forceful diplomacy of the past. Even for a country with a military as large as the US I don’t think it gets them anywhere so the chances of this jingoistic UK approach to relations with sovereign equals being successful is pretty low.
thanks flibs wise words as always.
Hi Rapper, GROW is down due to the massive selling of the sector for "Covid-19 Stay At Home Stocks" largely compromising of the NASDAQ and held by funds such as Baillie Gifford's Scottish Morgage Trust. They are typically higher valuations such as P/E. They all fell on Friday and the US market had a Bank Holiday yesterday. This naturally may have an effect on the listed value of GROW and other listed Private Equity funds... and the market in general.
Who knows if this is part of a wider correction or simply a dip. I am happy to buy on the dip. Added just over a grand today. As Steph mentioned the NAV result will be out in a couple of months and we could well see a good 20-30% gain.
steph flib et al.can you think why grow are such a poor market today almost 3%down? they must be well below the nav which is not long before publication. one would think they,d be considered a very safe place to be in the present turmoiled environment but clearly better brains than mine take a contrary view. why?
Hi Steph, I am pretty chuffed with the other fund too (the Marian one), performance for both have been very similar. Marian still own some TransferWise and a better disruptor bank in my opinion in Starling Bank. Both share a holding in Graphcore. I think Marian like to hold much longer into the cycle while GROW are much more early-stage, either that or GROW are planning to buy something exciting soon with the cash pile!
I've topped up recently even just above NAV/share. Might do a bit more.
With the printing presses a printing , the tech sector a soaring and cash from portfolio sales a rolling in our pessimistic covid 19 affected NAV calculation dated march 31 2020 will surely get a major correction on the half yearly.
Pure UK shares will continue to be affected by Brexit mess but the impact on GROW limited due to sector and EU wide exposure. Still the best share I can find.
"So just over 2 months to wait for some official guidance on post COVID crash valuation of portfolio."
- My other fund similar to this just received an 26% uplift since 31 March 2020 to NAV. Feeling confident about buying above the current NAV for the long run.
Always good to bank profit.
Same as we are doing here with GROW. Large tech firms have a lot of future growth priced in. GROW's portfolio does not -especially those with valuations based on 3.2x earnings.
Apple with P/E of 37 and dividend cover of 0.66 is many many times more expensive compared to GROW portfolio. Too many times for my money.
Over 10 years I'm confident GROW will outperform any major tech company never mind the tech index.
"It's a mugs game to predict small short term dips and spikes but for my money, I'll top up if this dips from here."
I am doing a bit of discount control myself. I have added some just now. The overall market has been down this week.
Last year there was a half yearly update on the 28th of October that commented on valuation of portfolio projections. This was followed a month later by the half yearly results which gave a precise valuation.
So just over 2 months to wait for some official guidance on post COVID crash valuation of portfolio.
It's a mugs game to predict small short term dips and spikes but for my money I'll top up if this dips from here.
GROW, along with the sector, has a portfolio of companies that on the whole have not been affected negatively by COVID and some important ones have grown faster. The 12% dip in valuation on March 31 2020 compared to the half yearly projections was not warranted. It will be corrected, either in whole or in part, on the half yearly results in late November 2020 on top of the "normal" 10% half yearly NAV/share growth. So good news coming.
Regarding: property market.
Builders in a C19-recovery play is for you, I however am playing property market rebound by sticking to what I know and have bought Rightmove this week as it is backed by fund managers I know (including Ballie Gifford who invest in GROW) and is a business I understand and use (that's why Purple Bricks is not for me). I don't like leaving the safety of funds but attractively priced investments are increasingly harder to find. I am selling down Ocado (another Ballie Gifford investment) to fund RightMove. I don't invest in funds who buy UK listed companies cos most of the listed UK market is carp.