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Bolt is TMT's 2nd biggest holding.
Since 2020 Bolt has doubled the cities served, tripled customers to 100m
"Now, our size and the range of products we offer put us in a unique position to revolutionise how people move around the cities. By providing an alternative to private cars, we can help create cities that are greener, safer and more pleasant to live in. It’s important to stay grounded, though — rising inflation and interest rates mean we have to be disciplined when assessing how and in what markets we invest. We’ll prioritise growth efforts in our existing markets instead of expanding our services into new countries. Our culture of frugality helped us come out of the pandemic in a strong position, but the challenges will not stop, and the team is focused on preparing for and responding to them.”
https://blog.bolt.eu/en/bolt-announces-ongoing-post-pandemic-growth-to-mark-ninth-anniversary/
Some more food for thought:
https://www.tipranks.com/stocks/blze/forecast
Backblaze has a forecast 110% aggregate upside based on 3 analysts. That would add back $0.94 to the NAV.
Based on my calculation earlier today of the increase in BLZE and BOLT since 30/06/22 to today that would add to the $7.84 "real NAV as at 16/08/22" to arrive at a future NAV of $8.78. At today's close price (up 3.2% today) that's a 52.85% discount to NAV.
Another fun fact is the average premium to NAV historically was about 30%. That's because this consistently grew at about that rate per annum. If we said "fair value" was this should return to that premium then that would be $8.78 x 1.3 = $11.41/share. Today's $4.14 is at a 63.8% discount to that "fair value" level!! (i.e. a double bagger)
TMT is covered by various UK Analysts Hybridan, Cenkos and Edison all of whom provide a slightly different perspective. It is also interesting to browse their holdings which are seed funds (pre Series A fundraising) and this segment seems to be quite resilient in the current market. As Cathie Wood says: Innovation solves problems - and we have plenty of problems right now. I particularly like Backblaze (am a customer) and have browsed the websites of various holdings such as Estate Guru and I've liked what I've seen. See: https://twitter.com/TMT_PLC
I notice the Investor's Chronicle have covered TMT this evening too:
https://www.investorschronicle.co.uk/ideas/2022/08/16/bargain-shares-capitalising-on-nasdaq-s-rally/
Talk about hidden value in plain sight. Today's news of a "massive" reduction needs to be put in context.
But before I do even with today's news there remains a 40% discount to NAV. I maintain this is actually larger, and here's why:
1. The NAV is as at 30/06/22. As I write on 16th August there is an uplift BLZE of $0.24. The downgrade to Bolt was made based on peer valuations of Lyft and Uber as at 30th June. Yet each of these now trades 44% and 58% above their 30th June valuations. (in other words the reduction of 28% would be reversed if we redid it today). That adds back another $0.92. That gets to $7.84 or a 47.7% discount to NAV just based on those 2 facts.
2. The Russia exposure turned out to be far smaller than originally feared. The amount was relatively small but other write downs were smaller still.
3. TMT has $13m cash adopting a conservative approach going forwards
4. Lots of positive updates from the portfolio including from Backblaze which remain also well funded.
The last solid "waypoint" was $9/share in March 22 (the FY2021 results). NAV $283m. Shares in issue 31.45m.
2022 changes:
Backblaze: -£40.76m / - $1.30 (Publicly listed shares dropped from $16.60 to $8.17)
Jan 22 Update +$37.2m / + $1.29 share (Rerate on Bolt's Jan 2022 Fundraise and other of its 50 holdings)
Ukraine/Russia -$4.6m (-$0.15) writedowns based on "potentially affected" businesses
= $8.84/share
Historic 5 year average IRR 38%
Historically traded 10-20% premium to NAV (due to its high growth)
If this average continues then that would mean a $1.68 uplift this coming week to $10.52/share
Current share price puts this at between a 55.4% and 62.5% discount to NAV ($8.84 or $10.52 vs $3.94)
This is well above any other VC fund and assumes that there's huge skeletons in the closet. The fact is its 3 biggest plays are well funded (Bolt, Backblaze and Pandadocs) and these make up about 68% of the portfolio. TMT itself has lots of cash following a fund raise last year and realisations.
Even being most pessimistic this is on a very high discount, and I think the market has overlooked the value on offer here. We will see on the H1 update. Should be released this coming week or the week after.
GLA