The latest Investing Matters Podcast episode featuring Jeremy Skillington, CEO of Poolbeg Pharma has just been released. Listen here.
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I know this is somewhat off topic, but it relates directly to any holding which has the potential for uplift as a "multi bagger".
And investors have the ability (and have had since the TESSA in 1990) to use efficient wrappers to protect against capital gains and dividend income taxation. The wrapper I am describing in now knows as ISA. For the wealthy investor, this has allowed the sheltering of cash, shares, investment trusts, pooled funds, bonds etc within limits. This limit is currently £20,000. The benefit of this shelter is that there is no tax payable on either gains generated in a disposal as a capital gains tax charge or from income generated from cash thrown off by way of dividend income. In other words, all growth is without taxation. (I'll address what happens on death later).
The benefit of the wrapper has to be used in a tax year that runs from 6 April to 5 April and if unused is wasted. Cash withdrawn from an ISA can be replaced during a tax year. This is particularly beneficial for some investors as I am discovering following a substantial inheritance a few years ago.
The downside of such a wrapper is that losses within the wrapper need to be taken on the chin and there is no benefit from a tax perspective in future years. But, who invests to make a loss? Losses outside a wrapper can be applied against future gains and that, I am finding is a potential real benefit now and in the future.
The current level before CGT needs to be paid is a paltry £3,000 and tax is applied at 20%. Selling 6 holdings that are not within an ISA and banking a profit each time over the course of a year of just £500 will bring an investor to the limit of the rules. For shares that throw off dividends, the limit is just £500. With the average FTSE holding having a yield of 3.59% it is very easy to cross the line and come within the grasp of HMRC.
I don't know about you, but I have worked my socks off to prepare for a rainy day. I've needed to raid my savings and start again 3 times because ventures failed or I needed to settle a bill and was facing ruin. To all intents and purposes, my real savings started in 2002 when we had paid off our mortgage, relocated and had £20,000 cash to invest.
The ONLY sensible way for investments to grow is to use efficient wrappers for some holdings and "play the game" as best as possible. Having inherited after an eye watering amount paid by way of IHT an equal share of my late parents estate (a qtr that of the Government and something I deeply resent), I have been able to shelter in these last 3 tax years £120,000 in ISA. (Husband and wife each have allowance of £20,000). The remaining balance is invested outside ISA (and SIPP) wrapper in a joint account. Some holdings have been sold so that our joint allowance has been used each year to stay within or at the limit for capital gains. Dividends are tricker to manage, so the holdings have little by way of dividend income - this year
I would never concentrate risk as much again.
i am where i am and not about to change at this point in the cycle. im confident grow will revisit 11.82 high within 3 years. nothing else on the market can do that % uplift. then 5 years late ill diversify reducing grow to 1/3rd of isa
A well constructed portfolio allows an investor with a medium attitude to risk and a timescale of 20 years to draw an inflation linked income of £30,000 annually from a £1m pot while preserving an growing capital.
steph - having a single holding valued at £1m even though it is spread accross a myriad of holdings in a single trust is perhaps rather a reckless strategy. After all, GROW does not pay any dividend and although diversified in a range of sectors, these are all fledgling companies made more difficult to sell as they are unquoted. I know it sounds hypocritical to comment like this as I have holdings in 3i Group, Princess Private Equity, Augmentum and Molten Ventures are all doing well, but it is a caution for others who may be influenced by contributors on a financial board.
Good luck with your investment - I genuinely hope that this pays off for you, but urge you to bank profits from time to time. Always sensible to have a decent exposure for each sector, especially in a rising market
That second paragraph sounds to me like they are looking out for discounted, more mature assets from distressed holders that can quickly be written up in value rather than further deployments to Series A rounds and seed.
I feel the portfolio is really bloated now. I hope the capital allocation plan involves some provision to reduce the debt burden.
"The news follows our recent announcement in relation to Perkbox, and reflects the additional momentum being seen in the realisations market. With multiple realisation processes either underway or planned across the portfolio we expect to deliver in the region of £100 million of capital back to the balance sheet this financial year.
"We will provide an update on our capital allocation policy in respect of these anticipated proceeds, which focuses on NAV per share accretive deployment, at the time of our full year results on 12 June 2024."
I doubt if buying at below what our cash raising paid some months ago (2.75) is “buying at the top”. That money had access to detail on the portfolio we do not have.
Im expecting we will drift up a bit more but we will not really fly until October half yearly results when we should get our first NAV/share increase for some time.
Glad I re-bought here the other day - even though someone here warned me I was buying 'at the top'.
Sp up almost 14% since then.
Hopefully it's turned a corner now...
I sold out a long time ago but you guys are having a great week! Hope it continues. Gla
“Modestly above” our holding on our books of 35m means circa 40m cash realization.
HOw easy the money is now pouring in now that we have prospects of realizations . The 55m fundraising last year was painful and dilutive at 2.75 when NAV /share was circa 700.
Now our portfolio is converting to cash at premiums to our NAV calculations.
Can’t see how our huge discount to NAV/share can last at this level. Even 2.78 a steal.
I’ve got 71,000 GROW shares in my ISA. Ridiculously concentrated investment strategy and currently well underwater (4.50 average). However, within 5 years I expect the 71,000 shares will be worth over a million and I’ll be set for life. Wish me luck.
Just looked and the spread is almost 30p (10%), that's not really my type of market to be honest.
Blimey, that's some chart Sangi. It's at a previous high which can be increase the chances of a pullback. I'll try to find the time to learn a little on the background. Thanks again for the headsup
Endomag was one of the companies I had spotted as a solid sign of value before they started including it in the core.
As with a number of other companies in the portfolio they were working to deliver a solution to a well defined problem in this case, an improved diagnostic device for planning operations for breast cancer and preventing unnecessary ones on lymph nodes.
Turned out a good return on the £9m invested. You could see they were a well performing company as they had finance from mainstream lenders for working capital.
Shame they have to be bought by a US company to continue their growth.
Follow-on funding was provided to support Endomag's continued growth in 2020. The deal values Molten's stake in Endomag modestly above its Group holding value of £35 million
News out today. A satisfactory read.
Investors these days (compared with the late 1970's) have the advantage of an almost bewildering array of tools and information that allows financial decisions to be made. Although I am not a fan of charts except as a very broad indicator, it does have relevance that should not, IMO, be ignored.
For GROW, the chart that I like is the 10 year one and, to my interpretation, the share price is beginning to show the hint of an uptick and the point at which investors are starting to hoover up the shares. Of course, buying pressure has only a small influence on the share price which tends not to last very long. Market Capital increases will only be seen with improvement in disposals and re-investment in new enterprise.
As ever, investors should undertake their own research but from my perspective, this has all the hallmarks of being a good time to build a decent holding as equities tend to do well with the tailwind of falling interest rates. there are mutterings that the ECB is hoping to lower rates in May and it certainly won't do the long suffering consumer any harm if the Band of England shave a few points off rates in May/June and further cuts in August and November.
I’ve not done a formal statistical correlation but we move with certain indicators more than others, but it does seem to shift.
Biggest seems to be interest rates and US rates more influence than UK for whatever reason.
Second biggest indicator is Tech 100 US which we track a lot of the time but not now.
Third is FTSE 250.
Forth is geopolitical risk linked to commodity prices in turn linked to inflation and in turn linked to interest rates.
Forth is
Steph, I think that the key to share price growth for this IT is through change to base interest rates.
We do know that rising interest rates the world over are headwinds for equities which are more easily absorbed by companies with wide moats and as the BoE might start to reduce interest rates in May, or more probably, June, this will filter to equity markets. FTSE has recognised this and has reacted and rises in valuations for the smaller markets, and in particular, unlisted companies SHOULD follow, albeit with some lag.
In the same way that the press is no longer reporting a cost of living crisis, different crisis will grab headlines.
"Underlying Gross Portfolio fair value (unaudited) stabilized and broadly flat for the year at constant currency, reflecting a modest increase in the like-for-like portfolio in the second half and positive contribution from the two acquisitions (first half: 3.7% decrease, second half: 4.2% increase at constant currency)."
That is good news buried under the NAV/share decrease attributable to the "one off " dilution and currencies movements.
Our core portfolio is finally growing a bit in NAV and this should accelerate as the 63% revenue increase's kick in for any revenue multiplier valuations. As the market continues to stabilize we should have some late rounds and IPO's that confirm our NAV calculations nicely.
I foresee NAV/share 15 to 20% higher by March 31 2025 with good further prospects to keep that pace or better it. With that our steep discount to NAV/share should be over. What SP relationship to NAV/share we have after that covers a range. Once the market accepts 15% to 20% growth of portfolio value as a credible sustainable rate SP should fluctuate between 80% of NAV/share and 130% depending on general market conditions. That is broadly our history.
I do think there will be some bounce back (in addition to organic growth of 15% to 20%) on our NAV/share as the downgrades were not based on portfolio failure but subjective views of valuations in the absence of hard market testing via funding rounds or IPO. A funding round valuation is much more solid than a revenue comparable and can take into account IP and niche factors. Graphcore is worthless using a revenue multiplier but clearly still has value. Ditto for many others. The higher the IP the greater the lag in NAV is revenue multipliers are the only key.
Https://uk.finance.yahoo.com/news/private-equity-valautions-holding-firm-130354578.html
With the FTSE exploring new highs this week, a few weeks behind USA, investor sentiment is improving and the share price has perked up for GROW. I've now broken even on my investments and, as finances permit will look to average my holding up over the next few months.
The practice of selling short has never appealed to me since, by its underlying limited return it cannot be considered anything other than speculation. GROW has produced new information this week which will allow investors to compare the formal numbers more accurately.
I remain bullish on GROW and although my holding(s) are underwater finacially, I am more persuaded to buy rather than sell shares in GROW at the moment.
The preliminay unaudited results state no downgrade of NAV/share for portfolio. That will be in the audited finals.
Some retrace of NAV/share due to dilution in raising the 55m below NAV/share and 19m unfavorable currency movement (random). Those wil be considered one offs.
You are braver than I to try to judge short term movements. In any case you should now short them according to your analysis. Good luck. I’m long for sure and optimistic of SP increases on final results.
According to the analysts the final year results in June will show a massive loss, so downside is more likely in the short term.
Bought loads at 218, started selling yesterday and just sold my last lot. I believe we will see 200p again in the coming weeks.
If it had not been for the dilution and the 19m currency movement in the wrong direction we would have had a small increase in NAV/share from September. I’m calling bottom on NAV/share downgrades. Now organic growth of portfolio booming along at 63% revenue growth will start to kick in going forward.
Step aboard before train leaves the station.