Roundtable Discussion; The Future of Mineral Sands. Watch the video here.
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Current UK£2.56 UK£5.97 UK£7.35 UK£3.30
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Jul ’24UK£2.67 UK£7.61 UK£9.00 UK£5.43
Oct ’23UK£3.04 UK£9.23 UK£10.20 UK£8.61
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Mar ’23UK£6.37 UK£11.35 UK£13.00 UK£10.
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Current UK£2.56 UK£5.97 UK£7.35 UK£3.30
Jan ’25 UK£2.78 UK£6.08 UK£7.35 UK£4.30
Dec ’24 UK£2.68
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Barclays now, apparently, has given an “equal weight” rating of 3.30. SO cantour at 3.15 and Barc at 3.30. Others much closer to NAV/share. Barclays probably the reason for the volatility Friday.
Either Nav/share is wrong or it is correct at the moment but there will be 2 years of small losses every half year report before we start to go up again. Cantour acknowledged a lot of upside potential to their guidance. Too true.
For my money I think NAV/share correct and includes the full market correction we have had. It is balanced between current downside and upside scenarios. Biggest factor in our dip is interest rates and we all can read the speculation that they have peaked and are about to come down over the next 2 years.
GROW Portfolio remarkably robust with modest and historically normal levels of failures. It is good stuff to have average portfolio growth of sales of plus 50% in spite of limited fundraising. Means good products and services that sell organically and naturally. CAZOO mark 2 they are not.
If we have further modest decreases in NAV/share this year end result half year will be the last before we start to increase NAV/share every half yer as we have done in the past.
Portfolio growing sales by over 50% on average which sooner or later will drive NAV upwards. If we show an increase in NAV/share however modest with a reasonable expectation of more to come on year end results we will jump considerably.
I am most interested in Graphcore. On our books for 37m when it was previously on our books for over 100m. So we have written it down quite a bit. Accept it might be worth zero this year if it fails to fundraise on time but it might be worth nearer what it was or more too. Big boys game. Uk government unhelpful. We could get a successful fundraising announcement at any time on Graphcore. I assume they are working on it.
Disappointed Graphcore are pulling out of the Chinese market in response to US pressure. Was always the possibility they might play that card when bigger US owned AI can’t. Still they must think they are in with a chance in western markets to do so.
I have rounded a holding up today with another purchase, this time of 545 shares. Trifling amount but it is to take advantage of some cash thrown off from profits taken on OTB, the bargain for which was placed today.
Very low volumes can create that instability.
And again - live prices showing massive spread of 14p but actual quotes still have sell 1p above buy
For about 5 minutes, back to normal now
Quotes for sell 262 and to buy 260!
War seems to be now the number one black swan holding back long term maturity investment such as GROW. Interest rates which were the number one black swan now clealry peaked an dwil come donw sooner or later -for my money sooner than expected. US listed tech at record highs which is a lead indicator of the direction of private tech later round and IPO valuations. Just a matter of time before the still private tech value chain reprices taking the new listed tech P/E ratios into account.
HOrible as it seems and dangerous as it is I don’t see either war (Ukraine or Israel) spilling out much beyond where they are now. Israeli invasion of Lebanon a big risk but last time that happened hardly impacted global economy even as Lebanon devastated.
Ditto for the Palestinians. Endless occupation is not new jut a more honest declaration by the Israeli government of what it intends to do. Far more modest Israeli governments since Oslo were expanding the settlements in the west bank at the point of a gun post Oslo without any real blowback from the west -so the global economic community have permitted the status quo which has not fundamentally changed, just become more obviously violent. Sad for all in the region, especially but not exclusively the Palestinians, but the impact on GROW minimal. Extraordinarily poor leadership all around.
US has been poorly led for a long time (and abut to get worse not better) but that seems not to have much impact on the stock market. Different worlds. FTSE affected a bit by some very poor UK management of late but those are real disruptions to trade we had as a result. Market does not care much if we have a genius or an idiot in 10 Downing street so long as they do not do any actual damage to the real economy.
Steph, I confess that I disagree that the market is stabilising. The markets, I believe are actually rather jittery and the "January effect" has not yet taken place - it might not take place. Yes, I accept that interest rates have the endorsement of having peaked but central bankers are showing no enthusiasm to reduce rates yet. Hints of cuts lift the market only to fizzle out a few days later.
Next we have Iran lobbing attacks on P'stan as well as Yemeni rebels causing some chaos to shipping, all in the wake of the Gaza conflict. That is unsettling for investors on top of the Russian invasion of Ukraine. With electioneering cranking up in USA, there is a horrible danger that Mr Trump will return to the White House. A frightening prospect for NATO.
While the difference is considerable between these two firms, it is not exactly translating into a brisk uplift in the share price for this trust at the moment. Both firms command respect but, for myself, I am more inclined to the lower guide target, which, if it is discovered to be too cautious can and probably will be upgraded.
For my portfolio as a whole, I am down around 1.5%, but that can change in a single day, so I am not in the least fussed.
Must say a bit shocking to have a 12 month guidance at only 3:15 but we have overtaken broker guidance before and I think will beat that one quite substantially. I’m more with the FEb 2023 Berenberg guidance of 900. Clearly delayed but the market has not deteriorated since then and in fact is now showing signs of stabilizing. We have had a modest dilution at 2.75 which right now is neutral as we got valuable cash to spend in exchange for the dilution but will be a minor drag on SP once the market improves. and our SP goes well beyond 2.75 again.
What cantor seems to be missing is why even benchmark ourselves on a 12 month target at 50% of current NAV. They make a lame excuse they have done their own EV/sales ratio but why trust Cantor when they give no details as to why so different than Moulton’s. Industry averages of sales to valuations are not sufficient. Need to be specific to the sector and the “quality” meaning that ownership of intellectual property or not need to be included. Retail based tech with little IP will inevitably have low sales to valuation multiples and that is a good chunk of the general market. Cazoo is an example of how volatile retail based tech can be. The sales to NAV of CAZoo right now is now a fabulously low ratio. Does that mean CAZOO is a buy? Maybe not. Averages include a lot of crap.
Even a 50% discount will disappear like snow on a hot roof once NAV shows credible and accepted signs of increasing again and that may come as soon as our year end results or first half of 2024/2025. With the portfolio average growing sales at 50% plus per annum this will come.
Also market seems to be stabilizing. Interest rates clearly have peaked and even Lagarde talking openly about rate cuts to come. As soon as IPO window reopens in volume the backlog that is jamming up late stage fundraising will lift as well and then “boom” for our SP.
Molten Ventures is a listed VC fund specialising in early-stage investments with a focus on emerging technologies. Historical investments have included UiPath, Trustpilot and TransferWise. Since IPO, Molten has compounded NAV at 15% annually and generated an average IRR of 30% on the gross portfolio. This strong track record is not reflected in its shares, which are trading at a c70% discount to NAV, the highest in the company's history. The discount is driven by the market's fear over Molten's debt and liquidity position, despite the company having several levers at its disposal to address this. In addition, we believe the market has failed to realise the downside protection offered by Molten's superior position on the cap table as a preferential shareholder in 97% of its investments. We initiate with an Overweight rating and price target of 315p.
Fears of equity raise overblown. Molten has already raised c£57m in equity in late 2023, and we believe it can resolve the liquidity issue with its banks and avoid issuing additional equity and diluting shareholders. Management has also commented that it believes realisations of c20% of the existing portfolio are possible in the next 12 months. This would potentially result in the discount narrowing to c50% of NAV, resulting in c85% upside for the shares. While risks still exist, we believe they are already priced into the substantial discount.
Downside protection against permanent capital impairment. Around 97% of Molten's investments are through preference shares, which protect against a permanent impairment of capital. This essentially means that in order for one of these investments to be loss-making, it would have to trade at an amount below the capital initially invested. We view this as unlikely since the average size of its core portfolio is just c£18m versus an average fair value of c£48m, implying valuations would need to fall >50%.
Well-funded portfolio with strong underlying growth and catalysts. Molten's underlying portfolio growth remains strong and the company expects revenues to expand 50% over the next 12 months. The portfolio companies are also well funded, with 80% having a cash runway to at least September 2024. Additionally, Molten's largest holding, Thought Machine, is growing at >50% and media reports have speculated on a potential IPO this year or in 2025; we believe this would unlock significant value for shareholders.
Valuation. Molten is one of the cheapest stocks in our VC coverage, trading at c70% discount to NAV. We believe this valuation is unsustainable given the number of opportunities Molten has to extract value from its existing portfolio. We value Molten using a blended ROI valuation and a peers-based EV/sales multiple to reach our price target of 315p.
Catalysts. Share price catalysts could come from a resolution to the liquidity issue, better-than-expected realisations from the existing portfolio and news of a substantial exit, such as Thought Mac
Thanks
yes i see the article is a reprint of the 2020 article but with a jan 2 2024 date.
so we have to wait for new chip -assuming graph core survive long enough to build it . sounds touch and go in spite of lucrative sector.
Steph, the article on the link about the GC200 is from something that was first reported in July 2020. See this Tech crunch article from the time.
https://www.google.com/amp/s/techcrunch.com/2020/07/15/graphcore-second-generation-chip/amp/
If Graphcore need 1bn Molten won't be able to take part. And probably won't want to. That's why Sequoia wrote it down to 0.
Bit dark sang.
If it really is the worlds fastest processor there is intellectual property and “ knowhow” worth something in this global market pilot to AI even if sales are slow.
Downside risk to be sure in a competitive market but don’t count Graphcore out just yet.
We may yet see near term interest in funding Graph core without a down round from the discounted price on our books.
Yes they do need money fast but maybe waited for launch to close in order to get a better deal.
Graphcore is sadly a write off for Molten. They have said they need a 1bn in funding for the next 3-4 years.
If they were to get that the Molten would be diluted so much as to make their current holding worthless. The alternative would be a buyout of the tech at a rock bottom price as the alternative would be liquidation.
Https://duino4projects.com/graphcore-launches-7nm-ai-processor/
If it does Graphcore will be worth many times what it is on our books for. Maybe 10x or more. If not Graphcore is only worth the IP in some assimilation with another AI firm. Graphcore needs an announced funding round soon to survive. maybe was waiting for launch to set conditions.
Bill Fawkner-Corbett, Head of SIGnet, will host a SIGnet after-meeting on Molten Ventures PLC following their Interim Results presentation with IMC on 1st of December 2023. The after-meeting will be held on Zoom to enable members to discuss the company. The meeting will be chaired to provide structure and enable all members to take part. Click here to register: https://www.sharesoc.org/events/signet-after-meeting-on-molten-ventures-plc4-jan-2024/
Happy Christmas long-suffering GROW Investors. Here's to a better year ahead.
"Fintech added 10 million customers in 2022, according to long-delayed results
Revolut says it is on track to reach $2 billion (€1.8 billion) in annual revenues this year despite a number of setbacks in 2023 that prompted shareholders to write down the value of their stake in the group.
The fintech, which published long-delayed results for 2022 on Friday, said it added close to 10 million customers last year, a record, driving deposits up by 71 per cent in the year to end of December last.
https://www.irishtimes.com/business/2023/12/22/revolut-expects-to-hit-2bn-revenue-mark-this-year-despite-setbacks/
New Guardian article on Cambridge-based company Paragraf.
Sounds a very promising company within the MV portfolio...
https://www.theguardian.com/business/2023/dec/19/graphene-will-change-the-world-the-boss-using-the-supermaterial-in-the-global-microchip-war
Incredible mom UK inflation print this morning - should really be a tailwind … technical and fundamental pictures are undeniably BULLISH ! let’s gooooo
Subject should be spelt of course: graphene (!)
Https://www.theguardian.com/business/2023/dec/19/graphene-will-change-the-world-the-boss-using-the-supermaterial-in-the-global-microchip-war
https://www.moltenventures.com/news/molten-ventures-participates-in-60-million-series-b-in-graphene-based-electronics-company-paragraf