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Great summary Agricore. Appreciated.
Hi Agricore, Thanks for your ongoing analysis. I have held 100,000 of these for about a year as a long term, possibly life changing investment. I have learnt the hard way that patience is a virtue in these sort of investments!
Best wishes, BB
I've been running some analysis on the 48p NAV @ 30% discount which led me to top up.
The NAV at 30/06/21 was £369m. We know that since then Oxford Nanopore rose 20% at IPO then rose further to £7.05 a share today (30/12/21). This translates to a £65m uplift at today's price and equates to around half of the current market price of SUPP (i.e. 16.5p per share). This is a publicly traded stock and while there's a tie in until April this provides a liquid basis for a good part of the valuation.
I'd make the point that BioTech generally has been beaten down in H2 2021 so many of SUPP's public holdings are down 20%-50% but that this is market wide. I am seeing reversion to the mean in other BioTech holdings such as BIOG and ARIX, and the need for BioTech has definitely not gone away - it has increased and also is a diversifier. Moreover the fact that ONT has held its ground since its IPO signals its strength and strong outlook. This article provides a very good overview of why SUPP's holding in ONT is exciting. https://www.ft.com/content/605ab02f-3f17-4c34-9671-c33b9d181222
As for the private holdings, many of these are exciting and fast growing plays on FinTech and 5G - Atom Bank, Seedrs, Federated Wireless are all top 10 holdings (by value). These haven't been revalued and I believe these will do well in 2022. None of this is included in that 30% discount to NAV.
Was the decision of Shroders to invest in JMAT a poor one for SUPP? In hindsight yes this is baked into the price.... the 48p NAV includes the reduced value of JMAT (£21 per share today). But the approx £3m loss is dwarfed by the ONT £65m gain so keep it in perspective. Moreover going forward there are still opportunities in clean air, as EURO7 regulations and similar elsewhere kick in (including in China and India). ICE cars will decline but EVs are still only predicted to be 1 in 7 in the UK in 2022. JMAT's hydrogen strategy could pay off too - PGMs are core to hydrogen (I read today that Palladium can be used like a "sponge" to store hydrogen much more efficiently than compressing it)
The ghosts of Christmases past still haunt SUPP and I love a share with poor sentiment and strong fundamentals..... The stock market in the long run is a counting machine and not a voting machine, as Ben Graham taught us, and picking this up at 30% below its published NAV is a bargain imo.
Happy new year fellow Suppsters
Suspect a few others have the same idea - I did the same earlier today and few decent buys this morning also.
Like theoldmansdoneit you say what can go wrong -(It cant be worse than the W word)
Yes, I noticed that increased NAV and on the strength of it I have today bought a few SUPP. The discount is so big now, how could it possibly go wrong?!! ??
Now 48.11p per share.
Share price (mid) is approx 33.1p.
And yet the Net Asset Value continues to rise, so they can't be doing that bad a job.
Over 46p now compared to an SP of 34p.
Situations like this don't last forever - buybacks, dividends (e.g. the ONP shares could be distributed to shareholders), market realisation, pro-active shareholders forcing a liquidation. All of these are options.
Something has to give, just a matter of waiting...
Over the summer, SUPP's new management, who I call the Schroder Juniors, announced their first investments. With great fanfare, SUPP's interim report (dated 30/6/21) named Johnson Matthey plc, a listed company, as one of these investments. They called the company "a global leader in the applied materials chemistry... set to be an important facilitator of the process of decarbonisation over the coming decade". Pompously, they went on to say "The investment fits with the Company’s philosophy of supporting innovative, world leading technologies, that showcase the best of British entrepreneurial spirit and will help positively impact society and the planet".
Today Johnson Matthey reported. Well, they're warning on profits, selling their battery division which they cannot make a go of, and announcing the departure of their CEO. Share price down 20% on the day and I estimate down about 50% since the early summer when the investment was made.
So there we have it: Johnson Matthey, showcasing what the new SUPP is all about! You couldn't make it up. Hats off to the Schroder Juniors!
And beardozer, that elastic band has further to stretch now.
Come back beardozer!
It's true that the discount to NAV has ballooned recently, following a material increase to the published NAV, while the share price didn't move... and then today 4 brokers/banks commenced their ratings on ONT - the short story is they love it but, again, it didn't move the share price.
Let's face it, with all the bad history people just hate SUPP. However, there've been big changes in this Trust which the market hasn't recognised. reputations can be rehabilitated, esp if the NAV keeps rising. Let's see how much further that elastic band will stretch - my bet is not much.
I'm finally out after needing funds to invest elsewhere. How did I get my research so wrong? Bizarrely, instead of the SP rising after the ONT IPO the discount to NAV widened! For some reason it reminds me of elastic bands. Maybe one will snap after catapulting the SP higher? A discount to NAV of 24% is remarkable. Strong buy? Not in this Market.
NAV up 10%, sp down 1.4%, very odd. Maybe the market will catch up tomorrow.
Should be reported later today - see yesterdays RNS.
Expecting a big jump from the 40p per share last time. Could be a good time to buy this morning?
Not sure how much longer such a big discount will last, especially as the board have mentioned using buybacks as a tool to lower the discount, and they now have cash (from 10% sale of ONT in flotation) to do this.
City of London Investment Management Company Limited have increased their holding:
https://www.lse.co.uk/rns/SUPP/holdings-in-company-3eqgcsm5yhris8i.html
https://schroders.wistia.com/medias/nwc9pu3gpc#s.wistia.com/medias/jltdqxuc66
https://rutherfordhealth.com/investors/announcements/full-year-results-300921
That very much depends on how well SUPP invests the £11m it raised from the sale of 10% of its holding in ONT. It has been starved of new funds since the Woodford debacle and it's high time for the Schroders team to show their metal in terms of spotting potential winners.
I think you are in good company. The final purchase on Friday was for 500,000. Directors have been buying way back at this sort of level. IP also failed to move up. Someone suggested their rise was happening when the float of ONT was first announced, where as it has been a bit more muted in SUPP even though it makes up a larger percentage of the portfolio. The future looks very bright in this sector but so are the valuations so plenty of leeway in the nav. My plan is to buy in gradually.
I did my research, got it wrong so I did it again and still thought SUPP was a no-brainer. SUPP's current discount to NAV has failed to attract investors which suggests I'm ahead of the crowd but what's the use? Let's hope ONT hits £10 before Xmas and SUPP hits 50p but what are the chances?
Also, I believe the SUPP board are not averse to share buy backs if the discount to NAV gets too wide - was in the last report I think. That will help!
Fair enough, but your bear points are opinion.
My opinion - 6 months time, ONP may be half or double - who knows? It is a rapidly growing biotech so not hugely correlated with the wider market. Could be a good hedge against dividend payers if the market has a wobble?
The other companies in SUPPs portfolio are also early stage, so again not a terrible place to be in the event of a wider market re-rating.
The only fact we have is massive discount to NAV, makes it a great contrarian buy for me!
Bull points:
- a significant discount to NAV, taking into account the latest ON share price.
- an interesting portfolio of underlying investments
Bear points:
- there's a 6-month lock-up period for the shares post-IPO. SUPP can't realise the current value now. In 6 months time, every other large shareholder will be thinking about selling.
- IPOs have historically tended to underperform after any 1st day 'pop'. Also, who knows where the overall stock market will be in 6 months. Many say it's massively overvalued currently (why do you think ON was looking to IPO?). Overall, ON may well be worth much less in 6 months time.
- the IPO has happened already. As the old stock-market saying has it, "Buy the rumour, sell the fact"...
The 100 million was yesterdays figure. They didn't say what the sp was based on so I guess it might be a good bit higher now although the ONT sp seems to be settling around £6.2 now. If its based on flotation sp then not far off your figures AI!
Sale of ONT amounts to £11million. Amount still held around £100million. I'm in
The ONT rise is huge. Actually their portfolio contains some very interesting companies too