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Charles, the number of shares currently in fee float now is a good question and the answer depends on your source of information. If you take the shares floated at IPO and the two later secondary placements it comes to about 18%. This jibes with the 17.9% reported by Reuters. But someone, Nidec I think, was told by DT that it is 27%. It is possible that SHs who own less than 0.5% of the shares and the EBF (see below) make up the difference. I do not know how many of these smaller SHs there are and it is not clear to me whether these smaller SHs were subject to lock-up or not.

The total of those in the top 10SH list being released from lock-up sums to 329,524,552. The total number of shares in issue is currently 697,636,903. So roughly 50%.

I’m not sure what the status of the DT Employee Benefit Fund is regarding lock-up,but that fund holds 7.86% of the total share in issue.

There are several so-called 0.5% SHs who were subject to the lock-up arrangements and I expect some of those will want to sell sooner rather than later if they need the money. How the bigger SHs react is anyone’s guess, but I personally do not think it will be in their interests to unsettle the market and they will be playing a different game. Both Summit and KKR are represented on the BOD.

As to the free float post lock-up, I would guess the shares held by the employees - who are subject to a 360 day lock-up - are between 15-20% of the total - this includes the Employee Benefit Fund whose lock-up status I don’t know. - so the free float will probably be at least in the order of 80% post lock-up.

There is a research paper that analyses SP movements post lock-up. According to the abstract there is often a temporary drop, but there have also been cases where the SPs have risen, and risen sharply in one case (something to do with shorters being wrong footed).

Jayne -my limited understanding of automatic trades (SETS) and auctions is that there is always an equal number of shares bought and sold no matter whether it as listed as buy or sell - as that is how I understood the book building and SETS ( theAT& UT trades)works. So no matter whether it is listed as a buy or sell, It is in actual practice a buy and an equal sell. So the volume quoted is half the buys plus sells. Is this correct?

When it comes to off -book trades through Market Makers (the O trades I think) Buys and sells are both listed but not necessarily under the correct buy and sell heading (as you said). I would have thought the the Money makers would have to keep close control to balance sells and buys or else they would have to hold large inventories of shares with the associated risk. So when I see two sales of 7 million I read this as 7m buy and 7m sold. In the end shares bought have to match shares sold - but with some ability to manage short term imbalances by MMs (the big difference from SETS)

I probably have an imperfect/incorrect understanding so if you or anyone else can so clarify to how it all works it would be appreciated. Basically I don’t understand how there can be a day when buys massively outweigh sells or visa versa - unless MM are prepared to hold massive and very risky share inventories. It certainly - to my understanding - can’t happen with A or UT trades.

I am still not totally convinced that the 27/10 is the last day of the lock-up period. This date assumes that the first day of the lock-up period is 30/4 – the first day of conditional dealings.

But this is what the RNS announcing the listing actually says about the lock-up period. I will leave it to you to make up your own minds whether the last day is the 27/10 or 2/11. It all hangs on the definition of “Admission” defined in the Prospectus as “ the Admission of Shares to the premium listing segment of the Official List and to trading on the LSE’s Main Market”

RNS quote
“Certain existing shareholders will be subject to lock-up arrangements restricting the disposal of Shares for a period of time following Admission.” (The period of time is 180 days)
“Admission to the premium listing segment of the Official List of the FCA and to trading on the Main Market for listed securities of the London Stock Exchange, and the commencement of unconditional dealings is expected to take place at 8.00 a.m. (London time) on 6 May 2021.” (this was the date)
Unquote

Note, too, that the 50% or so of locked-up shares (Summit, KKR, ML/AB etc) will only be able to be traded on the day after the end of the lock-up period IMO.

BR - your observation about when to buy is echoed by Buffet’s throwaway “ be fearful when others are greedy, and greedy when others are fearful”. A great approach.

Personally I have found it not too easy to practice, so I just buy good - hopefully excellent - companies at a price I’m happy with and just hang on through any market turbulence as long as my view of the fundamentals of the company remains the same. I was freaked out in ‘87 when my portfolio fell 50% overnight, but fortunately I did nothing, and that fall today can be seen as just a tiny setback on the ever upward trajectory. As they say “ different stokes for different folks”.

Best of luck with banks - I still holds a couple but see them as risky because they are the most geared of all companies - and therefore fragile - and I am not convinced all the 2008 lessons have really been fully learned. Also there are many technological disrupters in the pipeline IMHO, so short term, yes, profits are to be made, but in the longer long term ??????

Jayne - just part of an approach: observe - hypothesise - test -move on if hypothesis unfounded. As you note it is an observation and it was not meant as a prediction but interesting to see whether…..Needing to understand cause and effect relationships is in-bedded in my DNA.

Just a thought

15/7 Favourable Trading update
30/7 Peak
Fall
6/8 First Secondary Placement – discount on bookbuilding – 625p

15/9 Final results/ Favourable update
22/9 Peak
Fall
1/10 Second Secondary Placement – discount on bookbuilding – 750p

13/10 Favourable Trading update
15/10 Peak
15/10 Fall
Anticipating a third secondary placing?????

To refresh my memory, I have just reviewed the y-o-y revenue growth rate of DT. Revenue and cost are of course the most important metrics determining the bottom line.

Prior to IPO, the y-o-y growth rates were declining – from 73% in FY2019, 45% in FY2020 and ending up 41% in FY2021 - and then projected at IPO to fall further to be between 27-30% FY2022. Not a great picture when compared with SentinelOne’s y-o-y growth rate, which, by comparison, is 120% and built on an increasing trend.

Such a decline of the revenue growth rate with rising costs would be untenable for a successful future. For this reason DT decided to raise capital in the equity market as this would give them the flexibility to invest heavily in their technology and marketing. This capital raising was reasonably successful as their story on their technology and market is more than credible, but, nevertheless, with an outcome that is far from certain.

So with their increased spending on R&D and marketing I’m becoming increasingly confident that the decline in revenue growth is now being reversed and will accelerate further once the increased marketing effort kicks in, and again later when new and improved offerings emerge from their research efforts. To my mind the three recent updates confirm this change from a declining to an accelerating trend. And if these improved growth rate trends are sustained, the y-o-y growth rate will, by extrapolation, be back to at least a 55-65% range by FY2022 and very much higher by FY2023.

Personally I am comfortable with the current SP range based upon the current growth rate and associated uncertainty, and do not consider DT to be under- or over-valued at this stage. The market has so far reacted favorably to each of the three positive updates on revenue growth, so if the growth rate improves further and the associated uncertainty is reduced, I am confident in my own mind that we will see lots more upside in the future valuation.

Anyway my pennies worth – and I remain a confirmed hold.

Hi Jayne. I have learnt not to second guess the SP of volatile shares like this unless it has something to do with the fundamentals. Also I think we PIs are too insignificant to influence the market.

As the market does not like uncertainty, as I think you once also mentioned, I expect some more volatility around that time but how big the swings will be is unknowable - but perhaps the TA experts will be able to get a clue from their crystal balls. Personally I’m not convinced there will be a Secondary Placement immediately after the end of the lock-up period, but who knows what the original SHs are thinking. If Summit and KKR follow their normal path they will sell out either with a large placement or to put together a deal to sell the whole company lock, stock and barrel. But not yet, as I suspect as there may be more milking to be done.

It will be interesting to see what ML/AB do, if anything.

My understanding is the end of the lock-up for the 50% or so unlocked-up SHs means that they are free to deal unconditionally from then onwards just as we can. They may wish to do it by means of a Secondary Placing, but they do not have to. Also, if by way of a Secondary Placing, it does not mean they have to do it at the end of the lock-up period, so they could again take us by surprise sometime after the end of the period.

Ditto SS - Except I abstained on political donations as I don’t like the practise - but recognise that in this case it may be pragmatic.

Looks like the CFP Buffettology Fund has increased their stakes to 9m shares from 6.5m ( they are long term investors who follow Buffett’s investment philosophy)). AXA now also hold just over1%. (ref. Market Screener)

Jayne - I posted 28/10 earlier as the first day of trading following the end of lock-up based upon a start date of 30/4 so it is a faint possibility that was your source. Rereading the RNSs issued at time of the IPO made me reconsider the actual start date as it seemed to me to be quite specific based upon the word “Admission” to the market and it’s meaning. I expect there will be a RNS about the time of the unlocking so the exact date is probably not that important at this stage. Personally, I expect some short term volatility as the market reacts to the uncertainty regarding the supply/demand situation.

If positive results are presented that are in line with, or better than, the expectation of the market about that time, I concur that it will almost certainly be the overriding influence on the SP medium term as it has been twice before. I was only wondering if the unlocking was going to be an opportunity for Max and other traders to have some fun, or whether it might be an opportunity for those who want to load-up to do so. But who knows.

This share/company continues to be nothing but exciting/interesting.

Any thoughts on what will happen to the SP at the end of of the first lock up period when ca 50% more of the total listed shares become freely tradable? The two secondary placements of 3.3% and 3.6% did not pass without some consequence.

I am now of the opinion, but not yet confirmed or otherwise, that the start of the first lock-up period is 6/5 and not 30/4/21 as this is the date when the “Admission to Trading / Unconditional Dealing” occurred. The look-up period is stated to be 180days from “Admission”. If correct, this would make the last day of lock-up 2/11/21.

Seeking - I migrated from HL to interactive investor and I am happy with the service. I like the flat platform fee that is independent of how much you hold in your ISA + trading account. It is good value, IMO, for those with largish pots and who trade frequently but not excessively. The platform fee is as little as £2 per month if you use the trading credit, but there are several fee options. But, in the end, it is a personal choice and the best provider for you will depend upon your own circumstances.

IMO the BoE will raise rates - and possibly sooner rather than later - to control inflation, but it will not be an easy decision as it will curtail growth during this delicate recovery. Fortunately, and supposedly, they are independent of government, but they are still between a rock and a hard place. Rate increases will cause the capital value of bonds to fall as you say - and inflation will erode their real term value. This, to my mind, will make holding bonds an unrewarding place to be in the foreseeable future - but DYOR.

Inflation linked bonds are a different kettle of fish, but I don’t know enough about them to express a firm opinion. Is it a true inflation linked tradable bond, or is it just a bond in name and really a fixed term deposit?

JayneC - glad to see you using the first person “ we are partners”. I like it because I think all long term holders should act and think more as co-owners rather than third party observers. It is our company, our management (we vote for the BOD), our partnership with Microsoft…… My continuing “gripe” is that we as owners have too little say - on executive pay for instance as our vote on the matter is only advisory. All the same I vote on AGM resolutions - for or against - as I see this as my obligation as an owner.

Long live our company.

KKR had 90.5m shares at IPO and now 59.91m (8.6%) a difference of 30.4m. 48.5m shares changed hands in the two “placements” so KKR was the bigger seller of the 4 participating companies. It suggests to me that they sold a big chunk in the recent placement - maybe leaving the future game in Summit’s hands.

Thank you JayneC, and for the links and continuing insights.

One point I was trying to get across - with all this discussion only on price - is that ones perception of whether the SP over or undervalues the company, depends heavily on how you see the risk and, on this basis, what return you are comfortable on the basis of that risk assessment. For instance if I plug 18% - the interest rate on pre IPO loans -rather than the 10% I used, into my simple financial model, the value of DT falls to 660p rather than 1300p. And of course it would be much higher than 1300p if one were to accept utility type returns. I suspect analysts will be evaluating DT with a DR in the range of 15-20%, and that this will fall as there is more certainty on prospects - meaning that their view as to valuation will be raised just by a more favourable reassessment of the risks, all other things being equal.

I always try and temper my optimism with a dollop of realism but remain convinced that DT has a brilliant future and hopefully we will be able to remain owners for some time. I have just perused ONT’s prospectus, and, although it has potential and the technology is brilliant, I think DT is still streaks ahead in what it can achieve with its technology and management.

N99 I do not disagree with you - unlike trying to evaluate say, a gold mine, trying to evaluate a company like DT using DCF is fraught with difficulty. A qualitative understanding - as posted by JayneC and others - is a good way of evaluating potential of this type of company for the reasons you give. So I have just been trying to look at it from an alternative, and hopefully, complementary angle.

The warning on the tin says “ take care using on the actual numbers”. They are terribly sensitive to the assumptions made, and, as I said the purpose is to get a “ feel” for what it is all about as an alternative approach. I think it was Lord Kelvin of absolute temperature fame who said something like “ if you cannot express things in numbers, your understanding is but of a meagre kind”. So just an attempt to increase understanding.

And I am still hopeful the DT will find a way of leveraging their technology beyond their initial focus as is their stated aim as this, too, would add significantly to value but is impossible now to evaluate. This is what all the great companies like Amazon, Apple. Microsoft ….. have been able to do.

For the few long term holders, here is my back-of-the-envelope evaluation on DTs present estimated value and value per share. In my view it will only be worthwhile adding sophistication to the calculation once further information becomes available.
A lot has been said on this BB about whether the SP of DT is under or over-valued or whether the SP is frothy or otherwise. In reality it is impossible to determine with any degree of precision as it depends on what return one wants to get on one’s investment, over what time period, how much revenue is generated and at what cost including taxes, and what the terminal value of the company will be at the end of the evaluation period. However it gives me a “feel” for what the valuation could be. It is certainly not meant to be a prediction.

Here are the assumptions used to give an indication as to its present value by discounting the future cash flows (it does not use profit figures as depreciation and amortization is not cash). This type of calculation is used by analysts and is quite simple as it is just a compound interest type calculation in reverse.
I want a 10% compound annual return (discount rate) on my money evaluated over an evaluation period 10ys. Recent lenders wanted 18% on their loans to DT perhaps reflecting their assessment of the risks involved!
Year-on- year Revenue growth of 65% in 2022 on 2021 revenues, falling linearly to 20% in 2031 (2022 figure pro rate on increase from IPO, falling figure to reflect competition and market saturation, conservative I think)
Margin 0% in 2022 growing at 2.5% points linearly to 25% in 2031 ( 25% is DT’s long term aspiration)
Tax rate flat 20%
Terminal value (15X net cash generated in 2031).

Using these figures give a present value of the company of £9 billion or a value per share of 1300p. THESE ARE NOT PREDICTIONS. But they are figures that make me comfortable with the present share prices and I remain a long term hold. I can envisage an even more optimistic picture unfolding.