Member Info for lordloadsoflolly

Gambling or not, it's worked for me so far. Whereas if I'd held onto my entire holding all this time, I'd be way down. I agree it's not a fail-safe strategy. Nothing is, when it comes to the stock market. But by not being greedy and locking in any gains over 10%, I've averaged down quite nicely thank you.

Whilst liking your optimism, I'd disagree slightly on that last point, Walp. With SMT's current volatility, it has become easier to trade in & out for a 10%+ gain each time. Sure, selling out completely, then judging the optimal moment to jump back in might not go to plan. But trading a small part of your holding so you average down overall is feasible right now IMHO.

I think this could still eventually come good, but am no longer prepared to average down as it's become too risky IMHO. For too long now, SOH has promised more than the company has delivered. Sure, sales may have become more lumpy recently with larger partners placing bigger orders less often. That could mean things look substantially better again by next FY. But as they themselves have said, more large partners are needed to increase overall sales & reduce volatility year on year. Many moons ago. SOH categorised sales partners into sectors. From memory, these ranged from around £100K at the lower end to £500K+ at the top. Clearly this hasn't transpired if they can only generate just over £100K sales in total over a 6 month period.

BlueOcean50 - of even more concern to me is the lack of any meaningful accumulation by Messrs Tim'n'Tim. They were very keen to hold a lengthy investor presentation, telling us all how great IMM's share price prospects are. Yet - for exceedingly well-remunerated Directors - they've invested a pittance with their own money, preferring to rely on umpteen free share options to pocket any gains. Hardly looks like a ringing endorsement to me.

jbongo & cassandra29 - you both make a very good point about Woodford's main fund being open ended, as opposed to SMT (closed ended). I also agree Woodford had limited (if any) real experience of the VC sector and should have stuck to blue chip high yielders where - historically - he'd done well. Anyhow, that's all water under the bridge now. I think Andersen was a bit of a one-off visionary and am not totally convinced Slater & Burns share all his skills. You also have to wonder if the timing of Andersen's retirement had anything to do with him sensing the smelly brown stuff about to hit the fan! Only he knows that I guess. I still think SMT stands a reasonable chance of being a good long term hold. But it's going to be volatile and it's important not to fall in love with this - or any other fund, as some never recover their glory years. For me, the jury's still out on Slater & Burns. We also don't know if they'd change tack slightly, should market conditions in SMT's main sectors continue to worsen. I'm not trying to de-ramp by the way, as I remain heavily invested here (though am trading a small portion of my holding more than I used to). Just looking to give a bit of balance, as it's never a racing certainty what's gone before will come again.

Having posted Bloomberg's lengthy article, here's my take on it. 1) Most of its comments (though valid) are largely backward-looking. The sectors SMT invests in (along with its unquoted holdings) were particularly badly affected in the general recent market shift from growth to value stocks. Part of this trend unwound recently, so it's anyone's guess which share group wins out over the next year or two. 2) SMT hasn't always been a "shoot the lights out" performer. It only started taking off big time after 2016 - and more spectacularly since Covid first struck. This was largely down to sectors like tech, healthcare & consumer cyclicals becoming all the rage during the pandemic. Again, no-one knows whether this was a flash in the pan. Though I doubt it, as the pandemic permanently changed how - and where - we work, what we want out of life and how to plan for future health/environmental emergencies. I guess whether the Bloomberg article worries you largely depends on how long you've held SMT. More recent investors may be more concerned. Others who've held 30 months or more, less so. My main concern would be if BG felt it had the Midas touch and could do no wrong. As the article hints, this could lead to a break down in exhaustive research, due diligence & risk management. The proportion of unquoted holdings is also a potential issue. Look what happened to Neil Woodford's funds when he strayed away from bread & butter income shares into unquoteds. But the difference is SMT's management does at least have some experience & track record) in investing early (often pre-IPO), working with businesses to gain their respect & trust so they're not unduly diluted out, then - if all goes to plan - eventually reaping the rewards. It's not JUST luck that led to SMT investing early on in companies like Tesla & Amazon. Though of course a degree of luck is always involved. Whenever a fund loses its lead manager, investors should be monitoring things more closely. In a way, losing Anderson might be a good thing for SMT longer term, ushering in a slightly more cautious approach. So in conclusion, I won't be cashing in on SMT just yet, though I have re-sold some of my 2022 trading buys already. For now, the jury's still out......

Part 5 (final): "The firm says any similarities between portfolios are unintentional and that each team does its own research. All the same, the 170-person client services team has been reemphasizing the investment philosophy Anderson helped to build. Their line: This, too, shall pass — and Baillie Gifford will go on to greater heights as its bets pay off over coming decades. In webinars, letters and phone calls, the team has urged investors not to panic. The partnership keeps looking ahead. It plans to hire more people and move to a new glass-paneled, seven-story headquarters being built in a new development in Edinburgh’s West End. At a recent company-wide meeting, two senior partners said Baillie Gifford would stick to its guns. It was, they said, business as usual."

Part 4: "Stock picks are only one problem. During the bull years, Anderson and his team also became go-to financiers for a range of tech startups. Flush with investor dollars, they seeded young businesses in hopes of reaping outsize returns once the companies went public. Unlisted companies accounted for roughly a third of Scottish Mortgage’s holdings at the end of June, according to company documents. The fund got in on the bull-market rush over the fledgling air-taxi business, picking up stakes in Lilium NV and Joby Aviation Inc. It also bought into crypto financial-services company Blockchain.com and Northvolt AB, a Swedish battery developer. When or if many of those bets might pay off is anyone’s guess. One pick, biotech company Ginkgo Bioworks, went public last year, during the waning days of the craze over special purpose acquisition companies, or SPACs. Since then, the stock has fallen 53%. And while Anderson was the first to invest in private companies at Baillie Gifford, even more conservative investment trusts run by the firm have exposure to the asset class, albeit at much lower levels. Even Baillie Gifford insiders concede Anderson’s departure in April, telegraphed for more than a year, came at a particularly fraught moment. The firm created a success story around Anderson and his investment philosophy and used that rosy narrative to market itself. James Budden, global head of marketing, acknowledged — with some limits — Anderson’s long-standing role in shaping Baillie Gifford. “He was a strong influence, but this took 20 years to play out,” said Budden, the only person Baillie Gifford made available to speak on the record. “Scottish Mortgage didn’t immediately become what it is today. Yes, he did define a lot of the investment thinking.” For better and worse, Anderson appears to have left a lasting mark. University graduates who join the firm’s training program no longer get schooled in financial statements as meticulously as they used to, people familiar with the matter said. People who’ve left recently say risk management could be improved. Budden, the marketing chief, says trainees must still learn accounting but adds that success at Baillie Gifford takes vision, too. “We do have risk controls, though people think we don’t,” he said. “For us the biggest risk is finding the wrong companies and missing the big opportunities, but we also do proper risk analysis.” For now, Baillie Gifford seems hostage to the markets. An investment team called Global Alpha, created by former senior partner Charles Plowden in 2005 as a counterweight to Anderson’s go-big philosophy, has weathered the storm better than Scottish Mortgage by investing in more, less volatile stocks. Global Alpha today manages 39 billion pounds, more than any other group in the firm. Yet, all the same, it still holds a crop of Anderson’s tech darlings like Moderna and Tesla."

Part 3: "In an email, he dismissed the idea that his bull-market success and celebrity status came to define Baillie Gifford.
“The influence was mostly because the high growth worked so well for a prolonged period and therefore — as is the way in finance — it attracted more attention and even imitation,” Anderson said of his sway over Baillie Gifford. “Maybe this always bothered me more than people realized.” In addition to Amazon and Tesla, big-name scores included Covid-19 vaccine maker. But during a tenure spanning four decades, he shook off the firm’s staid reputation and fundamentally changed its DNA. At a time when low-cost index funds were upending the investment business, he pushed the partnership in the opposite direction: He challenged portfolio managers to set aside indexes and instead find companies that would solve big problems. In addition to Amazon and Tesla, big-name scores included Covid-19 vaccine maker Moderna Inc. When markets were going their way, Anderson and his acolytes could steamroll most doubters. Unabashedly contrarian and sometimes quick-tempered, he sniffed at what he viewed as groupthink by bean-counting CFAs. Let others worry about quarterly results and P/E ratios. Anderson wanted to spot the super trends that would shape the future. People who questioned him or issued a negative report on one of his stock picks often found themselves on the losing side a heated argument, current and former employees say. Others learned to keep their mouths shut. To avoid office distractions, Anderson eventually stopped sharing his own research in Baillie Gifford’s library. Before long, Anderson and his crew stopped attending weekly investment meetings, dismissing the gatherings as a venue of low-brow short-termism. Baillie Gifford later made the confabs optional before binning them altogether. A scruffy, sometimes rumpled character with a professorial air — one former colleague recalls Anderson wearing an ink-stained shirt one day, another remembers his poorly knotted ties — Anderson came to be seen as the mad genius of Baillie Gifford. (In a telephone interview, Anderson conceded that he could be hot-tempered due to the stresses of the job.) His star rising, he enthralled everyday investors, scouted Silicon Valley and hung out with Jeff Bezos in Sun Valley. Insiders say that with Anderson gone there’s more room for flexibility, but Baillie Gifford is in so deep it might be hard to go back. Wholly owned by its roughly 50 partners, the firm has staked its future on the belief that it can spot the next big thing. Then, the thinking goes, it can do what Anderson did: Get in early — and hold on for the ride. Before July’s bounce, the ride has mostly gone in one direction: down. Baillie Gifford is a top-three holder of Moderna (down 22% year to Aug. . 16); Shopify Inc. (down 68%); and Spotify Technology SA (down 41%). It’s also a major holder of Illumia Inc. (down 33%) and Peloton Interactive Inc. (down 58%), among others."

Part 2: "It’s been quite a comedown. From its Edinburgh headquarters 3,200 miles from Wall Street, Baillie Gifford emerged in the 2000s and 2010s as one of the world’s top stock-pickers, marketing the Anderson mystique and attracting ordinary investors and major pension funds across the US and Britain. Anderson set aside conventional investment metrics and staked his clients’ money on a relatively small number of risky, high-growth stocks. With a go-big-or-go-home ethos, he pressed portfolio managers to focus on sweeping, global themes, rather than investing geographically.
And so, Baillie Gifford famously piled into Amazon, Tesla and others that would soon catch fire in the bull market. For years, the only investor who owned more of Tesla was Elon Musk. (Douglas Brodie, a partner and portfolio manager for another Baillie Gifford team, initially drove the Tesla investment in the early 2010s, but Anderson got most of the credit — and the media attention). The results were extraordinary. From 2005 to its peak last year, Scottish Mortgage returned 2,240%. But what goes up usually comes down — in this case, down hard. With high-orbit tech stocks hurtling back to earth, Scottish Mortgage has plummeted 32% this year as of Aug. 16, its assets dropping to 14 billion pounds. All Baillie Gifford funds tracked by Bloomberg have fallen from 1% to 40% this year. Overall assets under management stood at 231 billion pounds at the end of June, versus 336 billion pounds at the start of the year. From Menlo Park to Shenzhen, Big Tech to startups, a pullback has followed a decade of giddy exuberance. SoftBank Group Corp. reported a record 3.16 trillion yen ($23.4 billion) net loss on Aug. 8 after its Vision Fund, the world’s largest technology fund, got hammered. Given the shifting landscape, the question is when, or maybe whether, Baillie Gifford can regain its footing and help reinforce the business of stock picking that’s been undermined in recent years by the popularity of cheaper, index-tracking funds. Indeed, other big name investors came unstuck after stellar returns. Bill Miller, the manager whose unprecedented record of beating the Standards & Poor’s 500 Index made him an investing legend, couldn’t relive his past glories after a sharp turn in his fortunes. More dramatic was Neil Woodford’s fall from grace in the UK. The star money manager mesmerized investors for years with his performance. But following a poor run, clients started pulling their cash, leading to the suspension of his flagship fund in 2019. Baillie Gifford is far more than one fund and has other strategies that don’t pursue the kind of returns that made Anderson a magnet for retail clients, who would flock to hear him speak at investor forums. But, over the time, the firm tilted toward his investing philosophy. Anderson, now chairman of Swedish investment company Kinnevik AB, waves off his influence."

Don't worry. Here we go (part 1): "After 2,240% Run, Tesla Visionary Leaves UK Fund Bleeding Money
Some inside the company saw him as a mad genius. Now, Baillie Gifford is trying to adapt to life after James Anderson.
For years, he rode the likes of Amazon.com Inc. and Tesla Inc. to the moon, earning a reputation as the techno-visionary oracle of Edinburgh. Now, James Anderson, bull-market hero, has left behind a precarious legacy. It’s been three months since Anderson, 63, retired from Baillie Gifford, the century-old Scottish money manager he transformed into an unlikely power-investor in global technology. Awkward timing, to say the least. Before Cathie Wood and Ark Invest, before crypto and “stonks,” Anderson began transforming Baillie Gifford’s prosaically named Scottish Mortgage Investment Trust — founded in 1909 to finance rubber plantations and later Baillie Gifford’s flagship product — into one of the world’s top performing funds of its kind for a decade. But the tech stock meltdown has left the firm bleeding assets this year, losing a staggering 100 billion pounds ($122 billion) by the end of June. What was already a tall task for the next generation of the firm’s stock-pickers — convincing investors they can follow in Anderson's footsteps — has added a new hurdle: making the case that they should. The recent market rally will have helped, but changing course doesn’t appear to be an option. More than a dozen former and current employees and clients, most of whom spoke on the condition of anonymity in recent weeks, depict a firm that fell under the spell of Anderson’s success. A company partner who held no formal management position for years ended up driving Baillie Gifford’s entire approach to markets. What Anderson has left behind appears emblematic not only of this year’s market downturn but also of the excesses that inflated a pandemic bubble in just about everything. Portfolio managers have been deployed to try to calm angsty clients. The uneasy mood was evident in mid-June as Scottish Mortgage investors gathered in London to hear what Baillie Gifford had to say about the drastic reversal of fortune. The crowd sat solemnly beneath dim chandeliers in a rented ballroom as Anderson’s successors, Tom Slater and Laurence Burns, called for patience, confident picks would pay off in the long run — that is, in 10 or even 20 years. Baillie Gifford famously piled into Amazon, Tesla and others that would soon catch fire in the bull market. Some attendees wondered out loud if Slater and Burns could deliver by following their old boss’s playbook. One asked if it would take 20 more years to figure out if Anderson really was a genius stock-picker or merely someone who lucked out in a bull market. “We are not sitting, looking into a crystal ball trying to predict what’s going to happen,” Slater said. “Wealth doesn’t come from predicting stuff but from a small number of exceptional companies.”

Bard1 - any chance of posting full article for non-subscribers to Bloomberg?

TopCatz - The last couple of years have certainly seen excellent progress, but TEK's long term share price performance has been dire. 26p float price on launch in April 2014 versus around 30p over 8 years later. Crystallising gains could really change that, locking in profits, so re-basing TEK's share price. Until there's evidence of this being on the horizon, TEK remains a trading share for me. I last bought in at 24p in June & will sell around 60% of this should the price hit 40p any time soon.

TopCatz - yes. I'm pleased they got the Lucyd IPO away when they did. With high inflation & increasing talk of global recession, I expect markets to become more volatile this autumn/winter, with further correction a distinct possibility. My main concern with TEK is that it's now IPO'd two of its holdings (BELL over a year ago). Yet still no meat on the bones about its exit strategy or any special dividend payment. I understand other posters' comments about not telling the market exactly when you plan to exit. But Clifford has already hinted at this when he said in July 22 "this should result in increases in returns on invested capital as our portfolio companies continue to mature and some achieve meaningful exits, which we hope to see in the next 12 months." TEK has really marketed itself as an incubator, sniffing out ideas with huge commercial potential, backed by a proven management team. Its stated aim is to get these companies to IPO (or trade sale), subsequently exiting & rewarding shareholders via a special dividend. At the moment, it seems to be creating great excitement when another of its holdings gets to IPO. TEK's share price promptly rises in anticipation, only to fall back again when there's a lock in period, no special dividend announcement & not even a hint of an exit strategy. Sure, BELL & LUCY may continue to flourish over the next year or more. In which case their share prices might rise even further. In theory, this should boost TEK's own share price, as the only alternative is that it trades at an even greater discount to NAV than before. Trouble is, there's also a flipside. Recession may start to look far uglier this winter and into 2023. Global markets may drop accordingly. In which case, part/all of the gains from TEK's IPO'd holdings could promptly disappear. As most PI's learn - sometimes the hard way - it usually pays to take some money off the table if you've realised a decent profit. I'd like to see TEK doing the same. Say hedging its bets, exiting around 50% of its IPO'd holdings fairly promptly post-admission and letting the remainder run. Maybe that's still its strategy, but I think we need to start hearing a bit more about exits. Until these happen, any gains in TEK's NAV are purely paper gains, which can only translate into tangible profits once cashed in.

As a quick add on, in July 22 Clifford said "We believe that we are executing on our strategy and this should result in increases in returns on invested capital as our portfolio companies continue to mature and some achieve meaningful exits, which we hope to see in the next 12 months". Which - almost a month on - implies TEK exiting from two or more holdings within the next 11 months. So I think we need to start hearing far more about this part of the strategy.

Seamanp911 - I don't mean to come across that way. Just trying to give a bit of perspective & balance. For instance, rather than Alan Green cooing at Clifford's every word and agreeing how marvellous everything sounded, why didn't he ask about TEK's exit strategy for each of the 4 companies? I.E. What happens now Lucyd has IPO'd? Does TEK instantly cash in some of its chips to realise a profit? Or is it in Lucyd for the longer haul? If so, HOW long will it be before shareholders are paid any Lucyd special dividend? No point in getting all excited about a TEK holding proceeding to IPO, if we still have to wait a year or more before locking in any tangible benefit from it. After all, the Nasdaq could tank in 12 months' time. Then what would happen to TEK's share price if it still hadn't exited from any of its holdings and paid its shareholders one or more special dividends?

Sure. But you'd expect any CEO to be bullish about their company and Alan Green puts Churchill's nodding dog in the shade. I'm not trying to diss TEK, as I own shares in them. But as Clifford stated, proof of the pudding will be in how the 4 companies actually evolve over the next year or two. Rather than what he or anyone else simply hopes they'll achieve.

House brokers' price targets are even more meaningless than other analysts' IMHO. Not only are they invariably clueless, they also have a vested interest (either a holding or payment by the client). So best totally ignored. That said, I'm reasonably confident TEK will prove a decent medium term investment to those who got in sub 30p. But I could be wrong. As could the "professional" analysts. Why else would the share price be where it is, if the company looked like it was imminently going to be worth 49p?

I wouldn't pay ANY attention to the CEO saying he wanted the share price back above 30p. Of course he does, given all his share options! Doesn't mean it'll happen. In fact, I'm always ultra wary of directors - particularly on AIM - who focus on the share price rather than the fundamentals. Why haven't Tim'n'Tim invested their own cash way more heavily if they're so uber confident? Given their salaries, it's inconceivable they haven't substantial sums available to invest. £60K isn't a significant vote of confidence from them IMHO. This share is now a binary gamble on FDA approval. If approved, share price will rise. If not, IMM will sink like a stone.

pedrolancaster - Trouble is, it's also totally pointless as no-one ever believes them.