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“Entire space sector will rebound hard soon and it will be glorious.”

Like a Falcon rocket, it will rise again. But not until investor enthusiasm has been refuelled.

We’re currently sat at around a 20% discount to NAV, having had a good period running at a premium.

In truth, that feels about right for the moment.

Don’t get me wrong, I’ll be delighted with any increase from here, but can’t see it moving before the next results update.

In truth, I think this is a great company but that the share price looks unsustainable in the 300s.

I agree with @TheTrotsky about the price having run ahead of the value.

So - in truth - I think this is undersold rather than oversold.

I say this having bought in around 150 and sold out completely around 420. So I don’t currently hold - although I will be buying back in.

I think it’s unrealistic to expect the SpaceX excitement to carry over to here much longer. We’ve had that “excitement” and now have the Anthropic and OpenAI IPOs to look forwards to. The US momentum investors are moving on and the IPOs will suck speculative money out of here temporarily.

This isn’t to deramp. I don’t do that (please check my other posts). Just an attempt at realism.

Up 7% on (what appears to be) absolutely no news whatsoever.

Let’s hope for no news tomorrow as well!

What TheTrotsky says…they are continuing to grow and diversify from SpaceX as their biggest customer.

“presumably this drop will negatively impact Seraphim's NAV next time”

The disbenefit is more than offset by other factors.

Based on the ICEye RNS and this then the NAV is probably around 240-250 at the moment by my reckoning.

“… couldn't SMT have top sliced spaceX before IPO? I swear EWI did that…”

EWI did and got hammered for it. They sold 35% of their stake at a $400bn valuation in October last year - missing out on a 5 fold increase in value as I type.

You’re truly damned if you do and damned if you don’t!

Scotsgent1943 - that’s not what it’s says.

It’s says that “the average” POST-IPO INVESTOR (not retail investor) is now sat at a $3 loss against $ 184 closing price on Thursday.

Big whoop.

“To fulfill their legal mandate to mirror the index”

Just to be clear that there is no “legal mandate” (that looks like an AI hallucination).

The fund has an *objective* to track *the returns of the index*, not an absolute requirement *to replicate the index*. They seek to minimise tracking error, not eliminate it.

So a fund can choose when and whether to hold a share - either for a period or at all. Not all funds even choose to replicate an index, with some sampling it.

If you think about, a share entering the index is just 1 in 250 (0.4%) of the index.

And it’s actually not even that for SSIT as the index is mar cap and free float weighted.

If you do the maths then that puts SSIT at around 0.15% of the FTSE 250 index. It’s 0.015% of the FTSE350. Both of which are acceptable tracking errors.

At the bottom of the FTSE250 it’s relatively common for a share to be promoted into the index and relegated quickly - so some funds hold off buying until the share has been in the index for 6 months or so.

So, there is absolutely no rush for the funds to buy SSIT

The fund managers aren’t stupid and have done this before - so they know that them all piling into the share create a temporary, artificial peak that will result - itself - in a tracking error.

It’s the same with the shares that are exiting. There is no rush to sell. Not for the FTSE250/350.

An “interesting” side note…

You’d have thought that SpaceX’s $2.4tn mar cap - around 6.5% of the NASDAQ 100 - would mean that it’s a *must buy*. But the maths are subtler as the NASDAQ 100 is free float adjusted and SpaceX has an unusually low free float at the moment of 4%. Adjusted that makes SpaceX currently just 0.5% of the NASDAQ 100, which is what QQQ tracks - so there is a bit less pressure for funds to pile in than you’d expect. It’s not the case that they can choose to not hold it, but they have the ability to feather in their buying.

Hope that all helps.

As far as I can work out, the SpaceX share price is now fully in the NAV with no discount.

I would have thought it inevitable that SMT will sell a chunk of SpaceX when it can to crystallise the gain and create some funds for other investments.

Saying that, there is nothing in the articles that force them to do this. There is a rule that a stake in any single company cannot be above 8% *at the time of investment* and a rule capping private companies at *30%*.

In the latter case, the SpaceX IPO has significantly tweaked that balance - taking private company investments down to circa 20%. If Bytedance (4.6% of NAV), Stripe (3.9%), Anthropic (2.5%) and Databricks (1.4%) all IPO this year then private company exposure is going to be down in single digits, which isn’t where they’d want to be.

And/but when you’ve made a 25-30x return on an investment then taking out 10-20% of the holding is a sensible diversifier to invest in further private companies.

Interactive investor suggests that we’re at a 7% discount, not a premium.

That will be based on the NAV published yesterday.

To build on @TheTrotsky…

The IPO included a “Greenshoe” option where underwriters could issue up to an additional $10.7bn of shares. This was done directly to banks yesterday - many of whom would have used it to build their tracker positions.

Excluding a “small” allowance of $3.75bn for “friends and family” to cash in shares, the earliest existing holders can sell is after the Q2 earnings announcement at the end of July / beginning of August - up to 20 or 30% depending on how the share price is doing.

There are then rolling, fixed periods at 70, 90, 105, 120 and 135 days post-listing where existing holders can sell up to an additional 7% of their holdings.

Then another block of 28% at the Q3 earnings and fully unrestricted after 180 days.

Musk can’t sell anything for a year.

“It would be interesting to know what value was placed on the SpaceX holding immediately prior to listing.”

I refer you to the RNS on 4 June. $1.25tn

One issue with the declared NAV is that they are issued around midday for the prior day’s value. But we don’t know what cut-off time is used for the valuation - whether it’s UK market close or US market close. If it’s Uk market close then it missed most of Friday’s price action.

So, today is the first day we’ll be able to see how they are treating the SpaceX in the NAV.

On Thursday, we know that SpaceX was in the NAV at $1.25tn or $95 a share. Friday’s close at $160 is a 68% increase, which should feed through to a 14.5% increase in NAV over Thursday’s NAV (declared on Friday).

If you use yesterday’s closing price then the NAV should jump 21%.

AND/BUT SMT can’t sell yet. And *may* not choose to reflect the share price in the NAV until the first time it can sell, which is the Q2 earnings at the end of July/beginning of August. It’s a legitimately prudent thing to do as something’s only got a value if you can sell at a price.

Anyway, we’ll see today.

Fela96 - I’m not saying the managers are going to do this, but highlight that the NAV needs to realistically reflect then realistic realisable value, not just the headline holding x headline share price.

This is the lock up schedule (from Claude):

After Q2 earnings (the first results as a public company), up to 20% of eligible shares unlock. If the stock is also trading 30%+ above the IPO price at that point, an additional 10% can be sold.

Five time-based tranches at 70, 90, 105, 120, and 135 days post-IPO each release another 7% of eligible shares.

A further 28% unlocks after Q3 earnings, and the full remainder at the standard 180-day mark.

Musk can’t sell anything for 366 days.

There is no secondary offering.

“Why not just sell as much of their holding as possible into that market?”

In any IPO the company makes a “primary offering” that sells new shares, which dilute existing holders but adds at money raised to the assets.

The is usually a “secondary offering” that allows existing holders to sell *a very limited number* of their shares. This is to prevent the market being flooded with shares and tanking the share price.

The existing shareholders are subject to a lock up period of typically six months before they can sell any more shares.

So, the short answer to your question - via a long explanation - is that THEY CAN’T SELL (very much if any) at the time of the IPO.

Fela96 - the managers could choose to hold SpaceX at a discount if their view is that it’s the likely price level once their lock in expires.

Mlc2010 - over a 3-5 year period, absolutely.

The issue is that the next seven months is going to go one of two ways. Stratospheric, or carnage. With carnage my favourite to win once the likely six month lock up period for SpaceX ends.

I suspect that the managers will keep the holding value of SpaceX at 1.25tn until the market properly settles.

“For what it's worth, this share has not recovered very well from 2021. Over 5 years its performance is pretty atrocious”

You’re entirely correct. But over 3 years it’s fantastic.

1, 3 and 5 year performance figures sometimes aren’t that useful. An investment measured between Jan 2021 and Jan 2026 might look fab, but not if measured between Mar 2021 and Mar 2026.

None of us is buying historic performance.

What we are buying is a personal return - because all returns are personal - down to the day and exact time you buy and decide to sell.

In truth, all we have to get right is choosing when to buy and when to sell. And my investment returns have gotten much better since I’ve been able to separate identifying a good investment from identifying a good entry timing.

So, you’re right. But the point is somewhat irrelevant.

If you were lucky enough to buy at 700 in 2023 then exiting now is a great result. Even if you might miss the top, you’ve doubled your money and crystallised it. And a profit is only a profit when you sell.

Yaz18 - of course they know what is happening.

Which is why they are taking profits here (and other places) to invest directly into SpaceX when given the chance.

…has filed for an IPO.

https://apple.news/Amf385QXhR8OijY2VusFo_w