Member Info for reapz234

"Investors are suffering from myopia right now. This condition is particularly prevalent in the growth capital investment companies space.

A market that was willing to pay a premium for exciting high growth businesses as recently as 2021 now has very little interest. Back then, investors didn’t worry too much about lack of current profitability and were happy to patiently wait for distant profits promised by business plans and cashflow projections. Not anymore.

This situation has a lot to do with discount rates, which are tied to interest rates. Much of the value of a growth company lies in its future profitability and the impact of discounting those future profits at a higher rate results in a lower present-day value. The US 10-year interest rate (i.e. the yield-to-maturity on a 10-year US government bond) rose from around 0.5% in August 2020 to almost 5% in October 2023. Valuations of growth companies, discounted at higher rates, declined markedly as a result.

This is not necessarily because the business environment became less attractive. It is largely due to the mechanical impact of higher interest rates, and therefore a higher discount rate, on future income and profitability.

There are several things that could lead to a re-rating from here: lower interest rates, the reopening of the IPO window, an increase in portfolio exits and increased capital flows into the UK stock market. Now looks like a good time for the market to correct its short-sightedness and reconsider the long-term attractions of these growth capital trusts. "

There is a massive gap between SP and NAV. This has been seen across the industry, and is starting to improve. Although this does seem to be unfairly discounted here, even a double of the SP would carry a large discount to NAV.

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For example:

"In June 2021, Molten Ventures (GROW ) – previously called Draper Esprit – issued new shares at a 7.7% premium to net asset value (NAV), in an oversubscribed fund raise. Now the same shares trade at an estimated discount to NAV of 55%. However, things are pretty healthy in the GROW portfolio. The company completed realisations from several portfolio companies in the financial year ended 31 March 2025. These included Perkbox, Endomag, Graphcore, M-Files and a partial realisation of Revolut. All these realisations were at or above carrying value."

https://www.theaic.co.uk/aic/news/industry-news/killiks-gilligan-the-market-is-being-myopic-on-growth-capital-trusts

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Looking forward to the next NAV update. Also any updates to validate the NAV further will help start this pending re-rate.

Investors 'hoping' funding would be received during AACR, then 'hoping' in advance of the webinar, and now changing to 'hoping' it arrives with results. Still no institutional investors after all this time. 'Hope' isn't an investment strategy

Funding needs to come soon, and only way this has happened in the past is via a retail raise or a Heights loan. A second heights loan would be extremely detrimental to the SP and would provide major dilution - seeing heights have made a handsome amount so far from the first loan it would be in their best interests to support the company a while longer

About 4D pharma

4D pharma is a world leader in the development of Live Biotherapeutics, a novel and emerging class of drugs, defined by the FDA as biological products that contain a live organism, such as a bacterium, that is applicable to the prevention, treatment or cure of a disease. 4D pharma has developed a proprietary platform, MicroRx®, that rationally identifies Live Biotherapeutics based on a deep understanding of function and mechanism.

Lack of any funding news and shortening cash runway, all sounding very hairy here. No major shareholders at 3% and institutional investors not getting on board.

https://www.lse.co.uk/rns/DDDD/update-on-suspension-of-trading-xy88kvj7rwutgbf.html

"The Board has been exploring opportunities to secure additional funding for the Company in recent months, however this has proved challenging but significant progress had been made, despite the very difficult prevailing market conditions.

Subsequent to the suspension, the Board was informed that Oxford had today instructed that the Company be placed into administration, in accordance with the terms of the Facility."

STG once again 'behind expectations' on their forward guidance of 'early May' to report their woeful results from 2024, doesn't bode well

It's just the annual webinar that Turner Pope organises so that they can justify charging their extortionately high fees for their services

NASDAQ starting to look perky again - great time for an IPO

More shares issued - another 6.5m added to the share count

Future prospects looking strong, very close to the new warehouse space being operational and revenues picking up further

Worth a read - https://mylesmcnultytrades.substack.com/p/huddled-group

Sitting on a paper gain, but showing no signs of closing out. Hopefully don't see this short increase further in size over the coming weeks/months, as over 9m shares only just hit the market and more to come in July. Must be waiting for a much lower price (15 or 20p or lower?), before there is any reduction in the short

The RNS also says "the level of dilution from each conversion event depends on the prevailing share price, which has been adversely impacted by market volatility".

The SP hasn't been impacted by "market volatility" - it has been impacted by the lack of funding or prospect of any near term funding, partnering or NASDAQ listing.

Anticipation of some 'posters' holding the price up here, but as soon as this has been released in the next few days selling likely to continue towards 20p. NASDAQ listing seems to have gone out of the window and management implying no chance of a deal any time soon.

Also added headwind of 9.38m shares to be sold (2.71m more than in the last quarter) - could even see the support of 15p touched in the next few months...

SP reacting positively, sitting on the 50 day MA and breakout of this could see a surge to the 300's today

It brings to the forefront that there's over 60% discount to NAV. Nice to see the NAV taking a turn and starting to increase again. Positive results here and the discount - looking more likely to trigger a SP re-rate

Any selling by weak holders would be met by buys as part of the buyback, causing the re-rate that is due here.

Once the £2.6m cash is received, hopefully we will see some share buybacks initiated. This would see significant increase of NAV per share, as we are currently trading at sub £5m MCAP with a big discount to NAV. This would also align with directors interests as would get us to 2.5p and/or 4p options.

Seeing we have the prospect of future realisations, no point sitting on excess cash. Anyway, would still have the unlikely option to raise more money in the future at a higher SP rate in the future if realisations hadn't yet occurred and some investment opportunities arise.

Also how has the IR update today been so largely un-noticed? Very bullish update there backing up their their 1 trillion valuation by 2030. 140% upside per year implies 25% upside per quarter, so continues to justify the forward valuation. Hopefully once an RNS is released others will clock on to the value here.

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In a recent interview with the Infinite Reality CEO, it is stated IR is projected to be worth $1 trillion by 2030.

- IR was valued at $12.25 billion at start of Jan, so expecting ~80x upside over next 5 years

- This equates to ~2.4x (+140%) upside each year

- This equates to ~1.25x (+25%) upside each quarter

https://youtu.be/u3idIYL98S8?si=AmqEqEJx3LXTg1Ip

Don't think there will be dividends until the share options have been awarded at 4p, otherwise it will make it harder for the SP to reach 4p once the dividend has been paid the balance sheet reduced, so need the SP to re-rate first to reflect the value here