Member Info for sageoflondon

I would pay money for a beer like that, but a spotter is a deal breaker I agree. It has much more of a market in those sorts of areas as well - US and Canada. We don't have the remote vast open spaces they do and our market way smaller than the US.

Agree re the idea not sales in 2000. Some are still a bit idea like - Graphcore, Manna (will drone delivery really be mass market commercially viable - I don't know - I am sceptical - specific applications etc, particularly emergencies etc??) - but in the minority. My comparison related primarily to valuation similarities.

It was a considerable bubble (Cazoo, Klarna amongst others evidence of that), albeit not quite as indiscriminate as 2000. Important to note that re-price doesn't mean a return to where things were - but more likely a re-assessment in the new environment, rather than a complete reinflation of the bubble that existed at the time - i.e. real value more likely to be reflected with an appropriate risk weighting.

Grow is fast becoming a speculative vehicle utilised to play inflation / macro expectations on a daily / weekly basis rather than an actual long term investment vehicle. Maybe that subsides at some point, but no evidence of that at present based on daily swings.

I think somewhere in-between. If you actually look at his investment vehicle positioning he hasn't sold everything, but he is very defensively placed at present. I think he's spot on with that. I think even big tech is going to struggle. Apple, Amazon, Meta and Tesla will all suffer in my opinion and that will cascade. Any fright and investors will look to solid income and profitable cash generation. Things like Cazoo and non profitable (flawed business models) will be come speculative plays until the go bust or actually make a profit. Markets won't forgive poor performance. I really want to see this 'talk' of IPO by some of the fintechs / start up banks hit the road - will be good to see the types of valuations - i.e. what the open market values these vehicles at. My guess is nowhere near what was anticipated based on recent funding rounds - things have gone very quiet. Every announcement however is little more than a litmus test of public opinion and appetite until the IPO is launched. I would imagine very few IPOs of this kind will take place in 2023 and if they do, they will have to be more reasonably priced.

It's not just an inflation scare - the inflation is real and the move to a higher normal for interest rates. It's a realisation that actually a lot of companies like Cazoo that floated at eye watering multiples of revenue were never actually worth anything like the IPO value - in fact a lot of the business models made no sense whatsoever and were complete folly - particularly in terms of valuation. There seems to have been a 'flight to shi** today - pure speculative rally. Anything I have that was a speculative buy has gone up stupidly today. Interest rates won't change Cazoo's future.

3 is still a lot higher than 0.25%. If you have a £500k mortgage, or a £250k mortgage on a fix of say 1.25% and will soon move to 4 or 5% then that is significant for a lot of people. I think a lot of western nations are going to have issues, particularly is one of major buyers of Western debt starts purchasing a fair bit more of its own due to rate increases - namely Japan. Western nations would love to be able to decrease rates again but will the global system allow them to do so. A decent spike in rates and then a gradual fall back suits me perfectly. Bring it on, I'm not sure it will happen as quickly as you are anticipating though and there are some major headaches along the way.

Personally - I see rates about where they are now longer term - they will go up (maybe a little from here), then likely back to around current level. That's where I personally see things for the next couple of years. They might overshoot, but I think that less than a 50% probability. It will take people time to adjust to rates at the new level - particularly those purchasing property etc.

Similar to house prices now compared to the 80s. A small rise in rates has a comparatively bigger impact on affordability now given house price inflation - if we had 15% rates now as we did in the late 80s / early 90s the housing market would be collapsing - and in reality would have done so way before now. There has been a bit of an everything bubble over the last 20 years or so due to rates way below the norm. This was accompanied by the great Covid giveaway and accompanying assumption that tech would win forever as a result of lockdowns. That resulted in technology prices getting way ahead of where they were pre-covid (and some are still way ahead) and some were already ahead of where they should have been pre-covid. There will be the odd outlier that globally dominiates. Microsoft and Apple aren't going anywhere at the moment as an example. I'm not however saying they are currently good value as investments - I haven't done the analysis and even if I had time too many variables in companies of that size.

But valuations of companies back then in the 1980s weren't as silly - things being valued at 200 plus times revenue etc. When that happens the impact of small rate rises will be amplified significantly. It was a bubble - it likely still is in certain parts of the market. Just as 2000 was - a lot of the stars back then never recovered - e.g. Cisco.

I don't see how that's directly relevant to the heavily indebted Western world as it stands today. Interesting though. I would totally agree with the stock market as whole - you might see say, Unilever, BP or Barclays dip heavily temporarily - but their earnings power will return quickly. If you can earn a 15% yield say on a share that was previously yielding 5% due to a stock market fall you're going to buy it - it's unlikely to stay there long unless earnings power permanently eroded. Grow doesn't pay a dividend and at the moment isn't making a return to its shareholders, when inflation is running at 10%. Risk and reward - and at the moment there is too much risk here, with little reward, hence the share price is where it is. Grow is very different to the FTSE stocks that pay an income day in day out etc - they are dull etc, but they are a lot more stable on the whole. Grow is a very different beast.

At that time most had assumed virtually zero rates into the future. Regardless of whether 4% is high (it isn't on a 50 year time horizon), it is to those making the assumption when investing in 2017 etc. The point is, at the new normal, would some of the portfolio companies have been funded at all. Zero rates can have an exaggerated impact on the risk investors are willing to take on - particularly when everyone is going the same. Valuations in 2021/2022 got way ahead of themselves and there are numerous examples of that. My view (not worth much in reality) is that this is likely worth somewhere between £3.50 and £6.00 at present, probably towards the middle of that figure, given the inherent risks and nature of the portfolio. Once inflation and interest rates have stabilised (depending on the level of those) it could well be worth more. Just my view. It's easy to anchor to past values, but in reality the past is the past.

Possibly - there are many types of profit and I don't believe that point was every clarified with a specific definition of the type of profit the CEO was talking about. Either way the likely size of any profit or even revenue bears very little relationship to what Revolut was last valued at. I guess we will know when it IPOs.....

Which of our portfolio is profitable already? I didn't know which you were referring to?

Interest rates were sub 1% from 2009 to early 2022 in the UK. They aren't going back there. Rates at 3-5% creates a substantially different playing field. No more free money. That article talks about the risk that wage growth remains sticky and is still feeding through, making it difficult to know whether inflation will fall back with rates at current levels. Anyway that's an unknown - what looks very likely is rates in teh 3-5% range and the end of free money - something that has resulted in an awful lot of overinflated prices - property for sure and likely a lot of technology valuations (along with the bubble resulting from the pandemic). Online clothing retail is a great example, Boohoo, Asos are suffering really badly - struggling to be profitable full stop, whilst Primark is going very well (along with Next).

I don't disagree with you, but I don't think the loan DD adds much in terms of supporting the current NAV. When the loan itself is so far below the NAV. Even a 50% fall in NAV still indicates assets that cover the value of the loan - i.e. in a firesale could still likely raise sufficient funds unless things went '2008' liquidity wise. Hence not particularly concerned whether the NAV is 20% or more out, or even significant more for that matter.

Thing with loan due diligence is they only care about getting their money back - providing they have their margin of safety they don't care. That's why banks don't really care how much they lend someone for a house, when the market is moving up and they have a 50% deposit. Very unlikely to take a loss, they just sell the house and recover if borrower can't pay. How much did we borrow compared to NAV? I don't recall - $200m - not much chance of them losing that - if that was tough with an NAV at £1.3 billion then that concerns me. They are only worried about the cash they might lose. So if portfolio is worth 20% of value they still get cash back.....might have carried out good DD, but focus on loan recovery rather than validation of the actual NAV as such.

Assets like the ones that Grow holds are now worth considerably less than they were 12-15 months ago per the market. Given breadth of the portfolio why would Grow avoid this - just because they don't have a funding round to crystalise the value? That makes no sense to me - you know my thoughts on Revoluts value today as an example - considerably less than $33bn. There are a range of examples of this - Cazoo, Klarna etc - Klarna is the best example - that was a big dip. Jupiter sold it's stake in Starling bank, I have no idea what for or how much compared to peak valuation etc. This doesn't even account for the fact that risk has increased in terms of company failures - Grow and portfolio companies due to less liquidity, higher for longer rates, inflation etc. Valuations of the companies in the Grow's portfolio fluctuate widely, particularly with interest rates moving to a higher base. People expected rates at 0% virtually into the future - until they were reminded that wasn't going to be the case. This isn't going back to £12 anytime soon. That's a long long way off.

day to day movements will be of no consequence if the market placed reliance upon the resilience and accuracy of the NAV - the market believes the NAV is lagging actual events considerably. Grow is defying gravity per the NAV.

Like it or not this is a risky company. It invests in early stage technology companies which may or may not be a success. There is also liquidity risk at present - i.e. if market continues how does it recycle capital, sell etc. Returns in tech are likely to be a lot lower next years. Big tech will consolidate, look to dominate, potentially crowd out early stage etc. Nothing stays the same, but unlikely to see a repeat of the broad gains made in tech over the next decade. If there are such gains it won't be in the areas anticipated.....I think NAV will eventually fall here, likely quite considerably. I think it will shock some investors - it shouldn't though. It might not be as bad as the share price is predicting, but it will come.