Member Info for sageoflondon

Virtually irrelevant here but I think some of the housebuilding shares will (eventually) be at levels that surprises us all. The ones with a strong balance sheet will look cheap at some point - but I don't think we are anywhere near that point. The market has a long way to go to adjust to the new normal of normalised interest rates. It will be painful if you bought a house right at the top, but fine in 5-10 years. Even a nominal 10-20% fall is a real 30-40% fall over two years with inflation at 10%. It's more a matter of where to hide at present!

There would have been dividends along the way in some of those banks, but not a great investment. This won't be going back to prior highs for years and years and could quite easily go a lot lower for a reasonable amount of time as well. The real downturn hasn't started yet in my opinion - this isn't a Grow specific observation. I also believe it will be protracted with systemic issues arising along the way. I am averaging down in some areas, but I want a return now (whilst I wait) on all of my larger investments. Inflation is running at 10%, so even staying at the same share price is a 10% loss. Preservation of capital at present is good enough for me. As things progress there will be some real bargains - along with opportunities to pick up significant yield now and capital gains in the same area as things normalise. Rates aren't going back to where they were (i.e. virtually zero) full stop - in reality they are now much more normal.

Lets wait and see what comes through. Just because the last funding round took place at a specific level, that doesn't mean it still holds. If the auditors are worth their fee they will be paying close attention to the valuations this time around given the external environment.

What sort of haircut have you factored in for Revolut? I would say taking it back to the £5 billion prior to the softbank shareholding would be completely reasonable.

My best performer has been IMB - currently my biggest holding. Most of the other stuff has drifted down, but holding up. This will take a lot of time and could get worse before it gets better, hence small holding at present. I still like picking up yield at present. 5-10 years down the line, with rates normalising at 3-4%, picking up a 7-8% yield today will look attractive, providing inflation is eventually controlled.

I have bought a very small placeholder stake. I like a monitoring stake with a view to buying more if and when I see fit. Still not confident this has seen a bottom and it could go down more. Time will tell.

This risk was well understood and as a result likely documented as a risk - nothing to see here on that front.

A company like Apple or Microsoft is making significant profits today so it's share price won't suffer as much as higher rates don't result in the same level of NPV reduction. Something that is making losses with the promise of a profit in the future in a higher rate environment is always going to suffer a lot more, add to that potential liquidity issues (which could well arise, but haven't yet) and that results in an even bigger discount to those future cashflows as survive / not survive is factored in. PE money isn't the same as tech VC money - there are a vast range of assets there. The standard PE formula is buy cheap due to poor management, leverage up a little (sometimes a lot) to juice returns and then sell back a very profitable well run company that appears capable of handling it's higher debt load - doesn't always work and often too much debt, but can't be aligned to VC model.

I have also read Moneyweek and that's how it looked to me - pension fund trustees primarily (and companies) - these aren't Joe Bloggs off of the street - like PPI. Pension fund trustees are required to have a range of skillsets (not all of them have all of the skills, but there will be a range of skills). There is a skills matrix etc. These aren't inexperienced, unqualified individuals in the round and therefore there is a different expectation as it relates to understanding. LDIs are not difficult to understand as such. If rates spike up on the debt instrument (i.e. the price falls) then there will be some form of cash call to pay on the instrument/ derivative associated with the LDI. That's basically what happened. What should have happened - in the clear expectation of rate increases and increases in sovereign bond yields across the world (developed, except for Japan) additional liquidity should have been put in place a good while ago - rates increasing wasn't a surprise - it was inevitable they would not stay at 0.25% forever.

Ocado had a business plan I am sure, a team of planners and Accountants. When there is a lot of cash floating around a lot of it finds it's way into areas that might not otherwise attract finance - 0% rates almost does that. Google and Amazon can fund losses for years to advance society, as can a lot of big tech, hence Amazon investing in Rivian. They don't always invest for profit, but rather advancement in one way or another. I am sure Manna have a business plan - I don't know the assumptions in that without being provided with a copy. Suburban areas where van delivery doesn't stack up - I don't understand why not - when our Hermes driver delivers here he told me he has about 70 parcels a day to do, all within a 3-4 mile maximum radius. I am in a suburban area (just inside M25). Don't see that drones would be more cost effective here. He delivers in a 15 year old Mid size SUV.....maybe the economics of Manna do stack up - time will tell. I think larger tech companies will get there first in reality - deep pockets.

Totally agree - some of the ideas are great, but often too early to tell if they will be profitable long term - some might become huge. Like I said I think Ocado is fabulous but people seem to prefer Lidl and Tesco etc. Ocado has struggled to make a profit in 20 years - management have however made a lot of money on that journey - most shareholders (other than some who invested right at the very start) have not been so lucky. Cazoo will potentially fail - it's already failed re it's European expansion. Grow has some great portfolio companies from an ideas perspective, difficult to know if they will become profitable winners though - given market conditions it's unlikely there will be many IPO exit opportunities.

I don't mention some of those as I think some of them are excellent - I think some of those valuations are fair - Thoughtmachine has potential, Aiven etc. I don't know every company in the portfolio really well so won't comment on some of those. With the exception of those companies I have mentioned, I am more concerned with overvaluation - not just for grow, but this sector, i.e. early-mid stage tech, some later stage too - e.g. Ocado. The concerns I have with Ocado are similar to Manna - great product - well Ocado is ( I have never used Manna) - I don't use anyone else - but can it really generate a sustainable long term return for it's shareholders - I have my doubts, same for Manna. Drones are expensive (like Ocado robots), they need programmers, designers, systems architecture, software developers, repairs and maintenance etc - the people doing those jobs are well paid. How much does a drone delivery cost long run if you build in depreciation etc, same with robots in an Ocado warehouse - isn't it cheaper to get a person (on a comparably low wage) to drive a vehicle in the case of Manna to deliver - especially where more than one house on a street - i.e. multiple deliveries. I can see how drones work better in remote regions, but what about the economics of that - is there money to be made.

Just because someone is willing to pay £14 doesn't mean it's rational - that's about what you can sell something for, not what I believe it's worth - I got it wrong, I didn't think it would go down so quickly from the peak. Looking back £11.90 wasn't rational because it had $7 billion plus (think it had actually gone up above listing price) of Cazoo in it etc. If trying to anticipate how the market and wider economy will impact a share price is flip flopping - guilty and proud to be a flip flopper! 2 years ago I would never have invested in a tobacco stock. I flip flopped on that to in late November 2021 through Feb 2022, primarily for a high yield and because I had proceeds from the sale of Grow shares to deploy / utilise over that period - and had no clue where to put it, I thought tobacco would be a safe spot. Bit of luck there to be honest. Do I think tobacco will look good in 6 months - have no idea - things change, including regulation etc - I might well flip flop again, particularly if market conditions change and there are more attractive opportunities.

you didn't read properly - I was referring to Allplants - the brackets appeared directly afterwards!! of course drone is technology - not one that will be particularly profitable (for the drone operator in the delivery space) in my view but that's my view. Great for the military.

I don't think the dip is irrational. It's the nature of volatility with something like this. Market was pricing success for everything with a bit on top at 11.90p - the market had forgotten that it's normal for a good portion of investee companies to fail / be sold for less than purchase price etc - so 11.90p was likely more irrational. Easy to do when everything turns to gold. The market it now doing the opposite, but difficult to know where it ends. This would be irrational without rates and inflation where they are and the situation in Ukraine. Would probably have sat nicely at £5-£9 eventually without the wider market concerns.

ps if you are indicating I short - I don't and never have, probably never will. Don't believe in it. Everything I have in ISAs and SIPPs and fully owned. It was going great at the top with valuations flying. In hindsight I should have sold at £11.90, not where I did!! Would have been worth a lot more to me! No guarantees I get it right, but I stand by my view - market conditions change, hence my view on valuation has changed significantly. I was amazed that they got Cazoo away the price it went for, Ui Path and Trustpilot took off well too - got more sceptical when we held as I wanted out straight away as I never believed those prices would hold. I got more sceptical with future rounds in allplants (it's not really tech), Manna etc. Graphcore failing to increase sales as significantly. Then on top liquidity opportunities are virtually non existent. The Revolut valuation was outlandish as well - just not feasible based on the stage it's at currently. That's why I am where I am.

But everyone assumed the pandemic would pass to an extent - or very quickly worked out which assets would likely benefit from it and those that would suffer. In addition to this there were no major systemic liquidity issues etc. The other thing is a lot of the ammunition was used up in the pandemic that has to be paid back - massive handouts etc. A lot of stocks haven't recovered from the pandemic at all and some are in a worse state, Marstons, JD Wetherspoon, Restaurant Group etc - it's cumulative for them, firstly virtually unable to trade, then massive cost inflation to make trading profitably difficult even when they can trade. I don't think you can take the two in isolation. The pandemic and the supply issues, lockdowns etc, even long term issues such as people leaving the workforce have an origin in the pandemic (NHS backlogs for treatment so can't return to work etc, less so long Covid), then the Russian led invasion. Of course it will pass - it's the damage that occurs in the meantime - there isn't a lot left in the bailout tank this time and we never really paid for 2008 without printing yet more money. We are paying the price for that now.

Ok, so the fact inflation has spiralled, the war shows no end in sight (and has started since that date) and rates have increased massively since that date and have a lot further to go - I think things look much worse. The pre-covid peak was 590p - yet through Covid we climbed for near 1200p - with very little real rationale for that other than a massive increase in tech valuations, ever increasing funding rounds etc, Cazoo IPO, Trustpilot IPO, Ui Path IPO. Things look very different today. I think this will represent a good buying opportunity at some point, just not yet for me personally. Everyone has their price.

If there is a disorderly sell off as per the IMF risk listed in the FT, this will likely go considerably lower than it is now. NAV reported won't matter a bit - it hasn't currently. I am just saying it the way I see it. Likely a couple of rounds at similar price maybe for some portfolio components, but in reality most of the portfolio likely down. Why do you think this portfolio will or has avoided the wider market problems / higher for longer inflation / rates etc specifically? Maybe if we have one or two world beaters that were close to IPO. I don't see any evidence of that. It won't take too much to have a full blown liquidity crisis with the way things are and then all bets are really off. Will investors head to Unilever, BAT or Grow - I am pretty certain it won't be Grow. I think it's really dangerous to anchor to what happened in the past. We are where we are. Everything around is saying this is worth less as a result.

If anything close to the current NAV is published without significant support for that valuation it just won't be believed. There is just no way the portfolio is holding up under these market conditions. Just no way. Not having to come to the market for money might mean you don't have to re-assess value (not sure of the rules), it doesn't mean the investment is worth what it was valued at in the last funding round. In my opinion this will likely surprise on the downside at some point in the next 12 months and not the nice type surprise.