Member Info for sageoflondon

My personal take on your Fevertree comment - Fevertree is possibly overvalued, certainly for where it is today - 10 times revenue for a soft drinks company looks punchy but ignoring the pandemic period it has performed very well. Fevertree is profitable and easy to understand. THG is neither of these things.

You would certainly have Hypertension if you were a THG shareholder (for the record I am not and never have been). Never fails to amaze me at how people are taken in with the hype on something like this. Even if long term it turns good there is an opportunity to pick it up for a fraction of the high and less than the actual float price. Feel sorry for all of those invested. I am certainly glad that Grow don't have a holding in that. I'm not expecting the fireworks with the NAV increase as some of you are. If we get it I will be pleasantly surprised. Just hopeful that it's positive overall. There are bound to be some failures in there as well. Not sure what our stake is in Pushdoctor but that looks like it is struggling. Some investments will go to zero or close, but that's the model overall. As long as the positives far outweigh the negatives all is good.

Excellent set of numbers given prevailing market conditions. Key to growth and meeting outlook for 2022 will be management of stock levels and supply. Some of this won't be in UPGS's direct control. A lot will depend on relationships and the flexibility of the supply chain. This has previously been strong. European growth looks like it's slowed quite considerably - I am guessing that Brexit may have had an impact in this area or is it the prioritisation of Supermarkets and Discounters that have led to the tail off. A decent set of results that deserve 200p a share as a starting point.

So for the last 10 years I have actively avoided a fixed rate mortgage and it has benefited me significantly. Before August this year we were paying 0.74%. This August I moved to a 5 year fixed rate. I don't think interest rates will be hitting 15% but I do think there will be some normalisation, some net interest margin expansion within the banks themselves. I could easily see somewhere between 1% and 4%. But even 2% would be disastrous for some. House prices will only continue rising whilst it is politically convenient for it to be that way......will that last forever. The young become more disenfranchised and want something different, taxes high etc. The only real way (and I'm a Conservative voter normally) is some form of wealth tax eventually. Reduce income tax etc.

Throughout history there have always been substantial corrections that are market wide. On a regular basis there are also stock or sector specific corrections. If I am honest I have made most of my money on these corrections. I was fortunate to be heavily in cash in 2007 (80% ish) and 50% ish when Covid hit. Sure I missed out on some gains up until that point, but nowhere near what I got buying during the fall. That was luck to an extent - I thought the market was overvalued in 2007 along with silly levels of debt hence my positioning. The stock specific corrections have also been very profitable. If you pick the right one, with recovery prospects where the market is really negative, these can also be very profitable. No one knows where interest rates will be in reality. Impossible to know. We could have a guess however that they won't be lower - or it's very unlikely indeed. Saw that Push Doctor isn't doing so well.....we're an investor in that..

I was disappointed with how much had been sold down. It shows that the market isn't strong at the prevailing market price or they would undoubtedly have unloaded more. Any more and it would likely have resulted in a seismic share price shift for Trustpilot - a 10% drop was sizeable enough. I personally think a lot of valuations are very stretched at present. I'm not expecting our share price to hit £12 again for a considerable period. Certainly not for the next 12 months or so, likely longer.

I take it that this announcement means Draper have sold some of their shares are part of this placing - so they have reduced the 7.9% they retained when this originally floated. We just don't know how much they sold.

Retail facing internet businesses maybe. This market particularly - Frozen vegan food. Very niche in my view. The market is also very fragmented indeed. There are already a number of successful firms out there, none of whom have much in the way of scale etc in the UK. I am beginning to think they are really struggling to deploy .

It always concerns me when the words 'record-breaking' are used and we are the ones paying. There are so many of these types of companies out there at present. They don't really have any USP/IP or a 'moat' as such - this isn't Peloton or Trustpilot, it's a frozen food delivery service. Essentially it's a frozen vegan meal delivery service. I always use COOK for this type of thing - they do both meat and vege and I can go into a shop and choose or have it delivered. Maybe not vegan though. Veganism is still a 'minority' dietary requirement. I'll often eat vegetarian but rarely vegan.

is that 2.7% per annum to hold I am assuming? So over say 4 years around 11%?

I don't think the UK government or central bank actually has much say in it. If others raise rates and we don't the pound devalues anyway and inflation goes even higher.

https://www.theguardian.com/business/nils-pratley-on-finance/2021/jul/15/revolut-valuation-makes-little-sense-compared-lloyds

I think the UK market is only starting to see the need for interest rate rises now. They will come, particularly in the UK, in my opinion. The impact could be quite severe. There must be an awful lot of people out there who have borrowed high multiples given where UK property prices are. No one ever sees it coming (the ones who do, and truly believe what they are saying make an awful lot of money one way or another) - that's why we end in this position where the market changes its mind. The longer some rate rises are put off, the higher the likelihood they will need to be more severe eventually.

I am interested to understand what forms of leverage are out there that allow a long term view to be taken on a share price. I have considered it in the past and always been put off by the fact that most methods available to mere mortals cost an awful lot and only really work well for 'bets' on short term price movements. Given shares rarely move in a straight line it would be very expensive to say bet on a 1400p share price for Grow in 3 to 5 years, would it not?

This is precisely why I don't every use leverage (other than a companies own gearing / leverage) to charge portfolio returns. Great on the way up, but the market can take things down for longer than most can take. Saying that, March 2020 would have been a great time to leverage a portfolio as hard and high as possible!! Now, however probably isn't that time.

Providing the NAV support is there I would 100% agree with you. The NAV support can fall away very fast however. The auditors will have a keen eye on valuations in this sector and they will be valued accordingly. NAV can evaporate very quickly in the event of a change in consensus. The consensus was that inflation was temporary and that interest rates won't be going up. It looks like the inflation issues will be much more entrenched that originally anticipated. Even the profitable tech companies are taking a bit of a pasting at present so we are right in the thick of it. I think we will be multiples of where we are in 10 years, I do however think we are in for a rough 6 to 18 months. I'm ruling nothing out.

That just doesn't make sense -£10 for a delivery? Where does your figure come from? Delivery charges are broadly universal regardless - if ASOS is charging £10, then others will be as well. It's the same challenge for Amazon - it's not like they have their own drivers either.

All of that may or may not be accurate. Difficult to tell in reality. We have developed the fastest growing tech company in our sector recently, saying that our sector was one of the least developed. It will become big, but not sure how big and the human element will always play a large part in our business. It looks like this will likely go sub £9 now. Again not unexpected given the placing was at £8 only a short time ago. If this goes sub £8 I will think about adding some more.

I agree only in part - a few things are country specific, but inflation is a global problem as well. I don't think this will be unique to the UK. We might be a bit harder hit than some though.

In my view it's missing the point trying to pinpoint the movement in the share price - it's only ever guesswork most of the time. The movement isn't likely down to micro factors specifically impacting the components of the portfolio. The macro perception is that organisations with little in the way of real world profitability will likely struggle in coming months / years as investors look to protect themselves from inflation. I think it is just investors becoming more rational as it relates to the price of assets that have not yet reached profitability. Gross Profit margins or 65% don't make a company profitable as such if they have a large cost base below that like a lot of our investments will. Ocado must be profitable at a gross margin level, but not at a net profit level. Substantial scale will be required in a lot of these businesses until we ever see a real return in the form of cashflow and dividends and accounting profitability. Hence we will always struggle more so whilst the inflation genie is roaming around.