Member Info for sageoflondon

Nothing would surprise me - I am not saying it’s worth that, doesn’t mean it won’t sell for that. A little concerned that everything is very hyped at present. However would be very appreciative of the NAV enhancement. Can’t recall exact stake in Caloocan but that would certainly put
a rocket under it.

UK tech will likely sell out re Graphcore - just don't see it being allowed to float. By the time it actually floats the valuation would be astronomical and would likely end up in the US. However it won't ever be allowed to get there. There was talk of a merger with ARM - given the objections to ARM's acquisition by NVIDIA. Not sure that will ever happen though. It would be great to think we could have new FTSE 100 company in our portfolio (valuation isn't far off the bottom of the range required already).

Economist - interesting. I studied Economics before becoming an Accountant. Really enjoyed it but didn't fancy doing the Masters and beyond to become a fully fledged economist.

Agree re transparency of Cazoo valuation - I just think they have got it wrong. I think the founder is an excellent salesman though with past pedigree and that carries weight alongside a very confident presentation I am sure. I'm not however saying that diminishes what I think of Draper - I just think that it one of the companies that won't clean up- so much competition and few barriers to entry really. Some of the investors in Graphcore are serious players - BMW, Dell, Samsung, Microsoft etc. These aren't just PE houses or VCs - albeit this will be their equivalent VC/PE arms in those organisations. These organisations have deep, far reaching knowledge and foresight in the area in which Graphcore is playing. They fought to be a part of that. It isn't possible to easily replicate Graphcore's product. Risk is it gets bought out by a Microsoft, Softbank etc. before it achieves it's real worth. Draper is almost worth investing in for Graphcore alone (not quite but).

Just an aside - I had thought that IAG did ask and receive government support - which wasn't made available to Virgin. I thought Iberia and Vueling had secured Euro 1bn of loans supported by the Spanish government, separately I thought the UK bit (BA) had received a £2bn loan from the UK government for BA specifically - obviously quite political which airline is supported. I think there was also an earlier £300m from the Corporate Finance scheme re Covid. No dividends for IAG for a while I am guessing. I looked at it myself in January.

I think all you are saying re private equity and valuations and the extract you posted is spot on. I currently work in Risk Management (I'm a Chartered Accountant) and have 3 years under US private equity ownership. We were a very profitable transaction and were sold a few years back. A lot of private equity capital out there at present just looking for a home.

I have to say I was an investor in Laird a couple of years ago. I was very unhappy with that one. I acquired my holding at around £1.35 on average and the price went up to roughly £1.75 ish in a couple of years. For whatever reason it was driven back close to a pound a couple of months prior to a sudden cash offer from Advent for £2. Somewhat annoyed. That company had an awful lot of value in it and Advent got it for an absolute song. That made the price £1 billion roughly. I will be interested to see the exit price they get for that when they eventually sell. I have a feeling it will be north of £3 billion but I might be wrong!

Nothing in there I disagree with. I wouldn't want a 45% drop on 90% of my portfolio though due to a tech crash though. Hence whilst this is my largest holding it doesn't go over my 8% limit. I think some of the Draper portfolio is amazing and will go on to great things. I'm yet to be convinced by Cazoo - not because I don't think it's a good idea or a good company (it looks good), just not sure it's scalable globally (i.e. Amazon of selling cars type scalable) and in the UK Cinch is a major online competitor alongside all of the forecourt operators - hence valuation raises questions for me. Time will tell on that one. Graphcore could be worth ten times what it is now in 5-10 years.

I also think there are a number of non-tech companies out there that will do very well post Covid (and not bad during) - Redde is one of these, along with Saga (it has a profitable insurance business whilst the ships are locked down - could be wrong on that one.

I am aiming to retire in 5 to 9 years - no way I am going beyond 55. Just have to see what the markets have to say about that!

90% in one share is a personal decision, but way too much for me, especially if any form of leverage is involved. I don't use leverage at all as I believe it can have a disproportionate impact on decision making, whether to hold after a fall etc. Regardless of how diversified the individual holdings in Draper are, Draper is a company and as such still reliant upon one management team, one set of financials, one internal control framework etc. There is always the Wirecard, Enron, Patisserie Valerie type risk - i.e. Fraud, Manipulated Accounts etc. That risk cannot be diversified away based on the fact that there are a wide range of holdings in Draper. The main risk that I see here is a large US tech pullback. Regardless of direct correlation to say a fall in Tesla it would undoubtedly hit markets worldwide. Just my view. I am still heavily invested in Grow which has been one of my star performers, having acquired my holding at an average of £4.68. My other star performer has been UPGS - volatile but great performance having averaged 38p on that one. There are some great shares out there. I won't be selling Grow or UPGS anytime soon! Steph - I enjoy reading your analysis on Grow - I don't always concur (but that's what it's about). You are somewhat more positive on the annual growth rate than I am - but to be honest it has outperformed my expectations for the whole of 2021 already. I was banking on somewhere between 10% and 15% NAV growth per annum on average.

I think this is a strong buy if the ships are back up and running and cashflow positive at some point in 2021, but fully recognise it could be 2022 before a meaningful recovery in overall revenues for the travel side of things. This however is a promising prospect as a company with an excellent reputation overall and a strong brand. Yes there is debt but most of this is tied to the ships. If you compare this to say the AA the debt levels are small in comparison. The AA is insurance and Recovery (which will likely slowly decline with more electrical vehicles on the road), this is insurance and travel - which is going to boom when it's allowed again. I for one want to get away and whilst a Saga cruise isn't quite right for me at the moment (young family) it is certainly something I would consider 10/15 years down the line. I can't see a more compelling recovery opportunity out there. Millionaire - a lot of what you say is very closely mirrored in Paul Scott's (Stockopedia) latest update on Saga. I believe it is his second largest holding.

My opinion (for what it is worth) - the NHS waiting lists are only going to get longer as we progress through the pandemic. At present more bed space will be put on standby for dedicated Covid wards accross the country. In order to clear these waiting lists Private Hospital capacity will need to be used both by the NHS and by private individuals desperate to get their hip / shoulder etc. sorted out. Even those ardent Labour supporters out there would likely agree that NHS capacity cannot be increased to cope with the backlog, especially during a pandemic. In any case the additional capacity required is to an extent a result of the pandemic and could become surplus to requirements 3 to 5 years down the line. The private sector has an opportunity to step in and help the whole country here, along with it's own balance sheet and profitability. We should be thankful that we have a private hospital sector at a time like this. I have rated this as a weak buy only because we are in a pandemic - structurally I think Spire are in a good place.

I wasn't expecting this reaction from a share price perspective.

You would assume that it would act as a floor yes. It doesn't always hold true - I managed to pick up some shares in Forterra for well below the recent placing price - I thought the placing price would act as a sort of floor there so was quite happy when I was able to purchase for less than the institutional investors, always satisfying when you aren't able to participate on the placing itself. This is however different in my view. A building materials company is a bit more volatile in this market than what is effectively a technology Investment / Venture Capital trust. Providing there is a good destination for the capital raised (would hope they already have a clear plan for this), then it should be a positive overall.

This was always on the cards given the opportunities out there in this specific space. I am a little surprised they haven't gone for a bit more. At this size they should be able to deploy the capital without any significant time lag. Shouldn't be dilutive and hopefully not a major impact on the share price.

I am not concerned about the spread on this as I have invested over a number of years. Picked the bulk of my holding up at 35p average and in ever since. I have reduced over the years as it became an out sized holding for me. I do still have a substantial holding. I think the return of furlough funds is a clear indicator of the intention to commence dividend payments again. There are clearly no liquidity concerns at present and trading performance (in my view) is likely to be very positive indeed. I think this share is likely to move above £1 at the next trading update (I believe this is due 7th September). The move back to 30p at the height of Covid was a great opportunity to top-up or establish a holding in a quality company where management have significant shareholdings. My view is get in below £1 whilst you are still able to. There are not many other companies that occupy such a sweet spot - strong expansion of online, growth of discounters, demand for products given Covid (less restaurant visits etc). Just my opinion. If the trading update is positive then this could comfortably move to £1.10-£1.25 (accompanied by a return to dividends).

I agree that in the (short-term) this has the potential to cause some product shortage. How quickly / severe this is will depend on levels of stock held etc. and the ability to ramp up production down the line to meet any resulting shortfalls. Hopefully things will get under control relatively quickly and this won't have much of an impact.

If the share price drops more I will certainly be purchasing more stock. This is a great long term buy in my opinion. Whilst earnings are likely to be a little lumpy this looks like a well run company. The dividend is pretty healthy too for a company that is clearly on a growth trajectory again. The only drawback is that the share price moves around a bit on even the smallest piece of news - both up and down. The key is to stay on the profitable side of those movements. Minimal free float and low volumes are the only reason I can think of for the relatively large spread and volatility.

If you were valuing Four Seasons which is a hotel operator not an owner of course an earnings based valuation model would be well suited. If however you were talking about valuing a hotel company that also owned a significant number of freeholds of the hotels it operated, then this would not be appropriate. Asset valuation would obviously have an impact on the valuation. You are trying to value two completely different things. If I run a property rental company but sub-let my properties from a landlord, any valuation is going to be very different to a property rental company where I own two-thirds of the freeholds.

So just for the sake of clarity.

In early 2015, Welltower purchased all four of the Aspen's London hospitals for £226 million. The hospitals were then leased back to Aspen which continued to operate them. The deal included Holly House Hospital, Highgate Hospital, Parkside Hospital and Cancer Centre London. They were leased back to Aspen for 25-year terms. Can't say for sure but likely on onerous terms. Remember BMI's lease cost was roughly 20% of revenue prior to the restructure. I believe Spire's rent bill is circa 6% of revenue. Very different balance sheet structure - Spire is much stronger.

Tenet Healthcare bought Aspen in 2015 and sold it to NMC Health in August 2018 for £10 million. That is for the company. They don't own the hospitals!! Of course the valuation for a company that owns circa two thirds of it's freeholds is going to be higher. Spire Manchester cost circa £65m albeit I don't know if that is owned or leased.

Good to hear different opinions but interested in source re statement that market is in long term decline.

https://www.wiseguyreports.com/reports/2727475-u-k-private-healthcare-market-by-service-type-private-acute

This provides some interesting analysis, key extracts:

• U.K private healthcare market expanding at 2.6% CAGR over 2017 to 2023 to reach market value of US$ 13.8 Bn by 2023 owing to rising NHS waiting lists
• Based on service type private acute care hospitals accounted for larger market share in 2016 and projected to remain dominant over the forecast period
• Self-pay Individuals end user segment accounted for larger market revenue share in 2016 and projected to remain dominant over the forecast period due to rise in out-of pocket healthcare service expenditure
• Players focusing on packages and fixed consultation charges to the patients to garner larger market opportunities.

The report doesn’t concur with a long term market decline, say like high street retail etc? It does mention some medium term bumps and obviously there will be winners and losers

There are also alternatives. I would prefer a rights issue to severely adverse borrowing terms. I don’t think it will b required at all but there are a lot of options given the asset base.

If the AA and Marstons can borrow without difficulty I can’t imagine there will be major problems (barring severely tightened credit markets). Surely they could collateralise against freeholds or even securities against individual properties. This isn’t Debenhams!

St Anthony’s in cheam must have cost a lot too. Unlike BMI they own a significant proportion of their freeholds. The capital structure should work but we need to see the earnings come through for the new builds like Manchester and Nottingham. Will take 3 years plus for those to run optimally from a revenue perspective. I used St A’s a few months back. Admin wasn’t perfect but Clinical Service was. They have a good geographic spread and are well invested - I.e. they should be right at the forefront in terms of latest technology etc. I might have gone to London Bridge but found a leading consultant in Cheam and its closer to where I live.

Show me a hospital company that doesn’t have debt.....or a property one for that matter. The board (in retrospect) are guilty of missing out this on what now looks to be a good offer, however all those holders could have taken the £3 the shares were trading at when the offer was made. It’s not the boards job to manage our investment portfolio, just to ensure they govern and manage Spire effectively. There is nothing to say they aren’t doing that at present - the market just isn’t great.

Firstly historical spend is important - if you don't invest in your technology you won't attract the right calibre of consultants. Ask BMI - they likely need to invest upwards of £250m just to keep up with the likes of HCA and Spire. Investment should (all things equal) bring returns. The market is bad at present with the NHS facing significant budget pressure. Spire is operationally and financially leveraged - as you would expect a hospital company to be. Spire's level of financial leverage is not excessive at all given the type of business it is. It's part property company - the Manchester hospital alone cost circa £65m. The struggle is the fact that there is currently excess capacity in Spire at present. There will be a break even for each hospital. When this is exceeded a considerable portion will go straight to the bottom line (apart from additional self employed consultant fees etc). Some cost base issues can be managed but it will take time to come through in the results. They have also (rightly) increased spend on clinical governance, compliance and internal audit. All important given they work in a highly regulated sector.

Yes the shares are struggling and maybe MDC have another go. I am not confident that MDC have the financial strength at present. I think HCA is a more likely suitor. Spire would fit very well with their current London centric portfolio.