Member Info for Senator1

SMT is a good indicator as it is the largest IT in the UK and much more liquid than the rest. Their 7% discount to Nav is 26% when all applied against the private portfolio. Their listed stocks which are about 72% of the portfolio are very large and liquid so should be no discount there. SMT's private investments are also the largest of the private companies and in many cases are very unique. If they are at a 26% discount then I think it fair the cos in Moltens portfolio are at 50-55% discount as they are much much smaller and earlier in their progression. I think that is what market is doing, taking its lead from the bigger names. The big guys will lead the recovery and we have seen some of that already with SMT but the thing that could drive things lower is if the US Semi and Tech sector rolls over. semis had a bad day yesterday and the unprofitable tech and even the large tech. My advise is be careful when your conclusion tells you the market is wrong. Of course it gets things wrong but it is generally more right than wrong. If you take out 3i and Bridgepoint from your analysis the average PE discount to Nav is 34%. Yes, Molten one of worst. It has a terrible share register and i think annoys a lot of people with the way the external carry valuation has gone relative to the share price. That is a real slap in the face to shareholders. If I wa an IPO investor I would be furious. Also AVI, the specialist in discount trusts has been a seller recently from 7m shares last Autumn to lessthan 5m. Care is warranted, its not as cheap as it might appear.

I politely disagree. If you value the Pref correctly at say balance sheet date, its value is the liquidation value plus a call option on the ordinary share value at the conversion strike on IPO or takeover. It is not the value as if everything was converted because that conversion is contingent on IPO or takeover. Also most Prefs have no voting rights, how do you value this aspect? very subjectively I would suggest. The one thing market hates is uncertainty and it will always apply a big discount if you cant answer the basics. As Molten signs NDAs they cant answer in detail and hence we get the fluff they come out with when asked. You seriously have to question whether this information asymmetry is appropriate for a listed vehice? How can the hired help know more than the owners?

The valuation asymmetry will never be solved until the terms of the alphabet of Rref shares is standardised. There is absolutely no way anyone outside the negotiations can value the different prefs until you know the precise terms. Even theterms of a pref A from co. 1 can be different to Co.2. If it going to be held by a listed entity the allowed terms need to be standardised, otherwise the valuation debate is impossible. most retail investors dont understand the range of terms on these Prefs. You cant just assume they are all converted and value them the same as they are valued as at a particular date be that semi or annual.

On 3/2017, first full AR after IPO, Nav was 3.70 per share. After Forward and share placing I estimate it as 6.71, growth of 81.43% or 8.88% CAGR.

The external carry was £5.6M at 3/2017 and now its £95.3M thats a CAGR of 49.83% p.a. The share options CAGR is 46.7%p.a.

Valuations is one part of the story with GROW but the only place there has been real wealth since IPO is to the management. It is an absolute disgrace. The Board and large shareholders are asleep and incompetent. This sort of biased rewards does listed private equity no favours. The relationship between the Board & management is far too cozy. The ISIF is asleep and Blackrock have it stuffed in so many ETFs noone is looking at the fundamentals. Baillie giffords time horizon is now a lifetime for any payoff and so they cant throw stones as they are not performing great. This needs a very fundamental fix. as a shareholder you are really only funding the wealth accumulation of management in a very blatant way. Wakey wakey shareholders.

Just had a look and in 22 perkbox had sales of £39M, up 21% on previous. Grow at same level and pro-forma sales £57m for 2024. Perk valued at £140M thats 2.5x sales. Not the 20,30,40 times of the some of the others. of course I accept the TAM and technology of some of the others much more impressive but again just goes to show private valuation ranges can be vey very wide. For me, 10x is my max as a multiple of turnover, when we get to 20-25 I struggle but then I am more a public market guy.

Yes but molten first invested in perkbox in 2016. The issue with molten is the £128m invested in FY 21 and £311m invested in Fy 22. What does it say that the entity they first invested in 2016 comes out at slightly above breakeven. I have no issue with Molten's valuation per se, as I said earlier they are valuing according to recalibrated recent fund raises but the public markets are just not accepting the private market valuations. Different investors, different valuations and thats where we are.

JPM et all have agreed a £150m RCF against a £1.3bn private equity portfolio, a trained monkey could do that. There is no information content on the appropriate valuation on them putting that facility in place. Auditors no little about valuation in the real world, its not what they do. they check there is a process and valid inputs which as I have explained there can never be as they dont have a long term IV input, so its really driven by comparable markt deals in the private space, or in other words a herd instinct. When you asre in the realm of putting multiples at 20x, 30x, 40x revenue or whatever you want it is not science, it can never be. At the end of day it comes down to what these private market investors are prepared to pay on the funding date for a potentially large TAM.

When you buy a Pref share the value has two components; the liquidation value and the probability of that and a Leap option with strike equal to the conversion price. Valuing that Leap option can never be precise as we have no market implied volatility input. Valuing the Prefs on basis everything is converted is not the correct way to do it because at the date of the report they havent converted. when the FCA do their review this will become more of an issue. This is to say nothing about the differnt priorities of different classes of prefs, can they vote or not, what liquidation preference they have, do they convert 1:1....there are loads of issues and I know that not one shareholder, including Blackrock and Irelands strategic fund has the answers to all this. This is why when you hear Mr Wilkinson talk about valuation it is so vague as he knows he cant answer properly because of NDAs. private company valuation is more fiction than fact im afraid. The last set of accounts from Thought Machine had sales of £42M and an operating loss of £73M. Last valuation was circa £2.2bn. Lets assume 2023 sales are £120M, thats still 20x Sales. Is that the right number? what about 10x, maybe 40x. Who really knows. what I do know is the FCA wont solve the difficulty of the material judgement behind private valuations and therefore it is fickle and when it moves can move a lot. Time might sort everything, but it will take time.

Nothing demonstrates the difficulty of private valuation as well as Aiven, the third largest holding. May 21 post money valuation $800M, Oct 21 $2bn, May 22 $3bn. Grow has it at £83m, my guess is they own circa 5%. So they are valuing it correctly at a discount to last round but the private market was on steroids in late 2021 early 2022 and as you can see from all PE listed valuations, SMT good liquid ex at 60% discount on privates if you assume their large publics deserve no discount, MSFT et all. The public markets just think the private market is way over the top, that is why there is a log jam in the capital recycling. On secondaries its a buyers market not a sellers as everyone knows this. Grow spent £311m in21/22 financial year, the largest amount in their history and realised £126m and yes got a £363m FV movement. They are now paying the price. Because they invest mostly in Pref shares which can have many different terms and because of NDAs cannot reveal all the details (and the detailed terms affect valuation) they and shareholders are fighting with their hands tied behind their backs. The information asymmetry makes these unsuitable public vehicles, its that simple. Also they cant return capital until they get much much bigger, otherwise they get diluted when the companies come back for funding which they do regularly in the A/B and seed stage. They have about £70m cash and undrawn £50M to support a portfolio of £1.3bn, there is no chance of a capital return or dividend and they cant sell at a fair price. This is why the people in the market describe conditions as among the worst ever but they caused it themselves by being too exuberant in 2021 and 2022.

What part of Nav calculation do you think management misunderstand & what do you mean by "underweighting complicated preference shares"? The Pref share has liquidation preference but no voting rights. What are management underweighting?

Go to source document, its public. Then you dont have to believe some random person who scribbles.

I read the S1; 159.2M shares outstanding after IPO with guide price $31-34 is $5.5bn

Weak sterling, strong dollar, plus there are lots of stupid single entities out there, but the market by definition is not stupid.. Another datapoint, the Reddit IPO. Coming this week at valuation of about $5 -$5.5bn. Their last funding round in 2021 was a valuation of $10bn. The magic 50% discount AGAIN and it doesnt get more current than that. In 2021 pre Covid, the private market was valuing things at twice the level the public market wants to pay and you are seeing that play out in Molten and they typically play in cos that are much smaller than Reddit so justifying a 60% discount.

Time and time again, market proves itself as worlds best fundamental analyst. If you take a contra view it needs to be based on hard numbers not wild speculation. Graphore is the next test of Moltens valuation policies if indeed it does find a buyer. Until then nobody has the hard data other than the accounts as at Sept last year.

You cant possibly know that Re Revolut. All we know is they have between 0.001% and 5% and its valued at £55M. You tell me their shareholding and then its easy to work out their valuation but unless you know their shareholding you are speculating. On Graphore, if Molten own the middle of the range they will have a write down of half their valuation. The fair question then is does this aggressive valuation policy apply more generally? thats what market thinks currently and so you 60% plus discount falls to 10-15%. Thats the issue Molten face, plain and simple. Market doesnt believe their current valuations and if they write off £12-13M further, market is proved right.

Last set of accounts available tell us their stake valued at £21.3M not £10M. That stake cost them £24M. We also know they own between 0.1-5%, dont know the precise figure. If they own 5%, the £400m is ok, if they own 2.5% they will have a £12-13M writeoff and if they own 1% they face an 80% write off. Those are the facts based on what is in the half year accounts of Molten.

Minimum 188.3M new shares (not sure what happens to Forward options) and taking last reported Navs and £2.7M costs of placing I get pro-forma Nav at £6.73, less fully diluted. 60% of that is £4, thats 50% upside if it goes to 605 of Nav. If its 40% of Nav thats where it is currently priced. 50% of Nav would be £3.36, that is probably the short term target. 27% or so upside in next few months.

There are many different RSI's. As many as there is historical data. A strong 14d RSI just means the share has been performing over that period. So when someone says what is the evidence on RSI, the first question should be what period RSI are you talking about, not what is the evidence on RSI per say. A stock can look greast over 14 days, like SMT and poor over 63 days or 252 or poor over 3 day RSI. Its like when people talk about volatility as if there is only one. The hard part about technical analysis is picking uyour indicators and adjusting them to market conditions. There is NO one measure, that would be too easy

Warren Buffetts Berkshire has never paid a dividend. Since May 9th 1996 he has produced a 10.35% compounded annual return. His rationale is simple. If shareholders can beat his returns dont give him the money, invest it yourself. He argues why return cash as most wont beat him. If you need cash sell some shares. For most investors, CGT is below the marginal income tax rate so this argument gets even stronger when you look at things after tax. He is theoretically right and has backed his view with performance, that is rare. Pick the best and let them do their thing and ask them not to pay dividends.

It means they can sell their TS below Nav. Not a big deal just reflects reality that they are below Nav. Doesnt affect Nav as such because the Nav reflects the value of shares held in Treasury. If they didnt approve this they would have to offer the TS to shareholders pro-rata or not be able to get cash for them unless sp>Nav. Its a sensible resolution. They bought the shares below Nav and can now sell them below Nav to generate cash