Member Info for Senator1

Or Buyback SMT stock, the best and most obvious trade they can do. Sell a stock at a 50 P/E and buy one at a 20% discount to a fairly valued NAV. No brainer!

Its up 174% year to date and is at 3 sigma on the UBB which happens less than 1% of the time. There are no certainties with stocks but you are a fool if you dont play the odds, especially when they are at extreme levels. Explaining everything away with a 5 year view is just too easy, any fool can do that and when you find out they are indeed a fool its too late. Tactics are important and part of that is knowing the boundaries of cheap and expensive. If SMT havent sold down a significant portion of NVIDIA it will say a lot about what you are getting when you buy SMT. A LT view and some tactics are not incompatible in my world.

u prefer b---****, i prefer maths

I for one hope SMT is selling in to the NVidia strength and holding some increased cash as I think a 45x P/E is a 2.2% earnings yield. Even if profits double thats 4.4% earnings yield in a 5.25% 1 month T-Bill yield environment. 52M shares have traded so far, $20bn. I hope SMT have sold out. Will they be that tactical, its not really in their gene code to think that ST but lets see. Nvidia now worth $1 trillion and in the last full year made $9.8bn, double 21. Lets say they double again, call it $20bn thats your 50 PE. Pro-forma 2% earnings yield in the price. Sell it SMT, sell it. Sell at least half of it, be tactical.

Doesnt that mean 77% is retail? No sophisticated investor needs SMT to buy listed stocks and pay them 0.3% for the privelege of managing. God knows what goes in to that definition of institutional. HL are in there and they are just an intermediary for retail. Finn and Investec similar. So they are not what I call sophisticated institutional

From 31/3/23 SMT SP is down 1.8%. Over the same period the weighted Top 30 (holding privates constant) are down 2.3%. The privates are held by SMT largely at the last funding round valuation with exception of Stripe where they marked this even lower which you can see from AR. So while Nvidia is up 40% over this period some big holdings are down; Moderna -18%, Meituan -30%, Tencent -16%, Illumina -16%, Zalando -26%, NIO down 27% and so you get a weighted down for Top 30 of -2.3%. So SMT is following the weighted public prices. BUT the 20% discount when applied to privates only is 60% odd and thats way too much. SMT is cheap, very cheap if you believe the last funding round valuations. Even if you dont and you thought it should be 25% lower, SMT is still very cheap. SMT do a dreadful job of explaining this. Their IR needs to wake up, this is an easy story to tell. Market is being dumb largely because institutions dont need SMT to buy the big liquid stocks and their mandate doesnt allow them to own privates. This leaves retail as investors and they need to be fed the factual information. Its in the AR but you need to know how to find it.

Calc done May 30th, informed May 31. Molten needs to increase 10% and Gore street decline 10% for Molten to have any chance. Castlegate timing seems odd but maybe it is what made block of shares available? For now looks smart by T Rowe Price

They also marked ByteDance down 6.74%, Northvolt 20% and 12% depending on class. Spacex the same, Brandtech up 8% and Zipline up 41% and 24% again depending on class. I havent checked yet but my bet is that is in line with their April funding round so I think it beyond any reasonable doubt that SMT are robust on private valuations which is what they have always presented. A 20% discount to a 70% public portfolio and 30% private means that if you apply the total discount to privates implies 67% discount on the privates. I see no reason for there to be a material discount to very liquid public stocks. So buying SMT at a 20% discount you are getting the privates at a very meaningful discount to some of the biggest private investors in the world. Makes no sense! SMT should forget UK listing and move to US but I guess that would mean losing Inv Trust status?

With the material recently published I think SMTs private valuations is fair. On Stripe we know recent round (March 23) was down 50%. SMT marked down the B share 53%, the G Pref 53% and the H Pref 31% and obviously kept the I at £70M. The discount on this should not be about whether SMT is valuing things properly, they clearly are, and updating 100% for down rounds. You can argue that the people putting in $6.5bn dont know what they are doing, thats a different argument but following the money SMTs valuation process is 100% robust based on my review of Stripe which is their 6th biggest private investment and on which we do have a recent material funding round. $6.5bn isnt beer money so hard for the back seat drivers to argue with people putting their money where their mouth is.

SpaceX

Historically USA has outperformed SMT from launch to end Jan 2021 by a good 10% p.a. but since then fallen more than SMT by 7% p.a. So in the good times USA has better record but in the down markets SMT more defensive or at least that's the history. Interestingly, as a % of top 10, USA has more privates but less concentrated in terms of the top 10. Noticeable difference is USA's punt on Spaces, much bigger than SMT, almost double relatively speaking. Conversely SMT much bigger punt on Moderna, what is the better bet?

The reason discount exists is the Private valuations. i did some calcs on Stripe at post money recent valuation of $56.5bn. I think SMT own 0.25% by my calcs but they carry it as at 31.3.23 at £201M rather than my calculated £114M, a 76% premium. This isnt as bad as it sounds as my valuation is based on ordinaries and they hold Class B ordinaries and G,H and I Prefs so you have to distribute equity value across these different securities as their ranking is different in the waterfall BUT I think 76% a bit excessive in the aggregate but is is IMPOSSIBLE to be certain without more info from SMT. I have asked them to consider supplying it, lets see what happens. They should because its a free option as market is not differentiating.

But thats where it is trading: SMT share price =628.5
Cum Nav=752.9 (i have left FV of fixed rate debt out as this declines over time. Nav as at 4/5/23)
Discount = 16.54%.
Used Sciehallion discount of -23% from AIC website. Remember to account for cable moves.
So there is no arb

that makes sense, they reported that in april, ty

stupid question

SMTs most recent Factsheet (31/3/23) at 844.88. They give 4 on their RNS releases NONE of which agree with 844.88. Be careful where you start, rubbish in, rubbish out comes to mind.
The more important question: while I understand the 4 different ways to calculate Nav as per the RNS, what I dont understand is why none of those numbers are the FactSheet number? BG has a lot of resources for sure but it would be helpful if the left hand knew what the right was doing.

That is not quite correct. Moderna is one of SMTs largest holdings at over £1bn and believe it or not that is less than 3 days average daily volume actually traded. So to exit this position gently would be very easy over a quarter or 63 trading days. On the private co. valuation, any professional valuation will include an illiquidity discount of at least 20-25% from public peers. Obviou8sly this doesn't cover a scenario where everything has to be sold tomorrow but that would never be the way in any scenario the underlying assets would be exited in practise.

That is not quite correct. Moderna is one of SMTs largest holdings at over £1bn and believe it or not that is less than 3 days average daily volume actually traded. So to exit this position gently would be very easy over a quarter or 63 trading days. On the private co. valuation, any professional valuation will include an illiquidity discount of at least 20-25% from public peers. Obviou8sly this doesn't cover a scenario where everything has to be sold tomorrow but that would never be the way in any scenario the underlying assets would be exited in practise. So the house sale analogy is just not accurate. There is a difference between a Retail realisation(house in your example done by amateurs) and the way a professional would exit a position or value a private position.

That is not quite correct. Moderna is one of SMTs largest holdings at over £1bn and believe it or not that is less than 3 days average daily volume actually traded. So to exit this position gently would be very easy over a quarter or 63 trading days. On the private co. valuation, any professional valuation will include an illiquidity discount of at least 20-25% from public peers. Obviou8sly this doesn't cover a scenario where everything has to be sold tomorrow but that would never be the way in any scenario the underlying assets would be exited in practise. So the house sale analogy is just not accurate. There is a difference between a Retail realisation(house in your example done by amateurs) and the way a professional would exit a position or value a private position.

I referred to everything outside the largest listed companies as private, this was loose labelling. WhaT i should have said was the 48% was the balance of listed, private and funds. I know SMT have their values but I doubt they value the private stuff every day, my guess is they do it once a quarter for the big ones at least. What the calcs below tell you is how the market is valuing everything outside the top 20 listed as that is only thing there can be debate on. The value of the top 20 is easy for everyone to see. At the current price the market has a 65% discount on these investments, saying they are 35% of the Sept 2022 value. The market isnt appreciating the defensive qualities of the Pref share investments which with a few exceptions is how they invest in the privates which had an aggregate £4.4bn valuation as at Sept 22. The calcs give you a pure view of what market thinks not starting at SMTs BV and going from there imo