Member Info for steph

https://draper-esprit.s3.amazonaws.com/production/uploads/document/file/45/DE_Investor_Presentation_PRF06_26.06.2020_Final_PDF.pdf

https://www.theguardian.com/technology/2020/jun/30/sunak-expands-500m-fund-for-uk-startups-hit-by-coronavirus

All EU countries doing the same.

Immediate benefit for GROW modest as our profits are generally from slightly more mature start ups. However we do a lot of early stage funding and this helps them grow and leverage our seed capital for higher returns.

Happy with my top ups. Roll on end of year results in a few weeks and in November the half yearly's -which I think will show no overall negative CORONA impact on the GROW stable and the 20% plus NAV growth firmly back on track including catch up for the conservative valuations done in the middle of the pandemic scare dated March 31 2020.

FLIB nice to see the new broker coverage. All part of being better known and our SP aligning with value. I think we will get significant upgrades in November which will help achieve your 50%. Our SP seems to need broker coverage a bit above SP but not this large a gap. I follow Investors Chronicle which has been bullish on GROW for some time.

Asset management firm BlackRock has given Europe a vote of confidence - hiking its rating on European shares, and downgrading their US rivals.

It argues that Europe should benefit from a ‘cyclical upside’ as its economy restarts, while American companies could suffer from an extended Covid-19 pandemic and rising trade tensions with China.

Yes we are in a little known trust and seeding the seeder.
Can't think of a better sector at this buy in price to get a portfolio of 20 odd EU profit making tech companies who are SME's and growing fast. Quite happy for management to stock pick for me even if I could buy the portfolio directly as I can with POLAR.

Topped up just now anouther 1000. Someone is selling in light trading. More fool them.

Thanks again.

Polar has been averaging 20% and I, rightly or wrongly believe a younger earlier stage trust like GROW (with a focus on EU and not the already large USA based companies) can win out.

Rightly or wrongly I believe a lack of investor knowledge of a small trust like GROW is part of the low SP not fundamentals that in time will shine through.

I completely take your point on diversification towards HGT and others but will likely wait until November to do anything substantial. I just think GROW will go up more over the next 5 months for share specific reasons.

Pretty scary market in general. USA has not controlled COVID and UK has not bedded some orderly Brexit. Those twin uncertainties will bear down on our portfolio for some time. Whole UK market probably about 20% under peers due to Brexit uncertainty.

While I agree that diversification is good I, rightly or wrongly, think there is a temporary deflation of GROW's sp due to reporting cycles and COVID scares.

Our year end was March 31 after just a few weeks of some very scary COVID news that depressed all shares n all sectors sharply. The valuations of the companies GROW owns were deflated to align with the traded tech sector at that date.

As the trading update stated overall GROW owned companies are not particularly suffering on the earnings side due to COVID and overall might be beneficiaries as one might expect given the sector they are in.

Of course other funds have the same COVID related jitters on valuation but GROW holding as it does 100% private equity company and having a year end March 31 is particularly affected. Polar who owns mainly publically traded funds has recovered nicely and has new highs after the March jitters. SO maybe not a great time to sell some GROW to buy, say, some more POLAR. Best time to do that might be late November when there is an equality of SP supporting information and I expect GROW to be testing new highs and be closer to broker guidance -which is 640.

Thus once the half yearly results are out in November there may be a GROW specific leg up as it becomes obvious to the auditors who set values that earnings were overall not affected. The finals announcement in late July and any other opportunity for a trading update may help as well.

Thanks

Yes some modest diversification is in order but I don't want to go too far from the EU young tech company orchard as I think it is general undercapitalized compared to USA's similar sector.

I'm glad you concur that these EU based private equity young high tech compares GROW own a chunk of have low SP's relative to potential. I think it is an arbitrage opportunity.

Just the EU private sector finance sector is less developed than USA's not that the companies themelseves are worse in terms of future earnings potential.

EU a funny high tech ecosystem. Very decentralized but in total a fabulous total amount of research university support and government programs. EU Universities almost giving away near market research in support of R&D industrial policy. Fabulously subsidized overall.

Very underdeveloped private capital markets to support probably because so fragmented geographically and jurisdictionally. Thus the SP's of EU private sector growing tech companies held back and an arbitrage opportunity. GROW seems to target this arbitrage opportunity most forensically and thus I expect a faster SP growth than it's peers.

It may be that the puzzlingly low SP of GROW is just the norm given a low valuation of the EU private high tech companies GROW tend to own. So any other funds or investors doing the same have the choice of taking a direct piece of those same companies. So for GROW's valuations to rebalance upwards the sector itself needs to rebalance upwards in relative terms to fast growing tech companies in USA or the larger (70% us based) tech companies that make up the likes of Polar.

Trying to answer my own amateur but essential question.

1) IN the long run (20 years) Grow SP will increase in line with the profits made by the underlying companies.
2) This is because those profits will in time be embedded in dividends paid (almost zero) and increases in the valuations of the underlying assets (which will in time be proportional to profits made).
3) IN the short run GROW's Earnings (E) based as it is on SP valuations of its assets will be very volatile and dependent on market sentiment for the sector -as that affects the benchmark valuations even if disconnected from profits actually earned by the underlying companies in any year.
4) Because GROW E will be very volatile the P/E is lower than the sector. Basic price to be paid for volatility
5) For my money the discount is exaggerated. I intend to hold long term and am happy for the short term depression of SP to occur due to market sentiment rather than due to any real profit performance of GROW's underlying companies (who are overall doing well in the COVID world we are in).
6) curious why corporates who can also hold long term are not more into GROW resulting in a higher short term SP smoothing the upwards curve a bit by having a higher starting point. 3.9 P/E is a silly starting point. The companies GROW owns are still earning money.
7) I think in the long run when the market gets used to GROW (a newby) the discount to the sector technology trust p/E (benchmarked by say Polar) will slowly disappear. Results speak louder than plans.
8) no reason why GROW from this starting point can't double in SP every 4 to 6 years for the foreseeable future.

AM I missing something?

Thanks again

Meri looks like an interesting diversification

Hoping GROW will double every 4to 6 years. Still think this is a good buy in price

Thanks

What do you think of current sp all things considered?

P=E on my last post.

My conclusion is that there is no reason why GROW can't maintain it's target of 20% plus NAV growth over a significant period say 10 to 15 years before the pond it fishes in gets crowded or fully valued.

As NAV growth is P for GROW than there is no good reason why the SP is not higher and thus the P/E also higher.

I just can't see why more investors are not in. Some very savy institutional investors paid February 2019 £100m placing 530 per share and the balance sheet has improved since then. We are over 30% below broker 12 month targets.
Am I missing something? Seems too good to be true. Maybe just not well known.

Still don't relay understand why a tech trust has such a lower P/E than the underlying shares it owns.

I can understand that in the short run the trusts earnings are dependent on the combination of dividends paid and SP rises. Conversely the underlying company can post a positive profit even when eh sp is flat lining for years.

However in that scenario the profit, even though it is not booked by the trust and temporarily of no use to us, does not disappear. It still goes into increasing the nav/share of the underlying company and thus giving that underlying company more safety or a deferred future sp rise based on the NAV/share.

IN the real long run there should be a correlation between the P/E of the sector and the p/E of the trust that owns companies in the sector.

Thus the 3.9 p/e of GROW is based on the private companies underneath also having similar valuations and similar P/E's when they are earning (as most GRWO companies do). Completely silly if they are really fast growing tech companies but possible as they are private with limited access to the markets.

Thus through the trust we are buying fast growing private tech companies who themselves are trapped in a structure that gives them limited access to capital and thus terrible P/E's. IN time these fast growing companies will outgrow the Private equity markets they depend on for SP valuations and "go public" resulting in more normal P/E's in line with the sector. So long as GRWO holds until going to market we will in time get the higher P/E's of the sector.

Arbitrage it seems to me.

Any counter arguments.

Someone more knowledgeable than I might be able to review the below musings:

I suppose why Polar and GROW have such low P/E's (7 and 3.87 respectively) is that their earnings are based on the underlying shares increasing in sp value (and/or paying a dividend). So the tech sector normally gives a P/E of 20 or more but if you own through a trust you are really buying the future increase in SP not the asset itself. So Polar which owns companies with a P/E on average of plus 20 has only 7. So a technology trust is in a way a leveraged bet on the portfolio.

For me as a long term investor I don't mind the leverage. The underlying companies that make up GROW will increase sharply in SP.

So if we buy company x and the sp does not increase over 10 years and no dividends were paid out (even though the company made money in each year) we have zero earnings as a trust. We only can book earnings when the sp goes up.

Conversely the underlying asset is different. It can be reporting earnings without any positive effect on sp and thus a higher P/E ratio is justified.

topped up today. Now maxed out again.

3,87 P/E just silly unless you think the underlying portfolio might dip in value.

Not much chance with privately held fast growing tech stock right now. ON average they are making extra money during covid changes towards internet of everything.

DIp from 500 just temporary market jitters that don't really apply to us.

don't know but topping up.

We have had a very recent update that included what I think was quite a conservative view of valuations by the auditor. Be bad luck if something bg untold. Auditor would get sued.

We all made good money on Uk builders between 2011 and 2016

I’m mostly out of builders for now as I expect GROW is the faster horse right now.

I might pivot back on 20or 30% share of portfolio again if we get a big sudden rise here but not until.

It may well be that GROW becomes my 15 to 20 year sole isa holding with my hopes of doubling every 4 to 6 years as I expected TEF to do. Get rich slowly.

https://www.marketbeat.com/stocks/LON/GROW/price-target/

premature complement, we have not made big money yet on GROW since I started posting here. All in the future.

I looked up buying a convertible on CAZOO. Neat.

My big insight was to buy UK builders (increasingly concentrated in TEF) big time just after the 2011 August dip. I made 500% on that play over 5 years. I missed selling at the pre Brexit peak though. I did not see Brexit coming and was not positioned for it.

GROW is a whole new sector only tangentially in my area of professional expertise. I'm all into Industry 4.0 and AE led industry and market changes but landing that general professional interest and knowledge to specific investments in the sector is really tricky. I am not confident I have any real ability in the sector to value pick.

I am, therefore, happy to let GROW management stock pick for me inside the sector and to be able to do so for private held companies I can't access. I am happy not to be invested in Trump's America.

I worry GROW is still a bit of a black box for me and we might get surprised by dilutions as we did for TEF. I was looking forward to the AGM where I could challenge management on these questions.

Whole area of trusts a bit new for me. I don't really understand why our P/E is only 4. Seems too good to be true.

would have been better if we had funded earlier stages but I can still see this rapidly growing.
GROW has a policy of most of it's portfolio already generating returns so in that sense not a pure start (burn rate) up play. To step in at the unicorn level of a company making money that can quickly grow to 10bn or more is probably smart.

I think Cazoo can grow very quickly indeed from this level. Covid a good time to buy in. All Cazoo needs to do is expand beyond UK to grow to a really impressive size fast. The business model was well overdue. Be interesting to see what imitators crop up and how much intellectual and copyright protections help. For the moment Cazoo has a clean run at the global market worth 10's of billions.