Member Info for steph

Looking forward to year end update. Seems to be quite a historic delay between year end on March 31 and an update. We ahv enot had a broker review until befor eth einterim upgrade on results so a lot of arbitrage.

I am not expecting the underlying assets of GROW to have dipped in value due to corona virus. They will follow the high tech shares (who have recovered all their early coronavirus dip) and on the whole be able to make money off the changes of more ICT and virtual and home delivery of services. Bad for banks and airlines. Good for tech stock.

This induced downturn is not like a regular recession. Loans for small firms is plentiful, easer than before. Start ups can access those loans with a few clicks of the mouse with far less due diligence than before. Good time to get on with developing a product or service.

I'm expecting the update will steady the ship and we will drift back to pre corona virus SP values in short order. Longer run this will help GROW grow faster as the EU feeder start ups now have had capital galore and will be busy developing new products even if they do not plan to market them just yet.

Looking at underlying investments and can’t see much that would be negatively affected and some who will make extra money off it along with most tech shares right now

I expect our dip is temporary

price has risen since new broker came on board feb 11th with a buy recommendation and target.

2 existing brokers have not upgraded their targets since midterm upgrade of asset base of 12% so they are 12% lagging and will be at least anouther 10% more so after finals start trickling through after March 31 close. So expect targets being upgrades to plus 700 shortly. Thus 5.66 is still quite low.

An opportunity to buy into so many private high tech start ups should trade at a 20% premium to undelaying value. Also EU financial market for high tech start ups much less capitalized than USA so safer share buy in points for us. EU wide market for high tech start ups (with links to global top 100 high tech universities) that can be unicorns or more same size or greater as USA but capital markets to support the sector a tenth.

This is now the largest holding in my ISA and I plan to hold it for at least 10 years. Sentiment, due to a rival's difficulties with poor accounting valuations, is holding the value down a bit which is a buy opportunity. Also only 3 years of AIM results makes this look new, unfamiliar and untested.

Without including the full correction (I think this will have when confidence in the business model slowly confirms over the next few years) this will still grow by 20% compounded annually according to the companies own target -always achieved and exceeded.

With actuals comfortably exceeding target year on year the bods have no incentive to exaggerate the valuations of the underlying assess. If anything they have an incentive to be conservative so as to have a bit of forward valuation to spare on a rainy day.

hi terr

board much quieter than TEF was.

All the builders have had a correction upwards we were expecting. I think it has a bit more to run before the long haul up based on hard improved earnings and volume. Even TW finally has volumes at pre peak levels (minus the Spanish division) so volume growth for sector will be slower now.

I am still 1/3rd into UK builders with bellway my lead but slowly pivoting to two trusts that hold technology stock. GROW for UK/EU start ups and Polar Capital for global larger tech firms. I think the two of them can average 15 to 20% growth for 10 years which I don't think a basket of UK builders can do. TEF could but it's gone. Rankles that this correction occurred after TEF sold out. We would have had an SP nicely north of 4 quid without the fire sale price forced on us of 3.50. At least those of us who pivoted out of TEF when we were forced to and into other UK builders got 25 to 40% for our trouble.

I worry that Boris' EU sabre rattling means we will have anouther trade cliff edge to deal after the summer and this sector correction upwards might evaporate. Might all be just negotiation tactics but it will hurt confidence which has returned somewhat and thus maybe reverse a bit our sector correction upwards.

I don't like such large exposure to GROW and feel I am dependent of valuations of the asset base I really can't check in any way. Still as my goal is 20% capital growth over a 10 year period it is the best fit I can find. I'm willing to take risk to get that. Choice gets wider under 20%.

Wise words

I’ve dug as much as I can about some of the underlying companies and am pretty comfortable.

Woodward obviously bringing all down a bit so room for arbitrage if grow valuations solid. I can’t see incentive for exaggerated valuations as they have consistently exceeded target. Better to then err on the conservative side and have a bit of a buffer I think.

I’ll go to agm and ask some awkward questions but for now heavy invested in grow as a better growth share than builders right now.

Wish me luck.

Oh boy anouther year with cliff edge or not on our basic trade relationships.

We used to be lions ruled by donkeys. Now we are Lions rules by a single donkey with a 5 year mandate to rule as a donkey. Not really an improvement.

Still I expect interest rates will stay low and there will be some simulative spending and maybe some further help to private house sales.

I expect Labour will emerge as a slightly more centrist opposition and slightly more credible candidate for government in 5 years time but I'll take my investment calculations on that closer to the time. For now Labour are not significant from our point of view as investors.

House of lords can cause government some trouble and will be interesting to watch. Centrists within the Tory parliamentary party will be interesting to watch. They can't be happy with this hardening up of a cliff edge. Don't know if there are 80 of them willing to defy the whip though.

I suspect we are at the mercy of Boris for 5 years. To me that means our housing shares will rise but not as much as they could have. Glad I have my EU start up and global tech stocks as over 1/2 my portfolio so that I am not 100% dependent on Boris. I'm not getting my million pound isa any time soon but still have that as a 10 to 15 year plan. First leg up will be helped by our UK builders whom are still 40% to 50% undervalued. After that I will need to switch to faster growing stocks.

thanks

looked at a IC write up of the Woodford Patient Fund and an upgrade on anouther part of their portfolio balanced the downgrade. I suppose it happens. GROW also has 2 downgrades in it's core portfolio balanced by much larger upgrades.

I consider GROW a stonking buy at 20% below NAV/share, a great buy up to NAV. Still an OK buy up to 20% above NAV/share and a bit of a toss up after that. Broker ratings suggest should be trading above 20% above NAV/share. I suppose on the steady pattern of NAV/share upgrades since the 2016 float.

Besides the history of upgrades the quality of the core holdings of GROW give me confidence that NAV if anything is understated and lagging. I enclose below just one of their holdings which is an absolute star. Can't buy into it any other way.

https://www.wired.co.uk/article/graphcore-ai-intelligence-processing-unit

below from the interim results of GRWO.

Graphcore

Graphcore, the machine intelligence chip company, announced the opening of their new Cambridge office and plans to hire 500 new staff. They have also expanded into Beijing, China, and Hsinchu, Taiwan.

The company has developed IPUs (Intelligent Processing Units) which enable unprecedented levels of compute. In May 2019, the company announced that Dell was one of the first customers to build an IPU-based Dell platform, combined with Graphcore's Poplar software stack. This platform is due to launch in Q4 2019, ready to ship to customers before year end.

Post period-end, the company announced their collaboration with Microsoft Azure. This is the first time a major public cloud vendor is offering Graphcore IPUs which are built from the ground up support next generation machine learning. The development is a testament of the maturity of their patented IPU technology.

I do my own decisions and im sure the psn advise will be correct in the longer term

Short term it is a crap shot on sp’s

PSN, which I was partly influenced by you both to sell, is doing quite nicely. Missed a few percent there. Market is not always logical.

Anyhow I bought with it GROW and PCT -which have not gone up but I'm happy with. I think GROW can jump when a fund goes in to build a stake. Fundamentals support a plus 600 price. Expecting a broker reiteration and maybe upgrade to 700+ which will help.

https://www.lse.co.uk/rns/GROW/interim-results-ph76bsl5w78ufx9.html

I'm getting more comfortable with this as a UK builders alternative. 20% discount to NAV/share is really good for the tech sector. PCN and SMT are over NAV. A 40% +discount to broker consensus even better. Brokers consistently saying this should trade at a premium to NAV/share which is unusual but given the fast growing nature of the assets owned maybe quite sustainable.

The more I look at it the more I am convinced the NAV is conservatively calculated and there is hidden treasure as we had for TEF. Valuation of NAV of underlying assets is mostly what shares the last funding round got which is a very conservative way to do it. Due diligence takes months and often the start up has no oven ready alternative to the funder and wants to grow fast to take advantage of huge opportunities and may have already partly spent the incoming funds (best friend has been there). So the final strike price is usually a reflection of conditions of a few months back and a substantial rip off compared to what the company could have gotten in the commercial market if they were publically traded -or if they had more time to chase multiple funds. They generally don't, they are focused on their core business not fund raising, so an arbitrage opportunity.

majority of around 40 on those numbers

https://www.lse.co.uk/rns/GROW/interim-results-ph76bsl5w78ufx9.html

A new poll gave the Tories only a 7% lead which means a 6 seat majority. Of course tactical voting could push that down further. Easier to organize tactical vote against an incumbent government than the reverse. You tend to **** off more people being in government than being in opposition -although Corbyn testing that thesis a bit.

A tory majority of between 1 and 40 is the worst of all worlds. Boris dependent on the swivel eyed loons the ERG not just for Brexit but on a wide range of social and economic policies. If I must endure a Boris government for 5 years I'd rather he have an 80 seat majority or more. It was painful watching TM in hock to DUP and ERG to keep her job she incompetently wanted so badly. Wrong leader with wrong coalition pulling her in the wrong directions. Pre 2017 election she had 2 really bad "know it all even though they knew nothing about trade" advisors as well.

I agree with the brokers. This should be trading at a substantial premium to Nav per share. PCT and SMT both trusts that trade at a slight premium to NAV.

Start up tech stock have lagging NAVs I imagine. That is why I am attracted to this sector. It is mostly future potential. If a start up is publically traded it gets a high P/E for that reason. Pre publically traded NAV is determined by the price private funds get for capital injections. That can be real rip off prices as the start up just wants to grow and due diligence is so long winded the options are limited. Often after 6 months it is "take it or leave it" with no oven ready alternative investor lined up.

I think there is hidden treasure in the portfolio GROW own.

The quality of the companies GROW own is the key. If you have confidence they will grow this SP must grow. They are fast growing companies and can beat any index. We as Trust owners have bought into a sector almost impossible to directly invest in so effectively or so cheaply. Once publically traded the value is not so hidden.

Can't believe we can still buy in at 20% below NAV/share. Silly prices.

No volume so do has not moved in spite of great results

Fully agree with brokers that fair value about1.2xnav per share which means 680 not the 480 we are at

574 is new assets per share. Thus we are trading at a discount to the asset base in a fast growing sector with a fast growing asset base.
Seems to be a no brainier to me. Even at a ratio of 1:1 of assets per share and SP we are good value as you are buying exposure to small fast growing comonaies that are not publically traded. SO opportunity benefit.

although I am no accountant they seem to be conservative on NAV valuations of the core holding. Don't seem to upgrade until there has been a funding round that established a precise new value. No estimates. Thus real NAV of core holding is probably a lagging indicator. Buried treasure so to speak. Also funding rounds are not a fair value metrology compared to getting onto the market. Always private investors get a better deal than the retail market.

Here is to hoping update says growth on track

Seriously undervalued share if it is.

unstoppable by now I think. Just the size is up for grabs. Probably good for our shares if large.

Weirdly I am hoping for a big Tory majority rather than a small one. I hope Boris has enough to ignore the ERG and pivot back to the center ground where I think he is personally more comfortable. There are SP pleasing actions in this middle ground as well like support for home purchase and enabling infrastructure. Expect Boris to deflate the Labour balloon a bit with funds for housing association build and more help to buy. .

Boris certainly not shy to splash the cash abound like a drunken sailor. Austerity will be over even as we are slightly poorer overall due to Brexit. We will become more like Italy and Japan on national debt and less like Germany. Midlands screwed in the long run but over the next 5 years will probably still have house price inflation above London as the ripple effects of earlier rises in London continue to influence. So happy to hold UK builders who have majority outside London for now.

I'd love to see a non Tory coalition government (maybe good for our shares as Labour tamed and hard Brexit avoided) but too long odds.

Can't see remotely how Labour could win a majority on it's own now this time round. The "radical" manifesto will live on for anouther fight on anouther day and as such will be a slight drag on UK shares for the forseeable future but not major. Nothing like the Brexit uncertainty we have been exposed to. Shares might dip in 4 years time if a more charismatic Labour leader is ahead in the polls but that is a long way out.

Thanks

Trouble is all these funds run by know it all 20 somethings too young to have been through the last crash. Some think they are wolves of Wall Street. I rather liked the less flash less hipster feel of TEF.

Still I want exposure to the high tech start up sector . I did look today at material science start ups. A few in us but not on lse . None attractive.

For now it is Grow and pct plus Uk builders led by bellway

https://en.wikipedia.org/wiki/The_Graduate

http://www.unitherm.com/i-want-to-say-one-word-to-you-just-one-word-plastics/

terr
thanks, terrifying for me to go outside TEF. It was involuntary but now that I have to I've looked about the world for an equivalent. 2 growing sectors come to mind. high tech young stocks and high end materials science and in particular engineered plastics. DO you remember the line form The Graduate with Dustman Hoffman 40 years ago "young man go into plastics". It was good advise then and still is.

The co-investors in GROW in order of size from 23% to 3% are:

Invesco, National Treasury Management Agency, Merian Global, British Business Bank, Canaccord Wealth, T Rowe, Brunai Inv Agency, Baille Gifford, Blackrock.

very interesting the Irish sovereign wealth fund in there for 12%
The British Business bank who themselves lend to start ups is in there for 6%.
Brunei sovereign wealth fund too.

These are very strategic funds looking for a managed tech start up portfolio.

Also GROW is deliberate Brexit proof with a duel listing on the LSE and Irish exchanges.

I definitely want in for the sector but am open to alternatives that do the same as GROW.

The only other sector I know that can have organic growth of 20% plus for the foreseeable future is engineered plastics. Not commodity plastic like what goes into bags and bottles (polyethylene terephthalate or PET that geos into plastic containers and HDPE and LDPE that go into bags). We will reach peak virgin plastic soon as environmental concerns and recycling weigh down on that sector.

What I'm talking about is specialty plastic and the IP, patents and additives that create real metal substitutes. Even the radiator of a car can now be engineered plastic. This niche is growing like hell. Maybe carbon fiber as well. This is a materials play to go with my virtual services play in tech stock with a start up strong weighting.

If I could find an investment trust that specialized in this -especially far eastern firms, I'd put up t 1/3rd of my portfolio there. Afraid to stock pick but might in the end do a few individual firms -especially South Korea, Japan and China.

thanks, yes no reason why supermarkets as a whole will grow. Almost like utilities. A certain amount we spend per week divided up into those who vie for our business. Pick a growing chain and they can gain market share but for how long?

yes high tech is a new investment area although not that new. I have been promoting high tech in my day job for some time now but have not tried nor seen a way to motorize any resulting knowledge. Of course the sector as a whole will grow fast in a general economic transfer from the value add of making physical things to making virtual services.

It is, however, by it's nature a very unpredictable and changing landscape. I don't have any confidence I can stock pick within the sector. My odd small punt up to now has been disastrous. Willing to delegate to a stock picker within the sector though and thus have an aggregated bet on the sector. Thus GROW and PCT both with track records of pacing well. Probably in high tech stock picking even more difficult than for UK builders. New way of making and losing money.

I really had specialist knowledge of Uk housing markets in general and east London in particular. I wrote reports on housing for government. It was great when my investment strategy aligned with my specialist knowledge. Except for BKY to a small extent that alignment is over. Builders will re-price upwards nicely in the next 2 years but I can't see the growth in the midland based builders beyond that. Brexit will accelerate the de-industrialization and they can't compete as London does for the knowledge economy. Well paid jobs will flat line and thus the builders market.