Member Info for steph

Crazy sp. half of broker averages so unless you think all 5 brokers covering grow are really stupid a cracking great 12 months to come. as nav/share finally starts to sustainably rise will be quite a sharp closure of discount

Historically there was a premium on average in the 2016 to 2022 period. Only exception was covid temporary dip.

I suppose the premium is due to fast growing assets unavailable to retail investor in any other way. Of course for 3 years we have not had a fast growing asset. NAV/share retreated from about 950 to 650. Until NAV/share starts going up we will be a a substantial discount.

Plus in theory the insight and wisdom of GROW management gains by being on the boards of seed and series A companies who are seeking funds. May be some truth to the wisdom argument as GROW has been improving it’s hit rate of companies that at least return our capital even through this awful retrace. Very small percentage currently underwater.

It will be a while until we trade at a premium again. Market confidence damaged by SP retrace to 1/3rd NAV/share. Will take at least 2 years for that to be forgotten.

Even for funds that can invest directly they are limited to the once every 2 years or so funding rounds. As GROW valuations on last round are lagging indicators (lagging by up to a year) some modest premium is always warranted in normal times if the asset base is growing at 20% per annum.

Lets hope 2025 is the year the sp reflects the underlying value for the first time in over 3 years. Silly for SP to be at half NAV/share. NAV/share credible and about to rise again (as it did for the first 5 years after the 2016 float rise every half yearly report).

After the market gets used to regular NAV/share rises circa 20% per annum as is policy “over the cycle ” we should again trade at a modest premium to NAV/share. I expect a burst of plus 20% NAV/share growth to follow this 3 year retrace. 3 good years to follow 3 bad years. Good luck all.

We still are below half NAV/share in an ever improving market. All hard cash realizations in line with our book values. No froth visble anywhere in our portfolio. Revolut at 90x sales for a 45bn valuation might be considered frothy but we don’t have it on the book for that 45bn more like 60x, still high but room for a bump or two as it moves to IPO and consolidates the 45bn.

I sadly thought this asset class (retail wrapper around illiquid tech from across EU/UK and sectors) would be a sweet spot of high returns and moderate volatility. I was wrong on the volatility but hold out hope if I don’t panic and hold long enough will still on average have high returns. We have been in the dumps for 3 years. Time to move substantially up I think over the next 4 months.

Https://www.edisongroup.com/research/strong-firepower-to-invest-into-the-next-cycle/34251/

Optimism slowly returning. Nobody brave enough to give much forward guidance as to when we start generating regular half yearly profit though as we did until 2022. I think this year ending March 31 2025 but I’ve been wrong before.

Pound euro holding steady since half year results at 1.20.

Big impact on “profits” if it moves. The mechanism is Euro held portfolio NAV however steady going up or down when converted into pounds. A few % results in 10’s of millions of difference.

Other KPI’s that will impact results is movement in multiples of sales to valuation for sector.

Multiple reached a peak for our core portfolio March 2023 of 8.4, then declined to 7.4 sept 23, 6.6 march 24 and 6.0 sept 2024.

This contraction of multiples offset our organic sales growth. Stability will mean NAV going up and any improvement in sector (seems brewing) will boost core portfolio valuations furhter.

Liontrust went below 5% on the 2’nd of December. Maybe them.

Thanks

I’m not a chartist but there are of course patterns in trading history that give clues to the future. My reservation is that sophisticated well funded research and algorithms faster than us spot the pattern and invest on it before we do. So not much arbitrage left over for us tiddlers. Be a chartist in the 1920’s and you would be rich rich rich as few fellow travelers, virgin unaffected data. Even the 60’s. Harder now.

Unless one thinks ‘the magnificent 7” have become untethered form the ecosystem from which they came values throughout the value chain from seed to big profitable companies needs to be balanced against risk. That is the seed phase has to have higher returns over the cycle (say 20 years) than big tech as it is higher risk, ditto for first round, etc.

Very high valuations for the big boys but historic lows for the sector from which they came can only happen long run if the barn door has been shut for some reason to new entrants. For tech I think the barn door is never shut. Big tech companies are not as agile as small companies with highly targeted new products.

The advantages of size are limited for R&D. Plus the bottom level ecosystem gets a lot of public money from Universities, etc and “sweat labour of founders”. That start up ecosystem will always innovate on average more efficiently than a big tech company in aggregate for the same targeted sectors.

I try to invest on fundamentals and I have been wrong on how long this big dip after 2022 has affected the sector. Just not a long enough history to analyze in the is new asset class of retail wrapped non-tradable shares. Wiser now.

!) I did state that historically SP has been close to NAV/share on average. Fact. Why do you think this dip will not revert to the established norm?

2) it’s a fact that there is a differential. Yes opinion as to whether that is structural or transitory. If you think it structural and durable say why?

3) ditto for 2

4) big tech recycling upstream after a surge… I admit that is economic theory but a solid one.

5) dry power at historic highs is a fact. Yes of course redeployment speculative. Why do you think it will not redeploy in same sector when the time is right (probably lower interest rates)?

6) it s a fact we have strong sales growth in our portfolio companies and low failure rate. Why do you think this will not sooner or later lead to NAV increases? Do you think NAV exaggerated enough to render actual sales growth not meaningful? I don’t.

I gave 6 reasons why I think NAV and thus SP will go up over the next 3 years. They are mostly facts with some opinion as needed to make the points. Such as to “dry power will deploy” but behind that assertion is a fact that dry power at histroic highs. Must go somewhere,

Which of the 6 reasons do you think is factually incorrect of misinterpreted/over egged as to future SP implications?

Silly. Nav calculations looking solid and on way up. No good reason for large discount. We would have started making money if not for currency movements that on average are non-directional. We will show NAV/share increases from here baring a major market collapse on year end results.

We will go up sharply over the next 3 years.

1) Long run our SP is on average NAV/share. It only dips on stressed conditions and is higher in good conditions (lagging valuation discovery and difficulty in retail obtaining asset base in any other way). We have a 100% uplift coming based on this factor alone. I suspect this gap will close as soon as we start making profit again -which might be as soon as year end results.

2) EU/UK sector at historically low multiples of sales. Pitchbook predict this will start to change and with that all our valuations will go up with the sector even without last round or IPO hard cash discovery. Ditto for our seed funds which have not gone up for 2.5 years.

3) Gap between US and EU multiples and valuations will over time close. Irrational and long run arbitrage will eliminate it. Profit is profit regardless of the position of the Atlantic ocean.

4) BIg tech giant profits will get recycled up the sector development pipeline.

5) Dry powder will deploy into the sector as interest rates drop.

6) OUr portfolio average sales growth of 50% per annum will drive increasing valuations. We have zero portfolio companies in immanent trouble as well -a historically low %.

Https://files.pitchbook.com/website/files/pdf/Q4_2024_PitchBook_Analyst_Note_Evolving_Economics_of_10-Year_VC_Funds.pdf

European VC valuations show strong recovery in Q3

Stabilizing interest rates and slowing inflation contributed to a recovery in European startup valuations in Q3 as the deal environment improved. Our Q3 2024 European VC Valuations report shows higher median deal values across all stages, putting the year on course to beat 2023’s figures.

Larger rounds have dominated the market, signaling investor confidence. The latest figures suggest European VC may be past the worst of the downturn, with promising signs for deal sizes and valuations heading into 2025.

i am where i am. stupid concentration of risk in hindsight but going forward i think this share for all it’s warts the best shot at *****upling over 3 years than any other. when it *****uples from here of course i will be a very diversified investor. lesson learned but for now i think my best shot is to hold.

will it *****uple within around 3 years? we each have to make our own bed.

Https://www.edisongroup.com/equity/molten-ventures/

With profit and indications it is sustainable the gap to NAV/share will largely close.

Nice to see.

My own view is the SP is the problem not NAV/share.

In normal conditions our SP is NAV/share or a bit better. If we still followed NAV/share the 8.5 year return would be a respectable but not spectacular 100%.

If one assumes NAV/share is temporarily depressed due to high interest rates in the cycle and will bounce back naturally to 9.50 or so without taking into consideration organic growth since the dip than one has a 8.5 year return of 200%. Still not spectacular but very respectable and starting to be worth the risk of holding this volatile asset class.

If one adds organic growth and maybe low future interest rates as energy prices drop sharply and feed through to deflation then the sector will soar. OIl prices held up by war uncertainty not supply demand. I do think the Ukrainian war will wind down soon after a short period of higher risk. Israeli wars will wind down as IDF run out of hospitals and schools to bomb.

I don’t think there will be a full out confrontation between Israel and Iran (which would cause or stock to dip through the mechanism of high oil prices and thus more inflation and thus high interest rates)

Iran has the technical ability to damage enough Israeli infrastructure (water, power) to bring the economy to a halt even in an asymmetrical exchange to give even Netanyahu reason to be careful. Netanyahu wants the US to extensively bomb Iran, not Israel on it’s own, and I don’t see the Americans doing that regardless of who is in the white house. It is not fundamentally in US interests for multiple reasons.

Anyhow each need to do own risk analysis. I’m betting on a bit more stability and with that lower energy costs and lower inflation. It was an energy cost surge that got inflation going and the reverse can cause deflation and with that very low interest rates again

Yes it is a dreadful post IPO performance in a hot sector where good money could have and should have been made. Can’t blame it on current market conditions as the 8.5 years covers a full cycle.

Portfolio and NAV/share per share has gone up but not SP.

Either one believes value was destroyed or the value is still there not recognized by the market in current sentiment.

I’m of the view that there is hidden value not destroyed value and this share will do very well indeed over the next 5 years. Retail wrapper around illiquid assets is maybe too volitive when times are hard. Model to give very little holding specific information (not even % of portfolio companies GROW own). With that a comparable valuation of each portfolio company can be undertaken by us “retail” investors” can be undertaken and we can have an opinion on the valuations (high, abouit right or low). The lack of info leads to an “assume the worst” mentality (and SP) in bad times.

ALl need to make their own decisions. I’m a hold with everything I have available to invest. In GROW. With hindsight an insane strategy to concentrate on one share however internally diversified, but I am where I am and need to wait out the end of the cycle. Wish me luck.

We have traded above NAV/share for substantial periods of time. 30% Plus in stable markets. Discount only in stressed conditions like the short term covid crash.

I have always put that down to retail investors not having any other way of accessing much of the portfolio (such as myself) and paying for the privilege plus lagging booking of increasing valuations (up to 2 years delay for last round). love the full pipeline, diversification by tech sector and diversification geographically. I counted it an advantage no US as they were always on higher multiples of sales.

Love everything about this share except for the 8.5 year post IPO SP performance. I don’t know where I went wrong. This sector is white hot. Return on invested capital overall is 1.5x. Truly terrible performance.