Member Info for steph

I’m in a bit of a “string em up” mood today. I’ve been stuffing my ISA with these since 2016 and zero return. 2021 peak no excuse for that poor 8 year average. either a lot of hidden value and patience needed -or I’ve made a jumbo blunder. I’m on the patience side but very frustrated.

https://www.sharecast.com/news/news-and-announcements/molten-ventures-portfolio-value-slips-in-first-half--18121008.html

Thought machine lost 36m in fair value. Nothing in the news that gives any light on this. Appears to be growing nicely.

All the others a wash (expect for Revolut up 59m fair value due to employee sale at a 45bn valuation). they did not book the full uplift for Revolut they could have leaving about 30m on the table for safety. Probably correct as a fund was trying to buy cheaper than at 45bn.

Generally all core valuations have been 100% flat for 2.5 years. Either management did not discount aggressively enough March 31 2022 after the crash (and then needed to wait for companies to grow into the valuations) or something odd is happening as rising sales and staffing should have driven increases. revenue multiplies to value class 3 stock coming down from march 2023 peak at 8.4. 7.4 sept 2023, 6.6 march 2024 and now 6.0 sept 2024.

I’d say very appealing. Be interesting to get any broker updates from Berenberg and Deutche bank.

We have an annoying seller and no pick up yet of half year results in the news. I think we wil go up but may take a day or 2.

Interesting. Not as dire as the unaudited update so I expect some SP recovery. Don’t know how sharp or when. IN the past can occur a few days later.

They did not book all the uplift the 45bn implied valuation would have given. ABout 30m fair value left on the table. They also took 30m off Thought machine in spite of no real bad news. Thought machine talking of IPO, talking about making profit and growing.

They have on average taken down the revenue multiplier from 6.6 to 6.0 for level 3 valuations. Cautious as market recovering not declining. They have trimmed fair value Aiven, Isar and Schuttfix for no obvious reason.

My take is valuation caution and wanting to be in a position to have sustainable NAV increases from this point onwards.

No mention of share buyback yet in spite of realizations.

Interestingly total shares in circulation has declined from 189.4m to 184.4m from March to September. This helped NAV/share by about 2.5% (although of course balanced by extinguishing cash that would have been part of NAV/share). Hoping for more share buybacks soon.

Https://www.finsmes.com/2016/06/venture-capital-firm-draper-esprit-raises-102m-via-ipo.html

Has it fulfilled the promise?

Berenberg 22 August 2024 580 buy, Beutshe Banks Nov 1 2024 654 buy

Why are we below 4?

Https://europeanspaceflight.com/esa-awards-e44-2m-in-funding-to-four-european-rocket-builders/

Good news today. Maybe we will rocket as well.

We have a lot of Isar 37m fair value so good news can add 10’s of millions to our portfolio.

Jim. There you go.

I’m always a buy and I missed entirely the decline from 11.82 to 2.10. I thought the dip from 11.82 to 11.2 was temporary and bought a few at 11.2. I hope I am wiser and more accurate now.

Best blogger is neither an eternal optimist (me) or eternal pessimist (saige) but one that calls both the ups and downs mostly right.

I am very confused as to where the 90m losses came from in this half. I will be reading with great interest the update tomorrow and especially any forward guidance. Edison , Oak Bloke, Berenburg, etc all bullish.

Tomorow

In anticipation of tomorrow and in an effort to understand this share I looked back at the reported fair value of all the top 16 core companies as well as reported metrics such as NAV/share, revenue multipliers of portfolio without last round valuations, gross portfolio value , weighted revenue growth of core portfolio, etc.

Patterns emerge.

Reductions of 90m in fair value is large (offset by increases -without currency movements-of plus 110m). Very difficult to imagine this is a cumulative reduction within the 16 largest core companies. COre companies have shown remarkable stable fair value between March 31 2023 and March 31 2024. The big drops in portfolio fair values were reported March 31 2022 and Sept 30 2023. The background market was stabilizing in the March 2023 to current period and the core companies were growing sales at, 39%, 57% and 50% pa. A discount was applied to core company valuations that were based on last round of 35% or so after the crash to avoid a unsustainable peak.

What is odd is the valuation of all the seed and smaller portfolio members. This was reported in year end March 2024 results as being only 1.1 x investment. Incredibly poor performance. Maybe as money went into seed funds during the covid peak realizations and these have gone down in value since. Be interesting to see valuation of “remaining” ie mostly seed tomorrow.

I suspect most of the losses will be here in “remaining”. Last fair value march 31 2024 was 521m for this area. Historically it was about half that before the COvid boom but we have been buying.

I can’t see any core companies who have suddenly lost big value recently. Revenue multipliers of portfolio without last round value (nearly all now) have come down from a 8.4% peak in March 2023 to 6.6% now as revenue grows.

Thought Machine, Coach Hub, Aiven, Ledger, Form 3, Aircall, Revolut (way up), ICEYE, ISar Aerospace, Schuttflix, HiveMQ, Riverlane, Freetrade, SMAVA all seem stable or growing in any news we can see.

Looking forward to audited results. We have an annoying small seller about who takes us down every time we seem to be recovering. I don't think the results will justify an SP below 4.5 -especially in these improving market conditions. Be good if they give some positive guidance to year end results.

Https://files.pitchbook.com/website/files/pdf/Q4_2024_PitchBook_Analyst_Note_Top_US_PE-Backed_IPO_Candidates_and_Outlook.pdf

Https://theoakbloke.substack.com/p/grow-grow-so-sew

We shall see at 7am November the 20th what is gong on under the hood.. I took from the below August update we would show net profit (even with currency movements against in the order of 40m). I’d like to understand why not and thus which bit of core had a NAV decrease and why.

“The four most recent realisations, including M-Files, Graphcore, Perkbox and Endomag, have all been completed at valuations ‘at or above our holding value’ which Davis said was evidence ‘not only of the high quality of our portfolio and the rigour of our valuation methodology but also the more active M&A market, which continues to normalise after two difficult years’.”

https://www.theaic.co.uk/aic/news/industry-news/successful-exit-puts-molten-ventures-discount-in-the-spotlight

We shall see this week what core companies are not advancing and where the NAV declines were attributed. Help give us a view of the quality overall of the portfolio. growth would normally slow if preserving cash so we shall see sales growth rate. Wish GROW gave us needed info on sales to valuation ratios by company and runway length by company. I find this trust us approach annoying. Trust is earned.

Https://pitchbook.com/news/reports/q4-2024-pitchbook-analyst-note-top-us-pe-backed-ipo-candidates-and-outlook

I’m expecting a modest strengthening of sp on audited half year results and investor presentation. I do think the dip from 4.10 to 3.30 overdone based on release of clumsy unaudited results and CEO departure RNS. I will like to see where the losses come from to offset the rise in revolut but I suspect it is a further compaction of sales multiples to comparables. This compaction will in time reverse itself with general market thaw and late round fundraising giving hard numbers to current valuation estimates.

As I understand it from Pitchbook comparables are not decreasing in sales multiples so maybe just a bit of caution. No sign of any core portfolio companies in trouble and running out of runway -as Graphcore was before a rushed marriage. We shall see. Looking back years it is pretty normal for a modest % of core companies not to make it and no sign of a surge of this cohort.

I was truly expecting profit in spite of any currency movement this half but will need to wait for finals.

Https://files.pitchbook.com/website/files/pdf/Q4_2024_Quantitative_Perspectives_Turning_the_Tide.pdf

Https://pitchbook.com/news/articles/pe-wants-retail-investors-money-but-are-they-eager-to-give-it

Https://files.pitchbook.com/website/files/pdf/Q3_2024_US_VC_Valuations_Report.pdf

I am a big fan of GROW but share your angst at current management. Not all 8 year underperformance due to external factors. I’m not quite there with the “string them up” mood but I am pretty disappointed. Trying to bury a CEO resignation in the middle of poor results was an unforced error. Profit for the first time before currency movement was a good news story poorly handled. They could have given some forward guidance for year end.

I have ben buying into GROW steadily since 2016 putting 20,000 into my ISA almost exclusively GRWO each year plus a spread bet position. Basically a sector play and a geography I preferred due to UK/EU valuation multiples less than USA -thinking the gap would diminish over time.

GROW had the best match to my ideal portfolio in the sector and being retail I could buy into unlisted shares and seed funds. I wanted the complete value chain and the complete UK EU geography and all tech sectors. I wanted to be in on the conversion from seed to round A. I also wanted a larger management team that sat on the boards of the portfolio companies including pre round A to know which had the most potential GROW gave me all.

Besides the obvious hindsight error of not retaining more cash from the bumper realization sin in 2021 and 2022 periods I had not up to now had concerns about the management. This is a new product (retail wrapped untradable start ups) and little track record to know how it might react in a crisis.

We now know that the IPO and late round exist market is key to valuations far upstream. I am amazed the record highs for big tec have not pulled the upstream sector up with it to some degree. Innovation high tech is by it’s nature a start up environment. Dedicated players on innovation niches should outperform the tec version of the old multi sectoral conglomerates.

Big question is where do we go from here? FOr my money it is a patient but frustrating hold. Sales growth and portfolio maturity since 2022 allows the portfolio to grow into most 2022 valuations with only the modest repricing downwards we have had. I still think we will get back to 12 quid within 3 years.

Clearly there has been losses on NAV within the portfolio to offset the windfall upgrade of REvolut. Why I don’t know. I thought that all down pricing needed since 2022 to align with comparables was complete. With robust sales growth we should have had a NAV increase or at least stability by now.

We shall see on the audited results in 3 weeks or so. Runway lengths are critical. Maybe there has been a decrease in that. Year end results showed pretty healthy runway lengths so I would be surprised if there has been a substantive deterioration. No warnings at all on any negative news on individual portfolio viability. I’m assuming we still have a lowish failure rate in the wider portfolio of approximately 69 core companies.

We were 3.80 nov 6th 8 years ago. Now only 3.20. No dividends.

Either our management have preceded over a giant 8 year long destruction of value or we are massively undervalued and will bounce back as soon as IPO market unfreezes.

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