Member Info for steph

Shell shocked maybe,

when something looks, quacks and walks like an irrational price maybe it is and will correct itself within days, weeks or months.

it is analytically a trap to look at the sp and reverse engineer the justification. sometimes there is no rational justification. the downside risk of substantial down-rounds across the whole of the core portfolio that would justify this sp is possible but improbable.

no evidence happening nor or evidence it could happen. never happened before to have years of downrounds for companies already mature enough to have substantial sales with good margins on those sales.

the comparable is the dot com boom and bust but those companies had no sales and collapsed when funding rounds tightened.

grow’s portfolio is genuine companies of the future. i think the valuations credible and cautious. for example graphcore now on our books at 1/3 what we had it even though in hottest sector. punished by us for lack of sales. correctly so but still with enormous potential. is 1/3 d too little an implied downround or too much impossible to say but in aggregate across portfolio hardly 75% wrong as sp implies. we have had recent funding rounds for some confirming our valuations.

panic not logic

good luck all

Https://tech.eu/2023/06/25/london-based-mental-health-and-wellbeing-platform-olivia-raises-5-million/

Well we are now at the lowest point we have ever had as a listed trust dating back to launch in 2016.

So the market thinks no value has been added at all in 7 years and that 100% of all cash reinvested (greater in aggregate than our assumed value) has been wasted while the rest of the portfolio has not grown at all.

Ridiculous. But ridiculous can last longer than a few days or weeks.

Yes vc funding market volumes down but not valuations. Down rounds and bankruptcies in the sector are at normal levels. Silly

Sen I agree that 8.4x average revenue multiplier is high. It is much higher than our normal multiplier used for estimating value when last round not used. With sales on average well up and company valuations well down our average revenue multiplier should be well down as well. SO I need to dig. I suspect not an apples to apples comparison somehow.

Bax, I can’t believe we dipped to our October low of 2.4 again but here we are. Be interesting if Berenberg stick their neck out again and guide 900 within 12 months. 2.40 to 9.00 is now a long way and investors have gotten quite used to a range of 2.4 to 4.80 so some will sell out as we go up slowing the rise.

I bought a few today. If I had more money I’d buy more. I think the SP simply irrational due to secretive structure of a retail wrapper around hard to value unlisted firms and assumptions made ridiculously on the downside risk -that is there but much more improbable than the sp indicates.

Nice to have some discussion about the long view.

Sage I admit the facts are on your side for now but Berenberg Bank (our only broker guidance) states a 12 month target of 900 from Feb 21, 2023. They said the same 02 November 2022.

As far as I can see Berenberg do not have any share rated in any sector with more than 100% upside. Indeed the whole ftse 250 has no share other than us with a 100% plus broker guidance of plus 100%.

So either Berenberg or you are wrong on the sp prospects next 12 months. Maybe it will be something in-between. I expect by this time next year, if not a bit earlier, towards the Berenberg end of the spectrum but I am the blog optimist.

For my money I think this is a simple miss-pricing but the big funds who agree and could add at this attractive price are waiting on the sidelines to be sure we really are ready for the sustained lift up before committing. They got burned on the 3 week rally in early November between 2.40 and 4.80 that was not sustainable. So they want to be sure about the recovery this time and are willing to pass on investing at the exact bottom. So sp success will create it’s own momentum.

Volumes are way down on late round and corporate sales but not so much valuations. Preference shares we have are not properly understood by many in the market. Just looks to them as if we are not discounting aggressively enough. Also we never put on our books the peak frothy valuations of 2021 and early 2022 so have less to adjust downwards -but this “conservative valuations” is not trusted by some.

Probably enormous repetitional damage to GROW’s management to have had 3 listed shares on our books who have not achieved recently, even with the tech rally, even 1/3 of IPO price. We did not dispose at the pre IPO stage as is our policy and have been rightly pillared by the market for not doing so. So with that glaring very public error little trust in our fairly secretive nav valuations of our unlisted core companies is being given by the market. The worst is assumed rather than what our management actually say. Management could predict accurately the second coming right now and nobody would listen.

The enormous cash realizations in 2021 and 2022 have been reinvested upstream and for now no hard evidence of the wisdom of this investment. GROW management say it is still there but the market does not trust them for now. This will take time. Roughly the cash realizations of 2021 and 2022 equal our current assumed value according to our current sp. Crazy assumptions of money mostly wasted and many core companies about to go bankrupt or nearly so. Just not going to happen.

May well turn out to be a 12 months down, 12 months bouncing at bottom and 12 months climb to something more in line with NAV/share. Half yearly in October with some NAV/share increase built on market proof of some core valuations in line with what we have on the books or more would do it. Many do not believe our GROW team to be getting the valuations right for this market. Personally I think the valuations are OK and the market shifting upwards anyway so either way NAV/share will be aligned with perceived value at some point.

Been a funny bottom with wild ups and downs.

SOme investors don’t trust our NAV calculations and are willing to sell (or not buy) accordingly.

I take the view that we are massively under any sensible sp but that the big funds with the same view are waiting on the sidelines for now. So relatively small sells (mostly retails) cause big dips and keep us under 5 quid. Most retail investors more fickle than us .They will move on if the sp does not respond quickly.

Some big Fund or funds went in between Oct 21 at an sp of 2.47 and it shot up to 4.71 in 3 weeks. They got burned and the rise was not sustainable. Once bitten twice shy.

SO they all sit on the sidlines waiting for clear evidence this dip is over. Thus bouncing along a bottom of around 3 quid.

It may well be the dip below 5 quid will disappear as mysteriously as it came. It may well be that a sustained climb will require late round Funding of some of our core to confirm or exceed our NAV and prove by market mechanisms that the NAV/share is not wishful thinking.

I am surprised the recovery in big listed tech has not trickled down to us but we were late in the dip and maybe late in the recovery.

I’m all in but this long stay circa 3 quid is quite annoying.

I though we were about to get a v shaped recovery last Novmeber when we shot up fom 2.40 to 4.80 in only 2 weeks but sadly no.

We are in the middle of a U shaped recovery with a bottom that has lasted 6 months and might last 6 month more.

I suspect we will drift up over the next 6 months as the background market improves and we get a trickle of late round funding at nav’s above what is currently on our books. Market verification of our NAV calculations now much needed. Of course once the market anticipates we are going up it can accelerate it.

I am starting to see our SP as a tale of 3 parts.

1) 12 month decline to circa 2.5 from circa 11.5

2) flat in range around 3 for 6 months

3) 12 month climb back to 11.5

We will not decisively start 3 until more evidence that our core portfolio can raise money at valuations above what they are on the books for. We need to show “profit”.. Does not need to be 2021 downpour ,just a light rain of net upgrades to NAV do. Nothing reassures the market more than market mechanisms.

Our management saying over and over that the valuations are conservative is not doing the job. I belie them and am completely invested but I’m an outlier. Cash paid in a funding round post September 2022 is what is needed across a few good examples in our core. We are starting to get that on a few but not the big ones.

The AI generated results I posted just spook a retail investor. They think once losses start they wil not stop -like a regular company going form profit to losses, not a trust. A loss making company is normally worth almost immediately near zero unless a solid believable plan to stop the losses. Not so us. Yes without gains we will trade at a discount to NAV/share but not this extreme discount. Once we start making nav/share gains agains we will quickly come up to our SP of NAV/share and beyond.

Good lusk all.

Whole analysis misses structure. value is principally linked to nav/share (just as the value of a house does not go down just because you are losing money on the gap between rent and expenses) not increases or decreases in nav share unless one thinks those increases or decreases are a multi year trend.

see below :

Full year 2023 earnings: EPS and revenues miss analyst expectations

Full year 2023 results:

UK£1.59 loss per share (down from UK£2.00 profit in FY 2022).

Net loss: UK£243.4m (down 181% from profit in FY 2022).

Revenue missed analyst estimates by 175%. Earnings per share (EPS) also missed analyst estimates by 126%.

Revenue is forecast to grow 75% p.a. on average during the next 3 years, compared to a 11% growth forecast for the Capital Markets industry in the United Kingdom.

Over the last 3 years on average, earnings per share has fallen by 36% per year but the company’s share price has only fallen by 14% per year, which means it has not declined as severely as earnings.

See Past Performance

Yes sp implies:

1) 60 % of core portfolio will go bankrupt

2) and the rest will not grow in value at all.

3) The seed funds and early stage companies we own will collectively stall and not grow in aggregate.

It is all silly.

Of all the core only Graphcore struggling with progressing to next stage (significant sales with good margins) and the game is not over for Graphcore at all. IN best sub-sector and with a great intellectual property. Can still go down (remember Amstrad) but in with a fighting chance in a lucrative sector. Only one good sales agreement and it will fly.

Absolutely no sign of either. Indeed as they say in presentation

Hoping for upside

we will see on investor presentation tomorrow.

all we need for a sharp rise is more investor confidence in existing nav/share

“2024 Continued target of 20% fair value growth through the cycle” -whatever that means and from which start point.

Does “through the cycle” means they expect growth from here to be 20+ to make up for dip.

Anyhow no NAV/share dip over update. Market stabilizing.

That level was last October 2022.

At least the very end stage of the start up to profitable big tech pipeline fully repaired. Seed and early stages never went down. How long it will take to repair the crucial for us late round fund raising stage is anybody’s guess but hopefully months and not years. IPO stage ditto but less critical for our SP than late round private funding.

Looking forward to 7am release of final results. Hopefully some reassurance and forward guidance.

Dropped out of our core portfolio for half yearly sept 2022 so I imagine priced in.

Hope I can post on results day without the jinx.

Historically we rise with results but not necessarily on exact day. Often a slight lag.

SO much of our discount is mistrust of our NAV calculations that in these specific circumstances news is always good to have. the lack of news increases anxiety and decreases SP.

Our preliminary results were reassuring but did not lift our SP. Maybe finals will.

Hopefully some reassuring detail on valuations.

Graphcore and Revolut the only 2 core that concern me in the sense that the valuation on our books might not be low enough for current market conditions.

Revolut seems to be growing nicely in a competitive market and states they have achieved modest profitability so no need to raise money. Is it worth the circa 15bn on our books? Maybe maybe not. Without a recent funding round just a guess either way.

Graphcore even harder to value. Basically the circa 2bn valuation implied on our books is for intellectual property (and further development) and a well developed team to service sales if they ever come in volume. In the fastest growing subsector of a fast growing sector and Europe’s only serious contestant. Anybody could recognize the strategic value and jump in based on the intellectual property and not worry too much about sales for now. Whoever dominates AI will have a leg up in the whole emerging economy. It is a big boys game and he country and company that wins will make a lot of money and have a lot of strategic muscle. In such a big game a few billion on development costs small change for some.

Oil at 70 in spite of hot war, Saudi cuts and sanctions means it is coming down fast. Even faster if some sort of Iranian reconciliation and ceasefire in Ukraine. We are about to enter a period of low priced oil. Goes in cycles. High price more exploration and shale production. As low as 45 for sure but there is always overshoot on the swings.

Just as energy started this inflationary cycle it will help finish it by lowering forward expectations and thus wage demands. Wages only paying catch up to inflation and coming down will lag for that reason but they will come down.

HIgh interest rates not stopping some bits of tech from reaching record valuations. It was always overweighted as a reason for our catastrophic drop from 11.82 to 2.4. Much of the dip below 2/3rds NAV/share sentiment not backed up by evidence.

We wil not get 11.82 or beyond until the late round funding market for unlisted tech repaired and volumes back. Be nice if IPO market was repaired as well but not as essential to get back our previous SP. Only a matter of time I think. Sentiment that is keeping us down can turn on a dime.

We went down fast on this dip and are late to start recovery.

Only Graphcore of our core portfoli may not come back to previous valuations . The rest will in time rise with the market. All doing well on sales growth and projected to do even better in 2023-2024. .

Even Graphcore may surprise on the upside. Just takes one good sales agreement. Sector it is in booming at record valuations but Graphcore having trouble achieving sales on a great product. . Tough competition though. Brexit has hurt the likes of Graphcore. No longer an EU champion vs USA but a big AI US champion vs tiny UK. We are getting crushed by nationalism and protected markets. Not the world to go it alone trade group wise.