Member Info for steph

One interesting thing is GROW were openly saying they thought the SP substantially undervalued due to a market misunderstanding of the way they evaluate and operate.

I don’t think they can say that without good credible evidence that it is true or they are open to lawsuits. I don’t think it is enough to say they loyally follow EBITDA guidelines on NAV (and thus NAV/share) and that the valuations are checked by auditors and others. To say that sp is undervalued they also need to assert that the current discount to NAV/share is unreasonable and irrational in current market conditions.

This requires taking into account comparable discounts, special structure of GROW, preference share effect and participation in administrative revenue activity and fund of funds.

I am convinced that GROW should not have the sector’s steepest discount to NAV/share. Opposite really. Still a discount due to uncertainly and market jitters but much less than the current 36% of updated NAV/share. Looking at comparables 72% would be quite reasonable. .

i thought they made a good stab at defending NAV

no news anywhere i can find as a result so may be a slow burn. if a tree falls in a forest does it actually make a sound if nobody near enough to hear it?

key was preference share effect they effectively said was not understood by reporters in the bews recently on key share. they also pointed out for 2 specific shares with a lot of media chat ghat they had already given for example revolut a haircut and never put on our books the full 35 bn peak possible valuation and thus had less to mark down as the market turned.

so conservative valuations on our books plus preference shares means the markdown september 2022 should be enough unless market takes a turn for the worse.

they note signs of stabilization and shares that went for money recently achieved valuations at or above previous.

also said they normally exit through trade sales which have not collapsed as ipo has so some false expectation we need ipo’s to get exits and confirm values but not true.

runway lengths healthy and an actively managed part of grow business model. the slow down to a still respetable 40% sales grows is mostly about extending runway lengths not lack of demand for portfolio products.

https://pitchbook.com/news/reports/q1-2023-enterprise-fintech-report

worth a listen

waiting for a better buy in point is less risky for sure than shorting.

who knows if this dips from here . 50% chance of up or down in any given day or week or the sp would be in a different range already.

i don't think one will ever get a better buy in than the 265 available yesterday right after an update with no horror stories in it. no strategic reason to be at this level just market mood.

sain makes good points on valuations but these are applicable to good markets and bad. revolut a good example. what value to give to tech start up maki g headway in the market and not burning cash but not on a reasonable p/e ratio yet. traditional valuation methodologies just break down. it is a bet on the quality and defensibility of the new product or service in a market. in aggregate and in theory the whole pipeline of new tech should outperform tradicional shares with healthy p/e ratios but unknowable what is a reasonable valuation along the way.

dot com was clearly a bubble. i don't think 2021 was s bubble that a year or two of catch up cant correct. more of a surge that happens from time to time. valuations in 2021 at least for our portfolio did not go crazy so we do not have to wait years until our portfolio values catch up to our 2021 valuations. 40% sakes growth followed by 60% sales growth in year ending march 2024

you having a laugh

good luck shorting , brave. tell us when you go in at what average and exit at what average

hopefully some detail on valuations that reassures market.

thought update overall was on the upside . was expected no progress on nav/share since half results.

unexpected was runway lengths extended. that was the legitimate fear that key parts of core portfolio would run out of runway and need to do a dilutionary fund raise or run out of cash entirely and fold. not so.

i think the sp prices in too much bad news that has not happened and is unlikely to happen

there has been fundraising at or above previous rounds so good evidence not in freefall.

also reporting runway lengths extended by 12 months from last year without fundraising is excellent news -albeit at the cost if slower revenue growth at 40%. normal healthy reaction to tightened finding market.

for my money even in this choppy market these should be an sp of 2/3rds nav.

good luck all

https://www.theguardian.com/business/nils-pratley-on-finance/2023/apr/24/revolut-bank-valuation-still-stretches-credulity-despite-15bn-slump?CMP=Share_iOSApp_Other

18bn is about what we have it on the books for. good news they no money anytime soon.

good sage like analysis . how can new economy get valuations so far ahead of existing players ?

tesla did it but how many teslas ate there?

“The concern is that a worsening of current market conditions could precipitate a new wave of zombie funds. But there is hope that slowing inflation and a break in the interest rate cycle will allow valuations to recover, or that today's more mature—and perhaps more sophisticated—secondaries market will provide the antidote.”

https://www.theguardian.com/business/2023/apr/20/woodford-fund-compensation-for-investors-likely-to-total-77p-in-the-pound?CMP=Share_iOSApp_Other

https://www.theguardian.com/business/nils-pratley-on-finance/2023/apr/18/private-equity-london-stock-exchange-thg-john-wood?CMP=Share_iOSApp_Other

CFO's expect boom in AI spending

Deloitte also investigated CFO views on artificial intelligence – and found that bosses expect “significant growth in capital spending on AI”.
That, they believe, will help drive UK productivity.

https://pitchbook.com/news/articles/venture-capital-monitor-charts-Q1-2023

Sorry I got it reversed. I went long at 22 but chickened out (at 9 quid) just after it flash dipped to 7 due to Hudson storage issues. I successfully shorted at near 130 but chickened out and took profit at 110. Anyhow was too scary even for me. Could have made a bomb if i had held my nerve.

For GROW I am in a much larger life changing position and uncomfortably it is still a big roller coaster ride.

Sage, good on you for not using leverage. I personally only have ever shorted oil when it was 22 dollars a barrel. Even there I chickened out too early as I did not understand the wild gyrations.

No I don’t believe short term speculators have “strategically” pushed GROW to it’s current level. I think the short term traders have simply amplified short term volatility. Volatility is a bit self fulfilling though as many otherwise happy holders get spooked and those like me who are long term start to reconsider if it really is the stable store of retirement value I thought it was.

My biggest puzzle is arbitrage. Why do funds and individuals that hold the same core portfolio not buy into that core portfolio at the implied discount our sp is.

My only response to that is, admittedly, a weak one in “Ricardian “perfect market” theory. 1) they are different silos and are not agile enough (or even allowed by fund guidelines and rules) to spot the arbitrage opportunity. 2) They are not aligned enough on the portfolio wanted. 3) Too small an opportunity to bother.

Personally I think it is just inertia. We are a relatively new asset class to have the retail wrapper around such a wide portfolio fo UK/UEU tech pipeline assets and they are simply not looking for arbitrage opportunities. thus can run substantial undershoots of sp value for significant amounts of time. Also once we were in the ftse 250 we got sold off along with the sector and disproportionately so because we were uniquely liquid compared to the bulk of funds in our unlisted sector.

Anyhow Sage what goes down eventually goes up. Good luck all.

Someone who is consistently bearish will be right 50% of the time -similar to someone who is consistently bullish. best and rare is someone who has an accurate mixed.

I’ve been overly bullish and missed therefore the dip from September 2021 to now.

I miss the days when I was debating with SAGE in spring 2021 is GROW should trade at a 70% or 30% premium to trailing NAV/share given it’s rapid growth and degree of uniqueness and exclusivity in it’s portfolio. IN fall 2022 was was debating if we should trade at a 30% or 70% discount to trailing NAV /share with the same SAGE. How times and market conditions have changed.

For my money I think we are about to rocket. I scraped together at great sacrifice to other needs 20k to buy more in my ISA as I think a uniquely low buy in price that will quickly change over the next 12 months and the opportunity to buy 7,000 shares for less than 20k will never happen again. We have a representative slice of the entire UK EU value chain for new tech ideas and IP going into an era of rapid market change in this direction.

Good luck all.

https://www.telegraph.co.uk/business/2023/04/14/brace-for-quantitative-easing-all-over-again/

VC is not a short-term business. Investors need to be confident to invest entire portfolios in assets that are mostly illiquid for years. Countless factors, including the COVID-19 pandemic, the Russian invasion of Ukraine, and deglobalization have upended decades of received wisdom and thrown a mature business cycle into chaos.

Additionally, high interest rates, the failures of Silicon Valley and Signature Banks, the possibility of government default, increased venture debt, and unprecedentedly onerous new regulations being proposed by the Securities and Exchange Commission are all potential pitfalls for the industry. However, opportunities also exist.

More realistic valuations, combined with a market awash in talent and new government programs designed to assist company formation in high-growth strategic industries, are all positive signs.

Confidence is a scarce commodity right now, and the net present value of prudence is undeniable. 2023 has already made headlines and shows no signs of slowing down. However, if investors can meet the changing market with the right mix of diligence, patience, and optimism, then venture capital’s best days are yet to come.

2021 not 2001

Also take off does not mean 12 quid within days of course. The journey back up to 12 quid may talk as long as the journey we just had down form 11.82. 1 to 1.5 years that took so 1 to 1.5 years to reverse itself.

FEd and BOE quite hawkish overall but even so interest rates clearly peaking and will be driven by evidence. International supply chain of energy and goods much cheaper and pulling down inflation just as it was the thing that pushed them up in the first place. Wage moderation will lag but will never go beyond the real value lost in the poor negotiation conditions the labour force finds itself. Low unemployment rates is mainly that a lot of people have dropped out of the workforce rather than true tightness.