Member Info for steph

Britain still far ahead of European rivals in tech business funding

https://www.thetimes.co.uk/article/00e7413c-808a-11ed-ab78-11b70ed96428?shareToken=2bbbbbf5471e33ea492e49f24ec583be

maybe coming late?

We have been quite volatile ever since we joined the ft 250 from aim. Maybe on aim we did not have short term traders exacerbating the ups and downs.

Once teh market accepts peak inflation, even if there are one or two modest interest rate rises to go, we wil see quite a boost as the dip this far below NAV was driven principally by interest rate fears not the underlying performance of the portfolio. The feedback loop to high interest rates and lagging NAV/share was threefold:

1) IPO exists and last round exists delayed so cash realizations delayed. Nothing speaks louder than cash profit.
2) some portfolio companies may need to fundraise if runway lengths not sufficient to get to other side of this nervousness. Might need to fundraise when that means a down round. GROW assumes quite a bit of that risk in it’s existing NAV calcs and preference shares protect as well.

3) General peer market down when interest rate expectations are high.

https://www.nytimes.com/live/2022/12/13/business/november-inflation-report?smid=nytcore-ios-share&referringSource=articleShare

https://www.edisongroup.com/wp-content/uploads/2022/12/Molten-Ventures-High-emphasis-on-capital-preservation-1.pdf

Thanks
“We consider Molten’s valuation approach as prudent. While valuations are prepared internally, they follow the International Private Equity and Venture Capital Valuation (IPEV) guidelines, which is the main VC/PE industry standard. We also note that these valuations are subject to the review of the Audit, Risk and Valuations Committee of Molten’s independent board, as well as external audits performed twice a year (currently carried out by PwC). Finally, they were recently subject to a third- party review at end-June 2022 as part of the arrangement of Molten’s new credit facility (going forward, lenders may commission quarterly independent valuations of the investment portfolio).”

Edison did say they did not expect share buybacks in spite of steep NAV discount available.

Still no Edison report. Must be any day now. They said on podcast that it would be a few weeks.

I’m hoping the Edison report will give further reassurance on existing valuations as well as some forward guidance on valuation growth going forwards.

We are nearing pivot point where central banks start to slow interest rate rises as inflation peaks and a recession is looming.

Once firmly accepted that interest rates have peaked then our sector will have a nice bounce. We are at these distressed levels due to fear of much higher rates than we actually have. While it will take a year or so for rates to start coming down (due to wages lag) the fear of going much higher can evaporate quite quickly.

https://www.theguardian.com/business/2022/dec/09/raising-interest-rates-inflation-central-banks-recession?CMP=Share_iOSApp_Other

Just no evidence portfolio companies are slowing down in terms of growth and progress to net profitability.

If ther ever was a bit of froth in the valuations of some long been discounted or superseded by organic growth. No reason to be 45% of NAV/share. Even taking account a lot of doom and gloom that may never happen 2/3rds of NAV/share a more realistic discount .

Inflation set to peak before end of the year

https://www.thetimes.co.uk/article/bf48fab8-732d-11ed-9810-4f6146eab184?shareToken=4b4dbbc11e6b301fccc31c32e1570863

we dipped a bit when US job figures came out a bit higher than the market expected.

Of all the factors that seem to influence our SP us interest rates seem to dominate -even mor than BOE interest rate expectations. As a recession in the US stops the interest rate rises -recession good. In general EU and Uk recession good for our SP has hardly any impact on sales of our companies but a big impact on interest rate expectations.

I believe we are quite discounted right now due to interest rate jitters. When those jitters recede we will have quite a bounce, firs back to NAV/share and then much beyond as NAV gets valuated without haircuts form last round and our companies get credit for the growth they have had since last round. Probably why Black rock building a stake now. We will rocket and that might start at any moment.

According to our lse website no current shorts. We had a few in the last few weeks but they closed out.

https://www.economist.com/finance-and-economics/2022/12/01/has-private-equity-avoided-the-asset-price-crash

Ive never seen that volume in a single trade.

Anyhow my thesis that high volume tends to favor us held

https://www.telegraph.co.uk/business/2022/12/01/ftse-100-markets-live-news-ftx-crypto-strikes/

Lower house prices helps the inflation index come down. Wages will remain elevated for a couple of years and towards the end may enjoy an inflation adjusted gain but probably not enough to compensate for the big loses early in this spike. In real terms if one takes a 5 year average wages will not be the culprit or beneficiary of the inflation spike. Wages will probably be the losers in spite of a statistically tight labour market. Union power much down from the 70”s and the gig economy participants frightened.

That might make sense of the dip form 4.80 to 3.80 over the last few days. I trust the sell has cleared and we can drift back to upper 4’s and maybe into the 5 to 6 quid range I’m expdecting shortly.

We should get the new Edison report within a couple of weeks which I’m expecting will give us a boost. I’m also expectation some signs interest rate rises starting to slow before Christmas due to moderation inflation expectations and evidence of a coming recession. Using the liz tuss days as a benchmark we have somewhat improved out outlook from there. Pound up 10% which helps dampen imported inflation. tax rises and spending cuts do the same job as high er interest rates to cool the economy so bank can be less aggressive. Energy prices much down which helps twice over by reduction of the energy price support and directly bearing down on inflation.

30-Nov-22 16:35:14 390.00 4,186,064 Buy* UT

volume usually good . we tend to have small sellers and institutional holds and buyers. so drift down when volume low

No justification for dip from 480 to 380. Just funds moving in and out I guess . We are now on 45% of a NAv very throughly and recently checked. Bad news that is unlikely is priced in.

What a great list of strategic sectors MV is in. Horrible sp right now under half of a very conservative full checked NAV/share. JP morgan (150 m loan) and KPMG (independent audit) have properly checked NAV calculations and concurred with the haircuts given on some last round implied valuations to reflect current market conditions.

Unless JP Morgan and KPMG are fools current market conditions includes the fact that IPO exists and generous last rounds are not there for now and value is added by genuine organic growth of the component companies from this baseline.

I’m all in. I think half NAV silly.

So without a major deterioration of current market conditions these are set to rocket.