Roundtable Discussion; The Future of Mineral Sands. Watch the video here.
We will recover and trade near NAV/share some time not in the distant future. Nav/share itself will start to go up again as well so might be a pretty exhilarating ride up. When will recovery start is the question though.
Could be as slow as the bank interest rate declines that may start late spring 2024 and not be complete until central bank interest rates are below 3% in 2025. Chinese deflation, lower oil and gas prices and tumbling money in circulation in most western counties will drop headline inflation faster than most are predicting. Oil and gas held up by sentiment rather than global supply demand imbalances so can drop fast if sentiment changes. We will probably now get a few years of low oil and gas pricing. It is a pendulum with each swing setting the conditions for the inevitable swing back. Wage inflation will be sticky but is really only catching up for the losses due to early inflation in the cycle. It will decline as well.
However markets anticipate rather than follow change so might be faster.
Https://pitchbook.com/news/articles/hedge-funds-vc-consequences-lp-withdrawals
Hedge funds coming out of sector due to cash redemptions. Of course that will run it’s course but means a longer bottom on the U shaped recovery.
Mist say suprised we are still 250 but hopefully will drift up as soon as the kefuffle on the fundraising is over.
we will not really fly until late round and ipo market repairs itself. lots we can go ip in anticipation though.
Https://theconversation.com/inflation-has-affected-the-uk-us-and-europe-differently-heres-what-this-means-for-interest-rates-218561
FOr my money I think inflation will come down faster than most expect and along with that interest rates shortly afterwards.
I think oil price will continue to show weakness over the next 12 months helping bring down headline inflation quite a bit. If not for so much war about it would already be under 60. Mainly kept up by sentiment not supply demand so surprise on the downside immanent. Saudi only OPeC member willing to cut and it at its limit of what it can do without affecting it’s associated gas flows needed for chemical industry. It will get tired of self sacrifice soon. US shale gas and oil ramping up as it always does when oil above 60.
Millions of extra barrels in the market as a result overwhelming the million the saudis cut. Iran and Venusualian oil increasingly finding it’s way into the market Iraq also going up. Russian oil finding it’s way to market at normal volumes but at a slightly discounted price. Even tiny Guyana making a small new contribution. China economy slowing and substituting imported oil for domestic production, coal and renewables year on year anyway.
I’d not be surprised to see oil circa 30 within 2 or 3 years helping create conditions for deflation and with that fiscal stimulus of ultra low interest rates again. Japanization of the global economy.
Hang onto this sector and SP. We will rocket over the next 3 years. Previous SP high not a glass ceiling. It will be shattered at some point in the not distant future.
Our SP seems to track US interest rates more than UK. I suppose our capital at the margin is global.
I suppose a bit of choppiness after a lot of share movement and confusion on the new NAV/share and strategy.
I maintain this will settle around 2.70 for a while and then, in fits and starts, drift up to 2/3rds of nav by year end results.
According to press release most of forward portfolio has either a 18 month plus runaway or are near or already profitable with unlimited runway.
Maybe GROW simply wanted more cash to invest in the existing 20% of profile who need it and “buried the news” with this merger. If fundraising at near NAV/share no real dilution. We loose a % of our holding but gain a % of the new investable cash.
Raising cash at 2.70 when NAV/share is 7.40 is an admission that we need the money badly and are willing to dilute in order to have a strong cash position coming out of the downturn when “buyer in the sector is king” and we can recover the discount with favorable investments that mature nicely. All possible but annoying we are in that strapped cash position in the first place. Would have been better to be buying our own shares at this discount.
In theory the dilution to obtain the portfolio in Forward is not a dilution at all. We just own a smaller percentage of a larger set of companies. It is just the cash raising part of 55m that is. I’d prefer not raising cash in this market for us but we are where we are. Ideally we should be buying our own shares in this market not selling but we invested too much of the 2001 and 2002 windfall to do so.
A bigger better funded trust -albeit at a 13% dilution- is at least a wash maybe a gain for us. Are we 13% bigger (including available cash to invest) to compensate for the 13% dilution. Seems so.
I’d me more nervous about a more substantial dilution. This seems strategic -albeit an acknowledgment we over invested in 2022 and should have retained more cash for a rainy day -that actually came fast and hard. SO the same cash (55m) is quite a bit more expensive to get than it should have been by retention in 2022. Lesson learned I hope.
Hindsight 20:20 though. Good share with good stock picking within an up and coming sector. Should outperform sector that itself should do very well indeed from these valuations onwards.
Results of Placing and Subscription
Molten Ventures plc (LSE: GROW, Euronext Dublin: GRW), a leading venture capital firm investing in and developing high growth digital technology businesses, is pleased to announce the successful completion of its non pre-emptive Placing and Subscription raising gross proceeds of £55.0 million, following strong demand from new and existing shareholders.
Pretty sure Blackrock committing themselves to buy at 2.70 in volume puts a floor under our sp -barring some big black swan event of course.
Getting pretty hard to imagine black swans worse than all the ones we currently have. 2 big wars. Inflation way above target. Idiots in power in multiple countries. Most g20 at debt levels never seen before. US elections that might bring more instability. All that is priced in. Of course things can always get worse but law of averages we are due a white swan or two.
Doubt if I could get enough to be worthwhile nor will the discount to our sp be enough either.
This fundraising needs to clear and be oversubscribed before these go up substantially now.
That said we probably now have a floor on our SP of 2.70.
One thing it does increase the UK weighting of the portfolio as well as the e-commerce end. I like deep tech but Graphcore shows just how hard that sector can be. That said historically e-commerce have been quick to go up when the going is good as well as quick to go down when the mood is sour. SO if bought at the right point in the cycle maybe will help us
Sang and I may be in agreement on one thing. OUr NAV/share is the key to SP sooner or later. Once confidence in our NAV/share returns we will go up but not exceed NAv/share. Confidence will return with a modest NAV/share upgrade at year end and/or market stabilization for funding rounds.
I wonder what the official NAV/share is in the new merged structure? If still 740 then all good on this merger -assuming we paid a good price. I still don’t understand the potentially dilutive impact of the fund raising. ALl will go into the new NAV/share calculation. Surprised that was not in the RNS.
Https://www.cityam.com/molten-snaps-up-forward-partners-in-41m-deal/