Member Info for steph

Britain's biggest bank launches cheapest ever 10-year mortgage
https://www.telegraph.co.uk/personal-banking/mortgages/britains-biggest-bank-launches-cheapest-ever-10-year-mortgage/?WT.mc_id=tmgliveapp_iosshare_AydD4lyKpbSP

https://www.marketscreener.com/quote/stock/MOLTEN-VENTURES-PLC-28722806/news/Molten-Ventures-Draper-Esprit-leads-17-5m-Series-A-in-health-tech-Aktiia-37648949/

Yes graphcore a gem. Slower moving than say Cazoo but what potential. NOt really a start up anymore. Solid product and market share.

David Smith: Why economic forecasters missed the surge in inflation

https://www.thetimes.co.uk/article/96df403c-8099-11ec-afe3-4426f55f9ac6?shareToken=a23a64408373aa675f89a655ec093709

British shares are making a comeback – it’s time to buy
https://www.telegraph.co.uk/investing/shares/british-shares-making-comeback-time-buy/?WT.mc_id=tmgliveapp_iosshare_AycS902k2mWG

Sent from my iPad

Thanks sage. Any chance of a link to the article ??

History is an imperfect guide to the future but it is probably the best guide we have. Certainly better than listening to all the self interested talking heads we get inundated with.

A 75% drop on NAsdaq after the dot com bust is certainly sobering and one has to include such a scenario even if a low percentage probability.

UK central bank rates stood at 6% just before the dot com crash so were hardly responsible. Post crash they bottomed out at 3.5% by July 2003 so compared to today not helpful to stock prices. They rose back up to 5.75 and then down sharply in the finial crisis and have never since exceeded 1%. I suspect rates below 2% are now locked into the system for the foreseeable future. Government debt is too high and too dependent on low interest rates to come out. We are all becoming Japan just 20 years later. With inflation at 5% in UK and 7% in USA a strange time to predict deflation. I think that is the real risk and central banks are concerned as well which is why they are raising so slowly.

SO my thesis is history will not repeat itself. Volatility to be sure but not a multi year tech retrace as with dot com. Interest rates will remain historically low and thus any stock with a high P/E or say unlisted with no net profit yet but growing and with healthy gross margins (profit in the future).

Apple and Tesla results last week even hinted that the outrageous valuations might not be so stupid after all for tech based market leaders. They are riding a genuine economic shift and not exuberant dot com speculation. Ditto for the unicorns in formation in GROW.

I agree if you want stable retirement income the much maligned banks are worth a shot. THey may finally start to grow but I’ve been there with Barclays and Lloyds and it has been a long wait. Leverage on loans has permanently been reduced by the regulator and with it much profit and growth. Completely agree with tobacco. Out of favour but dividends to die for. DOn’t know about builders anymore. Probably good but volatile and we are at the peak of a housing boom when rising prices flattered the money really made by buying land and building on it. I am not so sure the core business model is profitable enough to compensate for the volatility. We have a housing shortage so they will be around forever. might be a small percentage of a future balanced risk portfolio for me.

My ideal investment is as far upstream on new tech as I can buy. I want the risk of inevitable failure of individual early bird entities spread over as big a pool of early bird firms as possible -1000’s if I can.

I don’t want post IPO exposure right now. I dabble in some listed funds such as POLAR but never a big percentage I hold some RR as it is part technology part travel at a great non frothy price. Listed tech at manufacturing prices. I feel RR is really a technology firm out of favour as it produces heavy things.

Agreed on the 2 year horizon.

On the page 40 note yes of course we have no idea of the magnitude of the smoothing but what a great indication they were cautious to book all the naval upgrade on last round valuations they could have within the accounting rules.

At every turn they seem to want to be conservative in valuations precisely fo a rainy day such as this half is turning out to be.

Right now if we manage a modest nav/share increase for last half confidence will soar even on a jittery general market.

I agree chance of further general declines. ALso chance of a recovery as jitters on rate rises and war recede. Yes we wil have rate rises but very unlikely to lead to a US fed rate above 2.5 and in rest of G7 probably peak much lower than that. SO still cheap money not just as cheap as it was. Of course as a market retrace resets business confidence job creation will stall and central banks wil have an excuse to delay further rises. they don’t want to rise rates due to government debt.

What did you think of the p40 half yearly results technical note on last round adjustments?

P 40 of the half yearly results on technical note 18 fair value assessments states sorting interesting I missed.

Of the 504m of our portfolio priced at last round there has been a “calibration” process based on multiples of earnings. I would imagine this pulls down the valuation if a last round was “frothy” especially as our multiples have gone down a bit from the March 2020 covid panic multiples used.

It does not say how much this adjustment was or even in what direction but might be a reason to believe we have not had as much froth due to our most recent late stage valuations as you fear. Therefore genuine sales growth of our portfolio up to March 31 2022 may still result in a positive uplift in NAV/share.

Pedestrian is another word for sensible and balanced.

When my retirement starts in 5 years time or so we shall see. A high risk strategy like mine should outperform a pedestrian strategy on average for the obvious reason that the additional risk should be priced in.

I do think any problem with valuations getting ahead of themselves is limited to the IPO and late stage funding rounds. FOr GROW due to the feeder funds and early funding round participation we are much better protected than most young tech from over valuation. Even overvaluation on last round is corrected over time with real results catching up to expectations. So as long as the GROW portfolio is companies that will in time “make it” with only occasional exceptions it will outperform “pedestrian”. Of course switching in time between sectors and cash in theory better but I have no idea when to do that and I don’t have the time. I feel I can research properly a single sector and understand a single share. I’m not a full time investor. I have pivoted out of UK builders once Brexit hit.

Previously I felt that London based Uk builders captured the benefits of a multi sector big city growth trend due to globalization and the resulting growth of business and financial services. A bit like owning a hardware store selling to gold prospectors in the gold rush. Mattered not a bit which specific gold prospector found gold or not. One made good money off them all.

Pre IPO tech is my pivot. I was hoping pre IPO was immune to froth of the general market. Not 100% as it turns out but I’m confident on results it will not be as bad for GROW as what just got priced in. I think sitting 200pts below NAV/share is an overshoot stimulated by a sector lemming effect and not GROW specific analysis.

I have 130,000 shares in three different pots 2 fully paid for (ISA) and one on my spread now with “only” 40% leverage.

THat is nearly 100% of my retirement pot in this one single share. If that is not a true believer what is.

If it does well my retirement will be sweet indeed. If not tight for sure. That is why I blog so often. Always in my thoughts and I try to understand the share itself and the background market that also moves the share. I’ll certainly go to the AGM when I have a chance and make a nuisance of myself asking awkward questions. I was set to go JUly 2020 and was stoped by covid.

I am disappointed our sp can go down as much as it has since September highs without a bigger general market crash as a push. Of course we all benefited on the fast upside so not unfair it has shown a volatility when doubt is about. I just did not see the dip coming and overbought using leverage “on the dip” expecting a quick bounce back. Sadly not so quick.

I take the pitch book article and sage’s excellent advise on board but for my money I think we have a management team who would rather downplay results when they can rather than ramp them up. SO a bit of hidden value. They can’t hide an IPO or final round valuation but all the rest is conservatively estimated as far as I can determine. We have always exceeded forecasts for example. They seem to like it that way. That is why I joke about “gas in the tank”.

Forecast for the year end update is for an additional 10% NAV/share upgrade from the excellent first half results. Some of that is in the bank as reported page 6 of the half yearly results as 26m post period sales of trust pilot and Uk path shares was made at better than IPO prices. This sell off was to continue at pace so we may find we have sidestepped some or most or all of the recent dip below IPO prices.

Yes we will have fewer last round valuations now and those that occur from here forward will be less frothy. If any core company is experiencing a market slowdown on sales growth even previous valuations (Multiple or last round) may need to be revisited downwards but I expect sales growth is continuing at pace in all our portfolio and the worst that can happen is a freeze in NAV growth for some. Sooner or later sales growth will drive higher valuations so long as gross profitability on sales hold and runway lengths are long enough (or the company is already making a net profit) to see through any temporary change in sentiment. OUr core portfolio is pretty big companies with specific market niches they can expand into at quite good gross profit margins on sales. I agree the likes of CAZOO has been frothy but was never a big percentage of our portfolio. We made a bomb on it and are getting out.

Good luck all.

https://pitchbook.com/news/articles/stock-market-sell-off-toll-pre-ipo-vc-valuations

Good valuation article that aligns with sage blogs.

Craw I only sold on my spread and only because with this dip my leverage exceeded 60% which is my line in the sand. I have not sold any in my isa.

I still have a lot in my spread and am still leveraged (40%) so have 40% more than I can pay for in full there.

One just needs to be ready for an overnight black swan event without a margin call one can’t meet in the morning. As long as one can hold this will come back to previous highs sooner or later.

I predict that by our year end results update (which was 26 APril last year) we will be back to 10 quid or better. Jitters NAV/share might decline from half yearly spectacular rise we got will be over even if we get a smaller increase than was expected in October. I think this will happen even if the general market is exactly as grim as it is now. If the general market grimmer or sunnier then it will be different. I think we have a lot of hidden value in the valuation methodologies they can pull out for a rainy day. There was no good reason for the multiples of sales to valuations to go down a bit between covid panicked March 31 2020 results and covid boosted March 31 2021 results. It was the exact opposite of froth at least for that portion of our portfolio. Hidden value.

Wise words as always.

It is unknowable whether we are in what wil be a short lived dip or in a longer term correction or something in between. Fed might look at the market jitters and send a signal today about raising interest rates more slowly and some of the angst will vaporize. Silly but true. Ditto for the chest beating on Ukraine. It can end as soon as it started.

NOt just the Federal Reserve but ECB, UK, Japan all don’t want interest rates to rise much as they have big debts to pay. As Carney said it is all about communication. A lot of the work of talking about raising interest rates is in the talking not the doing. DOing hurts government finances. Talking lowers price and wage expectations just by talk. So governments may game the system by talking a lot about it and not doing much. If true the central banks are actually more dovish than they sound. If true we wil have above bank rate inflation for a year or two which will be tolerated. Quite low interest rates are here to stay. 0.25 is silly but 1 or 2% may become the new normal for a decade or two.

For my money I’ve taken your “long term correction” scenario seriously and have configured myself to be able to wait out the dip for 2 years if needed. A long dip. After that our core company performances wil “catch up” to sensible valuations.

Fortunately our components companies are adding sales month on month and so long as none go under for lack of funds they will all come good in time. May just take longer to get to significantly higher valuations as it was. I’m prepared to wait.

I think we are being compared to ARK innovation which is not entirely fair. We have a much wider and mature feeder fund system and we operate in the Eu where unlisted tech valuations are much less in terms of multiples of sales than in the USA.

Anyhow results will calm many a jitter. Roll on May update.

“A third big concern is valuation. Stocks in America look terrifyingly expensive. A measure popularised by Robert Shiller of Yale University puts America’s stock prices at a steep 36 times their earnings, adjusted for the business cycle. That is above the reading before the 1929 stockmarket crash (though still lower than the valuation reached at the peak of the dotcom boom of the late 1990s). A reckoning was due, especially for expensive-looking, unproven businesses. ARK Innovation, an exchange-traded fund that invests in young tech firms, has become the shorthand for the more speculative end of the market. It is down by 55% from its peak. There is also greater scepticism about the more established—or at least more familiar—names, such as Netflix and Zoom, which did well from the stay-at-home economy, but have suffered recently. “In short”, notes Michael Wilson of Morgan Stanley, a bank, “the froth is coming out of an equity market that simply got too extended on valuation.”

https://econ.st/3r1T21c

Much of the drama has taken place beneath the surface, at the stock or sector level. Technology shares in particular have fared badly. The FTSE 100 index of British stocks, which is light on technology and heavy on oil and commodity firms, has been more resilient than American indices (see chart). Prices have swung wildly during the trading day. Late last week New York’s markets opened to modest rises in the main indices, only for prices to tumble as the days ended. At the start of this week, the intraday lurches became wider. On Monday, for instance, New York’s trading day began with a big sell-off, which then intensified. At one point the NASDAQ composite was down by almost 5%. Then stocks suddenly rallied. The NASDAQ finished the day up by 0.6%. The S&P 500 index posted a gain of 0.3%, despite being down by 4% at its lowest ebb. Few were fooled by the late rally. Almost everybody, it seems, was braced for more red screens the next day. They duly arrived.

Behind all this action is a market that is always somewhat forward-looking. And what has the market now to look forward to? Quite a lot of trouble, it would seem. In six months’ time, the Federal Reserve will probably have raised interest rates twice, with more to come. The easy money that has supported stock prices will be firmly on the way out. Corporate profits will be squeezed at two ends—from decelerating revenue growth (in a slowing economy) and from rising wage costs. There are, in short, more reasons to be alarmed than to be hopeful. No wonder markets are so jumpy.

Buy a few and then batten down the hatches.

As mentioned sales within the component companies will continue to grow month on month. IN time this will translate to increased valuations and our NAV/share. As sage points out market sentiment affects valuations through the feedback mechanism of less generous last round buyers. However sooner or later sales increases will feed through to valuation increases. It is just a matter of when.

Also we can get a sudden boost if GROW announce we sold down most of our traded 3 shares prior to this crash. Any good news on this front is not priced in.

We might bounce back quickly with the sector as jitters on interest rates subside and war in Ukraine either goes down as a risk or is completed quickly with no messy complications dragging the west into the mess. Johnson’s chest beating is a bit idiotic in this respect. We quickly recognized a 2014 coup against a pro Moscow elected government in the Ukraine and the Russians quite rightly feel betrayed and not likely to believe much we say about democracy after that. We lost credibility. Now chickens are coming home to roost. If it happens hope it is over quickly with minimal loss of life.

I sold off half my post September top up that had an average of 990 so took a loss. Unusual fo Rome to do that. It is not that I think there is a greater than 50% chance of further declines from here just risk management on my leveraged spread in case there is war or much more angst on interest rates. I have sold nothing in my fully paid for ISA.

I am starting to accept that these will take time to recover to the September highs and could stay at lower than trailing NAV/share levels for a few months. I do think the results will calm some jitters and misunderstandings and as such will exceed the now very low expectations. Investors must be pricing in a NAV/share decrease for the second half of 2001-2022 which I think is not going to happen.

Anyhow good luck all.

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https://simplywall.st/stocks/gb/diversified-financials/lse-grow/molten-ventures-shares

Worth looking at the analyst forecasts

A lot of our portfolio is valued at multiples of sales and this ratio did not increase at all during the pandemic boom. So should not decline during the current post pandemic tech retrace

Our traded 3 shares have declined from ipo but we managed to sell quite a bit of that just before this crash at prices above or near to ipo so should be an announcement of value preservation and recycling to come. At its peak our traded shares were never more than 20 % of group nav and now likely well below 10%

Last round valuations might have had some froth but management was careful on that passing up on revolut a sage wisely pointed out. So no pumped up fund manager buying Willy billy on whatever came up in unlisted tech.

When the dust settles I think we will emerge as a bit of a value store compared to the sector and no justification for a SP below NAV/share. NOr do I think that we are in for a decline of NAV/share. Yes on some individual last round valuations there might be a NAV decline but there will be offsetting gains elsewhere.

Sales growth of the component companies is likely chugging along nicely without being affected by their market turmoil. Margins on sales probably not affected much as well.

It is nice to have a blogger such as Sage as well informed and immune to market sentiment of the moment. For sure I went into yesterday’s sudden drop with less leverage on my spread than I might have had without Sage’s blogging of caution and for that I am eternally grateful.

I worry about the black swans of war (Ukraine) and a general market crash due to interest rate rises that are too fast. I think the risk of either less than 10% (20% in total) but not a time for aggressive leverage to be sure. Need to be able to put your shares in a drawer and forget about them until this volatility is over. I’m hoping the sunny uplands will come in may but accept it might be longer than that.

Yes my fear now is I’ll have to let my spread bet sit for at least a few month on 75% leverage. No big deal (in the mists of time I once ran a spread on 300% leverage which was in hindsight way too high) but that is without a general market crash that might really test my spread safety structure. I had been running it at much less leverage (as low as 20%, hardly any leverage at all) before this recent dip that started in September. Topping up at an average of 990 didn’t help.

Confident it will all bounce back but when? Earliest is May 2022 but could be a year longer at this rate.