Member Info for steph

thanks

the good news just keeps rolling in. Only general market crash can hurt us and I think the odds of that receding.

UK, US and Euro central banks have all signaled they will tolerate quite a bit of "temporary" inflation before substantially y raising interest rates -or even stopping printing money for that matter. Whole weird new world of historically low interest rates into the foreseeable future -but very good for asset prices such as stocks and property.

We have never had a period of base rates below 2% before but we have had period of negative real interest rates when inflation is factored in.

For my money I think we are a long way from the UK market for asset prices peaking. Even UK real estate far from unstainable at these low interest rates.

I look at some asset prices elsewhere though and I see bubbles. Slightly overdone Brexit angst has kept UK asset prices and stocks in a more reasonable and sustainable band.

https://www.economicshelp.org/blog/1485/interest-rates/historical-real-interest-rate/

https://thinkplutus.com/uk-interest-rate-history/?nowprocket=1

https://www.telegraph.co.uk/business/2021/08/22/new-blow-biden-us-economy-starts-slow/?WT.mc_id=tmgliveapp_iosshare_AxpVddmwBL8r

Weirdly good for us at least over the next few months

We seem very sensitive to hints at rising interest rates. Excessively so given we are not massively frothy in our underlying portfolio p/e’s

So evidence interest rates are not going up any time soon no matter the reason helps. Last thursdays 3% dip was fear of this happening.

Any retraced an irritant on what we all believe is a road up to 20 quid in 3 to 4 years. I don’t think yesterday is the strart of any big one. Markets very jittery on low interest rate continuance and any hint we (especially from USA) that stimulus will end earlier rather later later triggers tremors.

I expect we will trade in the 10 to 11 range until update in October against a fairly neutral background market. Perhaps more the upper half of the range as I think we have resistance to not drop below 10.50 as shown yesterday. . THen as results for first half show we are still making very good money we will shift to 11 to 12 range.

SOme EU private tech on higher multiples of sales than our average. We are still pretty conservative so no bubble although a couple of ours have have gone crazy and the NAV uplift can not be hidden as it was floated or a last funding round.

Still for those of ours without a funding round valuation we are using a conservative 4.2 x sales which is a great conservative valuation benchmark so more positive supervises from our portfolio to come.

thanks

I think the September 30 interim results will beat expectations and we will have a further SP boost. GROW are making so much money hard to hide it under conservative accounting NAV calculations.

I've trimmed a few GROW from my spread just to make the position less leveraged (now down to 33% leverage which allows me to sleep soundly at night) and thus 95% safe for a 2 year plus hold. Hardly any interest in any other stocks than GROW . I hold a few Scottish Mortgage Investment trust, L&G ROBO Global, L&G battery Global, polar cap and rolls Royce but all without a strong conviction. I'm weary about an index tracker when they are all near record highs. I don't like bonds and gold as a hedge as I may lose money if the market does not crash. Gold is vulnerable to new mining technology increasing supply. If there ever is a BOE backed crypto I might put a bit in that. Nervous about all cryptos as they are in part pyramid schemes going up due to new entrants not any lasting or measurable value. When my 12 year old is urging me to buy cryptos it is a classic froth signal to get out. Regulatory risk is there for cryptos as well.

SO for me on my ISA a very long term 5 year plus (probably 10 years or more) hold and in my spread a longish 2 to 3 year hold. I've got 19 quid for GROW penciled in for July 2024.

I actually think black swans that can pull the whole market down (new virus, war, euro crash) less prominent than most times market at a high but no period is risk free and a general market retrace will result in us going down for a bit as well for sure. I just plan to wait that out if it comes. Just means putting the Champaign in the cellar for a year or two.

Good luck all.

My understanding is that the P/E of our GROW share as reported is not the harmonic mean of the constituent stocks but the change in valuation year on year of the core portfolio (and some other earnings GROW do elsewhere in the seed funds and as a business service). For our trust portfolio only a change in valuation of the underlying stock is booked as earnings even if the underlying assets are making good money and thus has a "normal" P/E. SO you can get a situation where the underling assets have P/Es of say 10 and GROW as the trust has a very unhealthy P/E of infinity if the average weighted valuations have not increased year on year. IN this way a trust of our type is principally a bet on growth in market value of the underlying portfolio. Of course the increasing NAV of the underlying portfolio is influenced by each's P/E's (not all have earnings -some being start ups have "burn rates") but it is not a weighted average of those P/E's and will always be different -generally lower. I once tried to calculate the P/E's of the underling portfolio by tidbits one can gather in the GROW reports. IN the 2019 annual report they stated the average conversion of earnings (profit) from sales was a very healthy 70%. That is a great ratio and above that of the big boys like Microsoft who already have a dominant market position in each market. GROW do report yearly sales of the underlying portfolio as part of the valuations as a component of calculation a NAV and for benchmarking. That is how I extracted an average p/E of our portfolio which was a very modest 7. That was a strategic buy signal for me. TO make a long story short GROW needs growth of the portfolio value (NAV) to register earnings. The market value of GROW is NAV of the underling portfolio (minus the risk free return on capital) plus a forward expectation of NAV growth. For some institutional investors who can buy parts of the underling portfolio directly on private funding rounds they will not pay the full premium such a fast growth rate indicates. should be paid. For us retail investors there is no other way of getting a slice of all those fast growing private companies. Thus, as I've debated with SAGE, who believes the moderating effect on GROW SP of the institutional investors alternative routes to buy the underling portfolio is a major cap on our SP relative to trailing NAV'/share and our growth rate. Personally I don't think the forward potential is fully priced in yet (even at 10.71 and a trailing NAV/share of 7.34) and at least for us retail investors this is the best buy on the market with "hidden" value. Good luck

no idea why GROW does not yet show up in FTSE 250 indexes and as you say maybe some funds don't buy until it does. SO maybe a bit a of a boost over the next period as the index is updated and weighted funds adjust. Maybe they do their own research however and are not dependent on the published indexes.

Great share great sector.

of course the third risk to monitor is a new virus variant of covid (or a new virus entirely) that evades existing vaccines. That would send markets tumbling.

This time round I don't think it would have quite the negative impact on GROW as GROW proved it could make money during a pandemic shut down as business shifted on line.

In spite of Ftse 250 at new highs I think we will have benign background conditions for a run to 20 over 3 to 4 years. Yes there will likely be a correction of 10% or so along the way (maybe more than once) but that will be a buying opportunity not a permanent set back.

I expect this sp to hit 20 Quid between 3 and 4 years out. Best bet on the market considering the low downside risk. Hard to imagine the sector not at least holding it’s own nicely in anything that can be thrown at it. SP will dip though in a general F250 crash. What could cause a general and sustained 250 crash and is the risk high enough to keep some ion back in cash?

1) RIsk of low interest rates suddenly unwinding due to high inflation. I put this risk as very low. G7 will be very reluctant to raise interest rates substantially as it hurts their fiancé’s substantially. High inflation but low interest rates good for stocks and other asset classes like property.

2) risk of Iranian vs just about everybody war. Real risk of escalation shutting down not just Saudi oil for an indefinite period but Kuwait, UAE, Bahrain and Qatar. I think Biden does not want war nor does GCC states and in most scenarios will be sable rattling only but a risk it spins out of control and becomes a large hot war.

3. That’s it for big black swans I can imagine. Brexit damage over for Uk and we will grow from here albeit at a slightly slower rate than we might have had. DOn’t imagine break up of the euro. Italian 10 year bond rates very low which indicates low risk. Of course if some strong anti euro party comes to power in Germany or France and blows it up it can happen but no signs of that yet. Cold peace between Russia and their west but no threat. We keep poking china but too much at stake for a real economic

6/30/2021 Berenberg Bank rating Boost Price Target Top Pick GBX 1,000

IN any case we are already past it.

ratings have been lagging and late and not much help with our SP. Nice to have such a strong "buy" consensus though. Pity they are not at the 12 or 13 quid we should be at within 12 months. No matter we have overran the broker targets before.

https://www.telegraph.co.uk/business/2021/08/08/crispin-odey-says-bank-england-will-never-raise-rates/

We wobbled over fears that inflation might force an interest rate rise and that will affect all tech stock with high P/E ratios.

Seems false on 2 counts. First we may never get a substantial interest rate rise for the foreseeable future. Governments have borrowed too much and have a vested interest in keeping rates low. they will find excuses to do so.

Second GROW's underlying portfolio does not have high P/E ratios -as compared to listed tech stock.

Great to see us firmly in the 10 quid to 11 quid trading range. I have 20 quid penciled in for November 2024 in my excel sheet on the interims just over 3 years out. Baring a large general market retrace of course.

I do think they deliberately deflated expectations for this years' results so expect actuals to be above forecasts and bit of a boost when that comes. We are outrunning broker guidance -which has happened before and the brokers were shown to be too conservative. Tricky share to value for reasons we have discussed on this board.

Thanks w13

Yes finally 10 quid

Next stop 20 quid

July 2025 or maybe earlier if we are lucky.

Great deep value share for isa. Still my only serious holding. P

https://www.investorschronicle.co.uk/news/2021/07/15/uk-tech-investors-forget-darktrace-and-stick-to-the-trusts/

Great is a share and I’m topped ou tin there.

Added a few on this mini dip on my spread. It will bounce about for sure and who knows if 900 is bottom but better than 50% chance it will stay in the 900 to 1000 range until we get into the 250 and then we should have a bit less volatility as automated funds top up.

I don’t trade this much. My isa is never traded. ALl in. As with sage I expect in 10 years this will look very wise in absolute and comparative terms. I do adjust my spread from time to time. I have a fear of margin calls on a big black swan event so constantly adjusting my leverage. Too little leverage and I am wasting the 2.7% annual cost of holding them on the spread. Too much and too risky. NO plans to hold the full position in the spread for 10 years but certainly for 2 or 3. Let’s hope they are good ones. Have to beat 2.7% for sure.

1014

Although I expect we will outrun that within months

I think congratulations are in order for us all for spotting a deep value within a confusing thicket of investment options. Even sage our bb cautious voice is well invested just does not think the so wi grow quite as fast as some of the sp optimists such as me.

Really solid replicable business model rather than a few lucky punts. Hats off to grow team.

I do hope they choose to grow organically into the f100 rather than jump start entry with further diluting fund raising. I support some as I think there is value in being the biggest in its niche as leading in funding rounds of the portfolio allows you to pick the companies and timing. I think we are a long way from the sector being overcrowded and over priced but it can happen so maybe best to focus on value per share from this size onwards.

Well spotted

https://fuentitech.com/having-two-unicorns-in-two-weeks-draper-esprit-is-bullish-in-france/90298/

Broke through just now

Great investment update. NAV valuations already increasing from March 31.

All more evidence as to why we should trade at a significant premium to trailing NAV/share. One reason is it just gets out of date so fast.

Wed, 23rd Jun 2021 07:00

RNS Number : 7701C
Draper Esprit PLC
23 June 2021

Draper Esprit plc (the "Company" or "Draper")

Notification of proposed admission to the Main Markets and cancellation of trading on AIM and Euronext Growth

By July 21, no dilution