Member Info for steph

Thanks

Fantastic seed fund ecosystem. Seed funds themselves seem to have a bit of ascending value as well as contribute to helping GROW pick the best for series A funding. Lot of work inside a seed fund. GOod to partner to do it. Good to see some government support and ownership at the seed fund stage.

Thanks

So a lot of different UK/Eu seed funds and all targeted at technology start ups.

all power to your GROW seed fund research.

The seed fund structure is the key to replicable results as the core holdings mature and IPO>. There is nothing else on the UK/EU market that duplicates the complete ecosystem GROW has set up. I'm told nothing like it in (me thinks) overpriced USA private equity tech stock market as well. Lots of fund managers who buy private tech alongside GROW but not with a compete ecosystem that helps selection of very young promising upstarts.

I don't know why we are so close to trailing NAV/share but who cares. We will grow rapidly in SP from here regardless.

Forecasts seem to allow for a modest deceleration from our recent shocker of a year on NAV/share growth. Will still be fantastic year on year growth -and we may exceed it if I'm right and they are burying good NAV news in a fantastic year in order to smooth the curve going forward and manage expectations. Always nice to exceed forecasts than underperform if you can set that up.

thanks for the link

Just goes to show that the draper seed to IPO value chain is important. It is different than most tech trusts not just the concentration in private unlisted UK/EU companies but in the compete ecosystem of seed to IPO growth within that.

So Draper growth is not just a few lucky stock picks. It is a self renewing and replicable sustainable system of a funnel with a wide mouth due to feeder funds such as earlybird and narrowing down through a support and analysis system ending up with a core portfolio that generates the bulk of the NAV increases.

IN my ISA I'm near 100% all in. While the SP will go up and down with general market sentiment the underlying performance of Draper will mean set backs and plateaus will be time limited. Not so for the general market which can dip or flat line from here for many years.

Even in the great depression some firms made extra profits as demand shifted. Boing in the new technology and service of the time made a fortune with expanding air travel and manufacture. Chrysler made great money by shifting to the cheaper Plymouth series. Even the 1930's equivalent of our fin tech made a fortune with the black owned North Carolina Mutual Life Insurance Corporation expanding rapidly by entering new financial instruments and operation from backrooms and homes.

So for me GROW is an ideal combination of a defensive yet fast growing stock and sector. Of course it can dip on sentiment as it did at the start of COVID but not for long.

https://en.wikipedia.org/wiki/Price–earnings_ratio

worth looking at this historical US P/E and how volatile it really is over the decades. And investing in this US or EU index is considered "the safest" stock investment and actively recommended by your bank or pension advisor.

The is no such thing as a risk free investment. Key is you are taking a risk you feel you understand and are comfortable with and you are prepared to loose all or part of your investment in line with your own risk analysis. Even bonds, cash, gold, crypto currencies and property can go down in value. Ask a Venezuelan how much his/her government bonds or cash he stacked away 10 years ago are worth now. Incompetent governments manage to devalue any asset class even bonds. Ask a Lebanese Olive farmer how much the farm is worth compared to 20 years ago.

So pay off debt. Invest what you can afford to loose. Start slowly. Invest in what you understand even if it is not "sexy".

GROW is certain a niche investment and some of us who have stated they have a large % of our portfolio in GROW have our reasons which are pretty openly discussed on this BB. Beyond that hard to advise.

All coming together. I'm hoping for more broker upgrades in the next few days.

Edward My explanation might have confused. I'll try again.

Being a trust P/E is not comparable with a single company's P/E . Our P/E is based on NAV changes. A single company is based on earnings. So if our NAV /share does not change year on year we have zero earnings and thus a P/E ratio of infinity. This occurs even though the underlying companies owned will have normal looking P/E's and have earnings. SO our trust P/E is not the average of the underlying portfolio P/E's and as such can be quite misleading. That said even for a trust a P/E of 4 is stonking good and a clear buy signal. No idea why such fast growth is not priced in more.

https://www.investorschronicle.co.uk/news/2021/06/14/draper-esprit-growth-prospects-undimmed/

https://www.fool.co.uk/investing/2021/06/15/this-aim-stock-is-moving-to-the-lses-main-market-should-i-buy/

15-Jun-21 Draper Esprit GROW Numis ? Add 960.00p previous 980.00p new

Being a trust P/E is not comparable with a single company's P/E . Our P/E is based on NAV changes. A single company is based on earnings. So if our NAV /share does not change year on year we have a P/E ratio of infinity. The trust is then worth NAV/share minus a small discount proportional to risk free earnings like bonds. Sage who knows more than I has commented in this area.

The companies that make up our theoretically flat lining NAV/share will all have normal profitable trading and normal P/E's they just will not be growing as is needed for NAV/share to increase year on year.

So investing in a trust such as ours is a bet on valuation or share price growth.

I did once try to work out what the P/E was of teh underling portfolio, This was done by knowing the average multiple of sales combined with a 2019 statement that 65% of sales was earnings. This created a P/E of around 7 for the fast growing underlying portfolio in total which was very good.

So ignore all trust's P/E's except in comparison to similar trusts. Our key statistic is the growth in NAV/share and that is going up nicely year on year as the finals state.

The big question is how much above NAV/share should our SP be? Trusts made up of listed shares tend to trade at a slight discount to NAV/share as anybody can get the same portfolio directly and instantly. Given nearly all our portfolio is private and fast grown we should trade at a premium. The big question is how much.

We have been in the last 5 years around NAV/share twice and above ranging from 10% to 30%. The faster we are perceived to be growing going forward the bigger the premium should be.

The finals guidance of 15% NAV/share growth for 2022 and resuming 20% growth after that is a fair pace and I think should mean a premium of at least 30%. Time will tell.

If we can maintain 20% growth over the longer term it does not matter much if our starting point is a 10% premium or a 50% premium. Will still achieve a stonking return once yo plug 20% into a compounding table over 10 or 20 years. My ISA is stuffed with these.

I find the loose use of 'Gross portfolio fair value growth of 51%" confusing. Gross portfolio fair value growth can include in a specific year a dilution or not greatly complicating year on year comparisons. Best one to watch is NAV/share which will be lower than NAV/share increases in a year where there was a substantial new share issue.

No matter how you calculate it we are dong well and I'm all in.

yes but the placing was complete yesterday.

I'm guessing but some investors need to sell today on the regular market to cover the cost of their placement investment yesterday.

I've topped up. 800 placement and oversubscribed is no impediment to us achieving 900 in the next few weeks at all. Market just needs to digest the huge volume recently bought and stabilize.

I assume it is just some sales to cover placing buys. Can't find any other reason. I expect it will clear. I topped up a bit on this dip just now.

looking at bottom of page 153 note 27 in annual report.

where valuations have been based on multiples of sales (rather than last round or IPO) the conversion to NAV is more conservative than last year -which itself turned out to be massively too conservative.

My take away from that is that, consciously or not, they are burying future reportable NAV earnings in an outstanding year that will help smooth results in future. Roughly they buried about 20 million or so of potential reportable NAV increases (7% of 300m).

IN any case it is good the NAV reported is not based on an increasing multiple of sales. in spite of the core portfolio being later stage than in the past which should allow a modest year on year increase in multiples of sales to convert to NAV/share.

https://www.lse.co.uk/rns/GROW/results-of-the-placing-and-primarybid-offer-jpt4vab0jnkich2.html

I suppose the placing we did not know about is the reason for the temporary dip from 860 down to 730 and back.

Anyhow all over now and we can drift up to a more reasonable premium over NAV/share. I think that is 30% plus even in the short run but I know there are other views, sage principal amongst them.

I did think the 15% guidance for 2021-2022 was a bit of an unscientific low ball throw away. They are generating profit through funding round based valuations and realizations at a fantastic rate and hard to see why 20% plus will not be achieved. They seem to be deliberately talking expectations down a bit so they can easily jump over. They themselves say the helpful trends to the business models they own is medium term and not a covid related one off stimulus. We might see 30% NAV/share growth year on year for awhile during this paradigm shift.

I could not see data in the results that help me understands the underling profitability, or lack of of, the portfolio. IN 2019 the portfolio was generating profit at a great rate (67% conversion) over gross sales. Above the listed sector averages of the big boys who had monopoly market positions. Yet we are priced as if these private companies are early TEslas eating cash and thus very high risk.

Arbitrage to be sure but I'll like to know more about profits of the portfolio companies. As I understand it is is not pure profit making anymore. Some do eat cash, as is normal, but higher risk. Maybe we will have a real virtual AGM and we can ask these questions.

https://www.investorschronicle.co.uk/news/2021/06/14/draper-esprit-growth-prospects-undimmed/

frustrating as these are good results but the placing on the same day at 800 is confusing matters. Thus our poor SP bouncing all about with no direction .

As soon as the placing is full (which should by my understanding by the 16th of June or earlier) the SP should go up nicely as those buying the placement are frustrated.

I've not noticed any broker upgrades yet nor podcasts from draper. that will help when it comes.

great results but we may need to wait until June 16 when the fundraising is over to see any SP rise. Temporarily buyers are diverted.

Certain directors of the Company, Martin Davis, Chief Executive Officer, and Ben Wilkinson, Chief Financial Officer, intend to participate in the Placing.

I'm not a big fan of dilution but at 800 placing price and directors buying looks ok. Advantages to dominate the sector and lead on funding rounds. Still a long way from being too big for the sector and chasing less attractive start ups just to spend.

The shifts that have benefitted GRWO are not a one off good year. World economic Forum report.

http://www3.weforum.org/docs/WEF_TheGlobalCompetitivenessReport2020.pdf

For instance, in the United States, e-commerce
has climbed by 24% in one year (July 2019-July
2020), after having increased by an average of
10% per year from 2010 to 2019. Globally, the
number of e-learning courses has risen steeply,
as over 1.2 billion children are out of schools
due to COVID-19 measures this year.9
Remote
working, telemedicine, videoconferencing and online
entertainment have all been on the rise since the
beginning of the pandemic.
These trends are expected to continue in the next
years, widening the gaps between digitalization
leaders and followers, both across and within
countries and across and within industries or
companies

yes the drift up in anticipation of the final results a good omen. News leaks even if just vague "buzz".

I am not expecting a NAV much different than the "at least" interim statement. Last year it was identical. What I am looking for is the forward guidance in the report and the interviews immediately afterwards.

Assuming GROW continue to guide as 20% NAV increases going forward ( and away from a perception that the 31% NAV/share this year is too good to be true and thus a one off).

Just logging the 31% officially and updating the broker guidance will help solidify the SP. I agree above 900 within a few weeks- if not days. Good luck all. 7am London time tomorrow we will put the ridiculous March 2020 COVID dip well and truly behind us.

I've long posted we should be above a 30% premium to trailing NAV/share to price in growth and the difficulty in retail investors buying the private companies that make up the fast growing GROW portfolio. Arbitrage opportunity I think although market ignorance and sentiment can price in a silly gap for a long time. Sooner or later the value will get priced in. And even if it never does just going up with NAV/share from here will be a fantastic rate of return.

Good luck all.