Member Info for steph

some years we have had a update as early as the 16th of April on year end results. Other years nothing until results announced at the end of May.

Price tends to drift up as good results being drafted.

As I keep repeating, but keep violating, it is a mugs game to understand short term SP movements.

NO I don't think the deliveroo IP retrace is sufficiently linked to GROW to have much impact at all. We have had nothing but company specific good news since 8.82 just 3 weeks ago.

I suspect it is just someone taking profit before year end on light trading. Possible connection with the US 20bn private capital on margin fiasco through a GROW owner who had to pull some capital at a time not of their choosing. Don't rule out a bit of manipulation by a fund wanting to buy a large quantity benchmarked against a specific SP date such as the year end.

IN any case I'm in for the long haul and looking forward to our new March 31 2021 NAV/share which I think will underline the credibility of 20% plus NAV/share growth into the foreseeable future. As I've said we should trade at a premium, sooner or later, to NAV/share of 70% to 100% if we can keep up 20% annual growth and the market starts to price that in. The bits of the portfolio we know about are massively exceeding this target in the last half. All good news.

what else is there to do? I suspect just a fund taking profit before year end.

https://qcconference.com/wp-content/themes/qcciir-v2.5/uploads/2013/ppf/papers/Jenkinson_Sousa_Stucke_2013_How_Fair_are_Valuations.pdf

Slightly different fund (10 year closed) but same problem of valuing fairly the underlying private portfolio. Interesting a long term tendency to undervalue by 35% against fund close.

At grow we get a better exit date which tends to be IPO as we have no time limit on how long the trust holds the portfolio. SO maybe we are "undervalued" by more than that. I'm sure the March 31 2020 and September 30th 2020 valuations will be shown in time to be silly on the low side. I suspect management are holding back where they are allowed so as to smooth returns if we have a hiccup in any future half yearly result.

I certainly expect fireworks on our yearly results due out end of May as we have had many funding rounds and IPO's that benchmark value in a way that can not be hidden no matter how conservative management wish to make the valuations. Funding rounds and IPO prices are an open market price. I suspect funding rounds conservative relative to the eventual IPO as no retail investors get a look in. Even IPO's a bit conservative as funds get priority over retail and they tend to trade at a premium post IPO.

Irritating SP at 816 but if this holds until April 6th at least I get to bed and ISA over 20,000 pounds worth of shares at this rate.

Love ISA and my hope is to be an ISA millionaire on the back of steady GROW SP growth over the next 10 years. ISA income (when you withdraw) is not only capital gains free but does not even need to be declared as income. Totally insane. Thus ISA is a pension income does not raise one into a higher tax bracket. Well worth taking risk inside an ISA to have fast growth.

Maybe I'm missing something but I don't see big black swans floating about.

Italian 10 year debt at 0.7% which is relatively low and indicates no EURO trouble that brought the UK market to it's knees in 2010-2011.

threat of slightly higher rates as discussed a risk to tech stock with very high P/E's but not so much to the rest of the market or GROW. I really don't think we will get 4% central bank rates in the foreseeable future. Central banks and especially the UK will want to keep rates down for financial stability reasons due to very high government debts. There are now other more targeted tools to lower inflationary expectations than raising the base rate until it triggers a recession as was done in the past. That was like smashing a nut with a sledge hammer. Plus job insecurity should moderate wage inflation. The pound should rise a bit which lowers inflation of imported stuff.

Savings rates shot up under covid so should finally be a v shaped recovery as the vaccine rolls out.

Brexit a dog's dinner but at least it is out there and the economic damage now factored in .
Business and financial service jobs in London proving sticky even without an agreement on equivalence never mind "passporting" that we had. Strong clustering effects prevent large scale jobs transfers to Paris, Dublin, Amsterdam, and Frankfort. EU trying to force some jobs transfer through regulations but that is fighting the market and could just result in trades being booked in the EU, and thus a transfer of liability in a crash, yet the best jobs remaining in London. We will loose a few jobs to New York banks as bizarrely they have been granted full EU equivalence but I think it will have limited impact as they will use their London based staff under a New York license.

Coming out of common market 30 years ago would have done a lot more damage to the City but it may have reached critical mass.

We were bouncing about like yo yo yesterday on incredibly low volume. 32 point spread for over 30 minutes with no transactions. Not seen that before. I suppose the big boys have either gone home or are playing a game by draining liquidity and then knowingly allowing it to drift. Maybe a upcoming transaction is benchmarked to yesterdays or today closing price and it's worth someone's while to influence it downwards.

Anyhow as I've said many time, but I do it anyway, it is a mugs game to unpick short term SP movements. Need to invest based on deep value calculations whatever the short term SP.

Apparently not as it turns out today but I’m always on alert to black swans

Full story: Credit Suisse and Nomura warn of hit after Archegos-linked sell-off

Kalyeena Makortoff


The investment banks Nomura and Credit Suisse have warned they are facing “significant” losses after a US hedge fund reportedly defaulted on margin calls, forcing a “fire sale” of an estimated $20bn (£14.5bn) worth of stocks that threatens to ripple across global markets on Monday.

True, we should have gone up on Cazoo news same as DNGT.

My take is that some fund that owns grow is taking the good news as a chance to sell some. I'm expecting to see some high volume trades appear. Nothing to do with GROW performance, just the internal needs of some fund manager. Near year end, maybe they want to book profit.

Anyhow "gas in the tank" as I say. I find this dip irritating but have used it to top up. Wish me luck. Roll on finals.

True but what I meant was we have little NAV/share growth priced in.

I am not convinced our existing NAV of each portfolio company prices in a lot of growth pre IPO . Ratio of sales per NAV is very low across an average of the GROW portfolio.

In 2019 final results was comment in report that average profits made per sale was 65% which is above sector norms and also gives us a way of converting sales per NAV to earnings per NAV -at least roughly. That is how I can talk about P/E of underlying portfolio. It is sales per NAV of 4 or 5 depending on the year divided by the % profit made on sales. Last year sales over NAV was 4.2 across the core portfolio which is low -perhaps reflecting the smaller % of benchmarking funding rounds per GROW investment.

basically GROW hardly has any future growth priced in so I would expect much less impact than traded tech stock on high P/E's who do and are thus very sensitive to changes in the base interest rate or the "the risk free earnings rate".

Of course GROW core portfolio valuations may be affected by a general decline in tech stock but not a great deal if they are mainly sales multiple based.

What might have an impact is a reluctance to IPO due to funds for that drying up a bit as they will be partly parked in cash. Slow burn impact as we are hardly trading on a big premium over NAV/share in anticipation of our core portfolio going to IPO's.

Less impact on our SP as even a 2% rise only 10% of our 20% projected growth of NAV/share. Not so for other shares who have a combined dividend capital gains projection of 5% or so.

GROW also have a portfolio that is already at a NAV which is on a very very low sales to price ratios. When converted to a P/E ratio using average profits made per sale it is still a very low P/E equivalent. Something in the order of 8. So quite a different fish than tech stock at P/E's of 40 or 50 where the net present value of that huge forward expectation of growth is very sensitive to changes in base interest rates. GROW not so much.

https://www.lse.co.uk/rns/GROW/trading-update-z6dk9cpsezfjyo2.html

in 2018 we got a nice update mid April. Wonder if they will do the same in 2021. Be nice. I hate waiting for end of May.

I suppose if GROW can replicate 20% plus per year for the foreseeable future it is because the underlying ecosystem of start up tech firms in the EU and UK are continuing regardless of general market conditions. When general conditions are good a boost to SP, bad the opposite, but even in the worst market innovative companies will be creating new businesses and I hope GROW will have many of those.

In a past professional life in the middle of the 1994 Mexican financial meltdown I tried to sell cutting edge Swiss bank business process engineering software and services to the flattened Mexican Banks.

I failed and have erased that year from my CV. However, a take away was that new money saving packages, software, techniques, etc were of interest even in, or especially in, a crisis where the buyers are genuinely worried about their current business model.

Bit of a shake up creates opportunities for new comers. We were able to talk to the very top of the banks quite easily. If I had access to a bit of start up capital might have been a commercial success. We just did not have the money to do the necessary pilots.

not added up all the pending uplifts on the core portfolio. Looking fabulous.

NAV/share uplift March 31 2021 will blow away 2020 and put to rest any market doubts we can keep up 20% NAV/share growth. Maybe then a more stable premium on NAV/share will get priced in -and get priced in on the basis of a significantly higher NAV/share as well.

I'm all in and waiting for year end results.

Love Film and Zoopla founder Alex Chesterman is to take his used-car platform Cazoo public in a $7 billion (£5 billion) deal, 18 months after he started it from a site in Northamptonshire.

Cazoo is finalising a merger with a New York-listed special purpose acquisition company (Spac) called Ajax I, which was founded by billionaire investor Daniel Och and former Goldman Sachs executive Glenn Fuhrman. Ajax I’s board includes Instagram co-founder Kevin Systrom and Jim McKelvey, who founded payments firm Square.

The merger — which could happen tomorrow, according to Sky News — would value Cazoo at $7 billion. While that would be $1 billion below previous expectations, it would nonetheless mark a huge uplift for early backers

https://www.thetimes.co.uk/article/used-car-site-cazoo-reverses-into-7bn-wall-street-listing-rmqsx06z0

I just can't wait for year end results. Hard to add up all the large upwards NAV valuations of the underlying portfolio. They are coming in fast and furious. I've lost track.

No idea why we had this little retrace but stocks never go strait up. Always a bit of volatility.

https://simplywall.st/stocks/gb/diversified-financials/aim-grow/draper-esprit-shares

https://www.theguardian.com/commentisfree/2021/mar/27/is-online-advertising-about-to-crash-just-like-the-property-market-did-in-2008?CMP=Share_iOSApp_Other

What more to do

Irritating dips

Quite right a trust that holds publically traded shares should not exceed the daily market value of the shares as anybody, even us minor retail investors, can buy the same portfolio separately. This holds no matter how undervalued the portfolio might be. There is simply anouther way of having the same for all investors.

A trust that almost exclusively holds private companies is different. For us tiddlers there is no other way to hold the same portfolio. Thus valid to look at the intrinsic value which takes into account growth and not just current NAV/share. Any value formula for a share with credible 20% growth will price it at 2x NAV/share or something similar.

We are a bit of a hybrid between institutional holders who can participate in funding rounds of the underlying portfolio and us toddlers who can’t. SO our SP (not our intrinsic value which is universal to the sector we are in) is held back a bit by that. How much is anybody’s guess. I put it at 30% for no good reason except our own history. We have been substantially above trailing NAV/share before. Any new institution investor interested in GROW’s portfolio will have to participate in future funding rounds rather than trailing so might be paying 2x our current NAV/share. GROW has a lead on any mirroring investor due to research and participation in seed and very early stages funding of 1000’s of tech companies so has first mover advantage against alternative funders on funding rounds.

Anyhow to make a long story short I think 70% to100% premium for us in a sustainable long term premium if we keep growing at 20% per year NAV/share. That is based on the sector growing at that pace and the difficulty in holding shares in the sector.

IN the very long run it does not make a big difference if our current sp prices in 5 years of future growth or not. OUR sp will chug up at 20% per year regardless. I mention the premium as part of the "gas in the tank" .

If (a big if) we repeat GROW's 20% per year performance since it's foundation for another 20 years that means our trailing NAV/share of 600 will become 32,723 in 20 years time. An immediate 70% premium of trailing nav/share (or 1020) grows to 55,625 in the same 20 years on 20%. They are both fabulous figures and for me it does not matter if the premium never gets priced in. GROW still great value and I will get rich slowly if I hold and GROW keeps growing NAV/share at this rate. I suspect it will slowly price in this premium over time (within the next few years as the market gets used to us) but no big deal if it does not.