Member Info for steph

Well we have achieved an SP that is what I was expecting only in late July 2021 when the year end results were out and we got a NAV upgrade and new broker guidance.

So what next? Should on the back of this early rise I trim GROW and diversify a bit? We are now 100 points beyond all the out of date July 2020 broker guidance so in some ways in uncharted territory. Scary and exhilarating at the same time.

I am not a momentum investor who buys stocks that have shown an uptrend. Some funds to just that with some statistical success. I suppose I am a deep value investor who makes a daily decision that there is still deep value relative to alternatives and a reasonable risk reward equation overall to be in the share, sector and market. I am after 20% plus annual SP growth over 10 years and that is pretty much the only way of achieving that target.

I still believe our NAV/share is seriously and unnecessarily conservative. Except where there was a well-publicized recent round funding (UiPath) our current NAV/share is unknown and now seriously out of date and deflated as well due to covid fears when it was last calculated. In March 2021 in the middle of the pandemic panic.

Officially (even though the Edison report is post UiPath) it is still 600/share. I’ve done my own historical chart (painstakingly extracted form the fine print of the annual reports) of sales and earnings multiples of the core portfolio and they show that for rather large profit making unlisted tech companies they are valued at surprisingly low sales or earnings ratios. Well short of publically traded tech companies even if you try to take size into account so comparing apples to apples. So as we chug towards IPO’s there is deep unrealized value.

I also believe we should be a healthy premium to a fair and current NAV/share. There are many methodologies to calculate fair value that take into account growth but a good rule of thumb is to bring forward future growth by 5 years at the trailing growth rate. For us the historical and credible NAV/share growth rate is between 15% and 20% depending on the dates we apply. That for me means our SP should be about double our current NAV/share. I would not call our SP remotely “frothy” until it is beyond that and we are still a very long way off.

So even at 820 I still think we are deep value. I sold a few yesterday and then bought them all back on a minor dip. My gut tells me to hold all. Good luck all.

https://www.crowdfundinsider.com/2021/02/172065-finch-capitals-new-fund-to-target-fintech-ai-startups-in-europe/

10-Feb-21 13:58:03 834.00 6,213 Buy* 820.00 834.00 51.82k

Medium sized trade all the way up at 8.34.

No news whatsoever today to stimulate a major SP movement. This is just delayed overhang from the UiPath upgrade and Edison report.

I hope not. I'd far rather have this to hold for 10 years than bring forward a year or two's SP gain on a take over or buy out. What would I do after that for 10 years? It's not clear to me.

Hopefully just funds realizing hidden value we have discussed and is clear in the commissioned Edison report.

I suspect Draper commissioned the Edison report and chose to make public the results in full to us retail investors because the big funds (who already have that data and analysis) now want GROW to re-price to something more realistic in terms of taking into account future growth. Us retailers who plan to hold for along time are not necessarily in a hurry to show the true value of what we own. Only important for us it re-prices slowly before we cash out. For me I'd rather tuck a few more GROW into my ISA this April and next at prices near a conservative NAV/share. Funds need to show results yearly, though, as they compete against each other for business. So patience is shorter if they think a holding is not showing it's true SP. Ergo Edison and open market publicity on the strategic value.

09-Feb-21 16:27:17 817,739 Buy 766.00 770.00 6m

Odd that such a large trade just before close does not move the SP. Any theories or guesses. ?

3 large trades totaling over 10 m pounds yet no share movement.

Odd pattern.

Some seriously large trades going through yet no SP movement. Often a good sign. I know I should not be fretting about short term weekly movements but I have a hunch....

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

and of course that is excludes last weeks UP Path NAV correction.

Any fair value calculation that gives weight to future growth will give us a significant premium over current NAV/share.

I almost never make short term SP predictions because share movement by the day or week is balanced and has a 50/50 % chance of up or down regardless of the medium or long term tends. Plus we normally retrace a bit after a recent rise.

Yet this time I think the UIPath funding round surprise and the excellent Edison report are game changers that have not fully been absorbed into our SP.

Edison noes we have grown 15.1% in NAV/share since Grow became public and 20% before that. Even the most modest revaluation of core assets on our year end will lift that a bit.

How much of a premium should the market put on "just" 15% regular over 20 years NAV/share increases. I think 5 years of future growth, especially since core portfolio profitable and big firms that normally would be public and have secure market niches where they have a significant share. SO eventually I think our SP will be 100% above our trailing NAV/share if we can keep 15% plus up and the market gains confidence we can. That is a long way from our current SP.

I'm expecting this to go up further this week.

Whole tech sector repricing upwards and that will trickle down to our private Uk/EU tech sooner or later. Us tech flew after London close so mo day should be a good day.

With the known repricing of uipath our nav is now 680 or so with the rest of the core portfolio to be reviewed at year end if not earlier one by one with funding rounds.

Core has a p/e of around 7 trailing which is daft if the companies can be as big as uipath.

Repricing will come just don't know when

I suspect quite a bit on year end results.

https://www.edisongroup.com/wp-content/uploads/2021/02/Draper-Esprit-Europes-leading-pureplay-listed-VC.pdf

Hard to start in posting which bit. All in line with our chat here. This hidden tidbit at the bottom of page 3 caught my eye:

"we understand the group is considering a move to the main market"

I just topped up a bit even at these levels. Nowhere better to put my money even if at over 90% of my portfolio it is massive overconcentration on one share by any measure. Grow itself is diversified sectorially, geographically and by maturity of the tech company growth curve (as the report points out). That is enough diversification and risk management for me .

Nice

one big black swan we do not have is Euros crisis. That is what did us in August 2010 and 2011.

My old forward indicator of euro trouble was Italian or Spanish 10 year bond yields. Above 4% trouble, above 5% sell, above 6% start to panic, above 7% go 100% to cash (not Euros though).

They are both at record lows. Spanish 0.1 and Italian 0.55. Incredible but true. Printing money and sharing the proceeds about is good to combat a fear of big banks folding and behind that government default Iceland style. Ireland who had a lot of banking just scrapped by in 2011. Switzerland decided to limit bank growth after 2010 just to be safe.

Even Iran trying not to get into a war. The big beasts of China and Russia, who could really send the global stock market crashing if actual missiles flew, seem content to just mess up our democracies with bots that leverage existing discontent and conspiracy. Cheap, safe and effective. Not nice but no impact though on our shares. Brexit over. Suboptimal but stable.

Fewer black swans than we have had for some time. Should be a good year for UK market and that background should help us a bit.

Pin and OCI sound good for punt. I like having alternatives to GROW even if for now I will concentrate in GROW. I "worry", if that is the right word, that a large fund will buy GROW rather than buy directly into the underlying portfolio and GROW itself will then go private again and shut us retail investors out.

Interesting that a fast growing tech company might choose to remain private at a 35bn us dollar valuation. Shutting retail investors out on the surface seems a bit unfair for any concept of a "peoples capitalism".

If our SP is not a healthy premium over realistic next round valuations of the underlying portfolio that might be a temptation for some. Exposure at a discount to what they would have to pay if they took the trouble to invest in our core portfolio one by one.

I was expecting a bit of a retrace as yesterday wore on that never came. We went up the full 8% that the increase in NAV/share implied -and that was on top of drifting up in the days prior to the announcement.

I think maybe large investors are waking up to the hidden value in the core portfolio. Our trailing and conservative NAV valuations during a time of tech booming has created a bit of an arbitrage opportunity that I suspect has not fully played itself out.

Roll on year end results and better aligned valuations with the real growth we have in the core portfolio we own.

I suppose as I bed and isa 20k/year I'll be liable for the capital gains on the sale of 20k. Looking like I may need to pay up. Super happy with my ISA.

You make a good point that our rise today is under the implied 8% rise n NAV/share so it has room to run a bit. I think on top of that this is more general confidence building on the NAV calculations and indication that many other holdings in the core portfolio are significantly conservatively valued. Great boost.

I too am not using the rise to take profit in GROW and diversify. I think over the next years we have a lot of road to run and it is still the best risk reward ratio for me as well.

My ISA is 92 % GROW. My partner insisted I put some of the investable surplus in an ISA antechamber share account that will get bed and ISA'd each year until zeroed out. Partner does not like my spread bet and assumes I will loose it all no matter how modest my leverage.

tax happy problem to have though.

I think this result today means we will drift up over the next 3 months more than the 75m NAV increase would indicate if we are in lockstep with NAV/share. It just shows the hidden underlying value of the core portfolio if a small chunk of GROW can achieve this.

I think we all might be in the happy position to need to pay some capital gains tax next year. I hold part of my GROW in a taxable share account. Mistake with hindsight (could have been on my spread bet) but still a happy result.

I think the capital gains limit per tax year is 11,000 or so but I think you need to sell to be liable as stocks bounce up and down. With this rocket deferral of selling what one needs this year might not be much help though. Great problem to have. Renovations, holidays and new furniture here we come.

thanks, bought a few for my diversification 6% column and will watch it. Year end results due shortly and hopefully should reverse the NAV/share downtrend last year.

Skid why do you think there was the drift down between March 2018 and December 2019?

This "delivered" 11.5m in first half. Now delivered 78m in second half based on real world valuation.

https://draper-esprit.s3.amazonaws.com/production/uploads/document/file/58/DE_Investor_Presentation__Interims_2020_Final.pdf

see p 14

I'd rather NAV valuations be accurate -neither frothy nor overly conservative. I think GROW's accountants in March 2020 have erred too far on the cautious side and results such as this will prove them spectacularly wrong. I wish the NAV methodology was corrected on the half yearly results but now we will need to wait for piecemeal announcements like this and the year end finals due end of July.

TTps://uk.advfn.com/stock-market/london/draper-esprit-GROW/share-news/Draper-Esprit-PLC-Investment-update/84221731

'UiPath

Draper Esprit notes yesterday's announcement from UiPath Inc., the robotic process automation software business, of its successful $750 million fundraising round at a $35 billion valuation

Based on the valuation implied by the fundraising, Draper Esprit's gross fair value (before carry deductions) is approximately GBP115 million (using a GBP/USD 1.37 exchange rate). This is an uplift of GBP78 million to the September 2020 fair value of GBP37 million.'