lol i don't disagree this could yet go a chunk lower.
In reality its incredibly hard to ever call the bottom on these things.
I just look at the share price being lower now than it was at the bottom of the Covid nadir and figure prospects can't seriously be worse now than early days of the pandemic when no-one had any idea how long the world would be crippled for....
Its a risky one for sure, but believe the risk/reward ratio is decent at this level |
I also think it'll fly when sentiment turns - could well see it going +20% from say 50p to 60p ;)
Klarna, Starling, wefox, Brandtech...
Not all bad businesses (ex Klarna), just don't see they're worth what the NAV says (an example being Klarna's 78% QUARTERLY down-value).
Good luck - at some point, it'll bottom. |
With this hitting an all time low, I've decided to take a nibble at 69p.
Have a feeling it will fly once sentiment turns (admittedly that could take a little while). GLA. |
spec #93, you think SMT should be on a wide discount because like CHRY it has a large number of holdings that are off-market? |
salt and spec - really appreciate your suggestions. i have CHRY on the list but am not so sanguine as I was having read the Questor piece. will definitely look at your ideas tonight. many thanks :) |
For the Telegraph not to mention the governance issues with this Trust is astonishing! A good alternative might be something like Augmentum Fintech which appears to be well run. |
See posts above. One of the most "obviously dodgy" tips imaginable.
@unastubbs - IPO Group worth including in your list, along with GROW & CHRY. |
Tipped by Questor
"Investors need nerves of steel owning this fund – but this really is the best time to buy
Questor investment trust bargain: the fact that Chrysalis has not shared in the tech recovery shows we are at the point of maximum pessimism" |
thanks spec, I've now found a very interesting piece by Patrick Hoskins of The Times from last week
it has given me much to think about, you were quite right to mention governance in your post this morning. i shall sleep on it! |
SMT has a way still to fall IMO - deserves to trade on a wide discount.
CHRY will be a long at some point - isn't yet IMO. GROW looks a viable alternative, also not yet, but without the huge Jupiter issues/overhang.
This might give you pause for thought on when to invest:
He's a stopped clock, but is he wrong? |
sorry to go off topic there. |
 I must admit I am tempted here. I'm also going to admit that I hadn't even heard of the Trust before reading the aricle in the Telegraph. So I'm a real rookie. I've spent the morning reading the entire thread and the articles linked to it. I'd like to thank all contributors for making this one of the best boards on ADVFN, totally unfrequented by loons and weirdos.
Struggling to think of any reason why the price is up today other than the Questor article itself. I can see the risks and am thinking of having it form 3.5% of a new portfolio I'm creating using the cash I've been sitting on. In the main I'm trying to create a portfolio to beat inflation over the next ten years (when I will be 60) with a small income component (i have an income port). I will mainly be investing in ETFs (20% in Vanguard's World ETF for eg, a ftse one and japan, and europe, and health etc etc), some income shares (SBRY, LGEN, AV), an infrastructure IT, but would like to have an element with growth in mind. Also thinking about 5% in SMT.
If anyone would care to comment or suggest alternatives to CHRY or SMT for the growth component I would be happy to hear. |
 One of the worst tips I've ever read.
"...A drastic fall in the value of such a portfolio was inevitable, no matter how well it was run or how strong the prospects of the individual businesses in it."
Yet tip it they did, at a premium, and it's now down 70% from there.
No mention of the vast sum Jupiter ripped out of it for unrealised "gains". "Well run" indeed! Nor how much of it Jupiter/Jupiter entities still own.
"...Valuers now advise the board, which makes the final decision.".
It's the last part of that sentence which is key.
"Partly, in Questor’s view, this reflects the fact that the NAVs of trusts that invest in unquoted assets are updated with a time lag that usually runs to three or six months."
They've got it a*se about t*t. We're in the foothills of the downgrades to valuations, including many that won't pull through or be able to raise new funds. The lag doesn't mean the share price is failing to reflect improvement - it means the share price is anticipating what's coming, which is more interest rate rises, more big falls.
They talk about Starling Bank reaching profitability, yet no mention of what it's being valued at?
100% revenue rises for some holdings, but no mention of what those revenue rises are costing?
I doubt every CHRY holding is going down the toilet, but not difficult to pick out several that are - Klarna is a Klaxon. Starling are on this weird PR campaign to deflect criticism of BBL fraud.
"We referred to the recovery in growth and tech stocks over the past two months. But there is no sign of it in the Chrysalis share price, which stands at a record low of about 73p."
We so haven't seen the bottom of the market, nor the end of comedy valuations in "growth" yet. At some point, CHRY's share price will reflect a good each-way bet for recovery. Averaging down at -70% isn't it IMO.
The whole thing's been very Woodford, and WPCT/SUPP has been tipped all the way down too. |
Klarna now 6th largest holding (c.6%) |
From The Telegraph today
Investors need nerves of steel owning this fund – but this really is the best time to buy
You are always running a risk buying – or indeed tipping – an investment trust that is trading at a premium, and Questor’s advice to readers in June last year to buy shares in Chrysalis Investments at an 18pc premium has rather proved that rule.
That premium has now morphed into a discount of about 55pc. As is often the case with trusts, movements in the discount or premium amplify what is happening to the value of the actual portfolio – the net asset value – and in the case of Chrysalis, the NAV has also fallen severely since our tip.
Take the two things together and we are in the red to the tune of about 70pc.
The rational course of action now is to seek to understand the reasons for the trust’s poor performance and form a dispassionate opinion on the chances of a recovery. To do this, we need to understand what Chrysalis does and appreciate the extent to which its investment strategy exposes it to forces beyond its control.
It invests in unquoted stocks, mostly newish businesses that seek to disrupt existing markets via the use of innovative or superior technology.
However, its holdings are not start-ups: they are more established, often profitable, and in some cases close to seeking a listing (some of its holdings have already floated).
In the wider economic and stock market circumstances of the past year – the return of inflation, rising interest rates and the consequent turn of the tide away from “growth” stocks and into “value” – a drastic fall in the value of such a portfolio was inevitable, no matter how well it was run or how strong the prospects of the individual businesses in it.
We have written many times about the unavoidable difficulties of valuing unquoted assets, but whatever valuation method you use and whatever its shortcomings, the only possible move in value of a portfolio of young technology stocks over the past year has been down.
In fact, Chrysalis has put a lot of effort into valuing its assets appropriately and independent valuers now advise the board, which makes the final decision.
To sum up, the value of the portfolio has suffered over recent months as the result of powerful forces in the financial markets that its managers could never have influenced. But what are its prospects now?
While we have seen a decisive change in mood back in favour of growth and tech stocks in the past two months, we cannot be sure it will continue. What we can do is look at the trust’s holdings and get a sense of their prospects for profitable growth over the years ahead, in the hope and belief that once the market has calmed down it will be the fundamentals of individual businesses that determine their value once more.
In a trading update last week, Chrysalis reported “strong revenue growth across the portfolio and excellent trading among [its] largest holdings”.
It said Starling Bank, the largest holding at 20pc of assets, had reported its first full year of profitability with pre-tax profits of £32.1m. But on an annualised basis, its current pre-tax profits are more like £92m, thanks to year-on-year lending growth of 72pc.
The second largest holding, Wefox, a “digital insurer” that makes up 17pc of the trust, “grew revenues to more than $320m (£275m) in 2021 and is on track for revenues to exceed $600m by the year end, representing growth of almost 100pc”, Chrysalis said.
Brandtech, a marketing technology company that accounts for 9.4pc of the portfolio, has also “continued to perform exceptionally well in both revenue and profit growth”, it added.
We referred to the recovery in growth and tech stocks over the past two months. But there is no sign of it in the Chrysalis share price, which stands at a record low of about 73p.
Partly, in Questor’s view, this reflects the fact that the NAVs of trusts that invest in unquoted assets are updated with a time lag that usually runs to three or six months.
But there is nothing to prevent improved investor sentiment lifting the share price (in other words, narrowing the discount), and the fact that this has not happened suggests to this column that investors have given up on the trust.
This feels like the point of maximum pessimism – the best time to buy, even if strong nerves will be needed.
Questor says: buy
Ticker: CHRY
Share price at close: 71.9p |
 I do hope the Board gets a grip of this Trust, acknowledges the loss of trust caused by a chronically poorly designed incentive structure and other governance failures, and seeks to take active and public steps to rebuild that trust with shareholders. The tone deaf nature of the reports adds to the sense that they are not assessing the reputational damage caused or have a plan in place to turn things around.
In this day and age we know that poor corporate governance erodes shareholder value - one of the benefits of the IT structure is that we have a board which is meant to look after our interests as shareholders - and communicate with us how the Board is mitigating key risks.
This is not just about the macro environment or the portfolio companies, but how the company has itself been managed, which seems to me the key reason for the plummeting share price and appalling media coverage.
This still makes up a small (smaller still thanks to the Board and managers!) proportion of my portfolio - the "bold" red on my monthly spreadsheet serving as an active reminder not to make the same mistake again! |
Indeed, with the last two of those very much in the "genuine PE/40% discount" club.
CHRY undoubtedly have a value - but think I'd rather miss it than punt now. |
.. also GROW, MERC, FIPP, PIN, HVPE etc. |
There's so much to pick apart at CHRY - Jupiter run it, Jupiter own a slug of it, Jupiter put their own funds' money into it, Jupiter take a massive performance fee based on unrealised Klarna gains from it. Klarna then falls 85% with rumours of previous shareholders refusing to put up more funds.
Again - used car. But fair to say even maggots have a value. Who knows if it's there yet, market falls may have only just started, and the profitable holdings may not stay so for long.
And that's before Opportunity Cost - AUGM, IPO, SUPP(!), genuine PE ITs on 40% discounts. |
I am beginning to think that this chrysalis is not going to turn into a beautiful butterfly. Something closer to a maggot I fear...
Well , I guess it has taken a high risk strategy, that in different circumstances might have paid off, though galling that the two fund managers took a £117M performance fee just before the share price started to bomb. That's the trouble with performance fees, they reward a share price rise but don't punish a share price fall. |
@euclid5 - would you buy a used car from CHRY/Jupiter? |
As announced on 23 May 2022, the Company's net asset value ("NAV") per ordinary share was 211.76p as of 31 March 2022.
It is estimated that the revised valuation of the Company's investment in Klarna due to this funding round, along with the movement of listed assets and FX post-period end, would result in a decrease in the NAV per ordinary share of approximately 32p as compared to the Company's last reported NAV per ordinary share. The resulting NAV would therefore be 179.50p
Note that 45% of the portfolio is currently profitable and 51% of the portfolio is now either profitable or has sufficient cash to reach profitability. The remaining 44% of the portfolio, excluding cash, has approximately 15 months of runway without raising further capital. |
Or as FTAlphaville so brilliantly put it - "Klarna - buy now, pay 85% less than a year later". |
Klarna saw its valuation slashed by 85% in a new financing round announced Monday, reflecting grim investor sentiment surrounding high-growth tech stocks and “buy now, pay later” lenders.
The Swedish fintech firm said it raised $800 million in fresh funding from investors at a $6.7 billion valuation — down sharply from the $45.6 billion value it secured in a 2021 cash injection led by Japan’s SoftBank.
It follows weeks of speculation that Klarna was seeking a so-called down round, where a privately-valued firm raises capital at a valuation lower than when it last sold investors new shares.
Klarna CEO Sebastian Siemiatkowski attempted to downplay the significance of the company’s valuation decline Monday, insisting the deal was a “testament to the strength of Klarna’s business.” |
https://citywire.com/investment-trust-insider/news/jupiter-hit-by-huge-chrysalis-losses-in-its-other-funds-while-klarna-deals-fresh-blow/a2391514 |
Register for real-time alerts, custom portfolio, and market movers
Hot Features
Premium
