You also need to understand how they calculate the NAV.
The majority of holdings are valued based on last funding round. There have been very few the last 18 months. Supposed independent banks ( BoA ) has approved these valuations. But BoA don't even research the company !
I also think this is massively undervalued, but part of the reason, which I have expressed multiple times to the CEO, is that this system of valuation is too obscure.
I also think there are a fair number of zombies which the company needs to address.
However if you just look at the top 25, there is serious value way above that implied by the share price. As for buy backs, you can do the maths. Not complicated (tongue in cheek. |
Looks like £135m of debt at the last year end but doesnt the NAV include this debt? So that you can still pick out the cash as an asset in the way commentators are doing? |
I would suggest net cash after debt, which would give a lower more realistic number. |
Bamboo
why has the forced seller not already approached the company directly to make a deal?
Not possible whilst IPO in closed period.
Wunderbear
This buyback has NOT “enhanced shareholder value” nor stabilised the share price. FACT.
If you define shareholder value as NAV, then it has enhanced value.
IMO share buy backs are fantastic if at that right time!!!
Many investors don't like them because companies buy too soon into the downward trend. If IPO were to utilise the remaining funds today at 36p we'd be very happy with the significant NAV per share improvement.
Buying 114p of NAV (of which 20p is solid) for 36p is a no brainer? |
 I’ve thrown caution to the wind and added another couple tranches of stock at 36p. I only topped up a few days ago at 37.5p, but since then something’s been playing on my mind - would I look back with huge regret if I didn’t take further advantage of this shakedown. I had to take the punt as my overwhelming belief is the market has significantly mispriced this stock.
I don’t often get excited about a share, but IPO is a rare exception. I’ve been crunching the numbers over and over, saying to myself, what am I missing here? Am I massively over-estimating gross cash c.£200m [20p per share], noting this forms a large part of my calculation. We know ONT valuation is c.10/11p per share, which means the market is almost disregarding the rest of the portfolio.
Excluding cash and ONT stake, the market values the many remaining investments at just 5p/£50m whereas IPO reckon 84p/£840m. It’s this huge disconnect which has created a seemingly unbelievable opportunity to make a significant return on capital at this price point.
I’m mindful my NAV estimation is derived from y/e figure 114.8p. We might well discover it has fallen further, but surely not to the extent where a share price of 36p is validated. Next month’s Interims will shed further light on this matter.
At this moment in time the cash element is more important to me than NAV as this acts as a huge safety buffer at current price 36p. Besides, you can’t argue with stone cold cash, whereas NAV is highly debatable as evident here.
We’ve seen high volumes traded these past few days, easily outstripping buyback numbers. There are suggestions a large seller is driving down the price [would explain sudden 15% drop few days ago]. If that’s the case they must be desperate bailing out at rock bottom prices c.36-42p. In the short term, my concern is, if someone is dumping stock, how much are they dumping, and how many days/weeks/months before they’re finished. A prolonged sell-off could depress the share price further. There’s been no RNS notification to suggest a major shareholder is dumping stock/reducing their stake, but maybe one will appear soon.
I was encouraged by this morning’s RNS re portfolio realisations ytd of over £43m [majority attributable to sale of Garrison Technology], completed at or above carrying values. This should give shareholders some comfort re accuracy of IPO’s investment valuations.
IPO also expects to receive c.£8.4m from Intelligent Ultrasound Group’s sale of clinical AI business to GE Healthcare for £40.5m, of which IPO holds 20.8% stake. You’d think all this positive news would impact the sp! Unfortunately not, the market appears completely uninterested, no movement at 36p.
I note Directors plan to increase the buyback programme to a total of £30m, ytd they’ve bought back 29m shares, c.3% of shares in issue, for a total of £13m. Fantastic! Let's review the highlights of this buyback to date.
During this period £200m has been wiped off IPO’s market cap. FACT.
The share price has fallen 36%. FACT.
Discount to NAV [114.8p] has widened from c.51% to c.69%. FACT.
This buyback has NOT “enhanced shareholder value” nor stabilised the share price. FACT.
Majority of shareholders have suffered significant capital erosion. FACT.
Anyone who thinks otherwise is clearly in denial. FACT. [said with tongue firmly in cheek]
I’m a great believer in value will out. It’s just a case of waiting patiently for the tide to turn, as it always does. Another share I’ve been aggressively buying this past month is BP, and similarly to IPO, its share price has fallen heavily despite ongoing buyback programme. But at least BP pays me a 5.5% dividend while I wait for my 550p price target to materialise.
Given my average price is now below 40p, I’ll be looking to exit IPO c.75-85p. In the meantime, assuming it is a large seller depressing the sp, I’ll make a foolish prediction and say once seller has cleared out we’ll see a sharp upturn c.42-45p, thereafter 50-55p within 3-6 months. |
Sorry who are they paid to? |
Running costs. |
Sorry loglorry for being dim but when you say "self managed" how does cash re fees leave IPO and what is the entity that benefits? Or does a party get shares in lieu of these huge fee entitlements? |
Thanks for sharing above post by Oak Bloke, Ghhghh.
Interesting conclusions and look forward to results |
Oak Bloke normally posts here but this is his most recent IPO update
The first was IP Group. The reason for this was its 11% fall today to a year low of 35.8p (I got 36.02p on my buy). This is despite several pieces of good news which I’ve explained to readers in other articles (In listed holding Tissue Regenix and Intelligent Ultrasound), the recovery in Oxford Nanopore which is down today (as could be expected in a tech sell off) but also ONT’s recent fund raise adding Novo Nordisk to its list of owners (7%) is following a substantial amount of due diligence carried out by them and deciding to take a position but also begin buying ONT shares in the market. I have explained that the far larger market for Gene Sequencing is in clinical and industrial applications and not just in the laboratory. Until now much of the work has been in a lab. Its relationship with Novo and others will drive forward its presence in this lucrative and rapidly growing market.
But the good news doesn’t stop there. I use the word “eagle eyed” for a select portion of my readers but I was eagle eyed today too. I realised that I have intelligence about certain IP Group holdings which have a bearing on the H1 update which is imminent. I speak of Featurespace - an IP Group holding - but also a CHRY holding. CHRY’s June 2024 update has it 20% up compared to December 2023. If I apply that to IP Group’s holding that’s a £15m gain for IPO.
If I do the same thing to Bramble which is also held by HGEN and which also released it’s Q2 update compared to December 2021 is a 21% gain. That’s a £2.8m gain for IPO.
Adding the Hysata upround, Garrison sale and IUG and TGX uplifts the post period gains almost equal the post period loss from ONT and that’s considering ONT has fallen some 12% since last week too (about -£10m).
That puts IPO on gains of £74.6m and losses of -£80m YTD, and therefore on a 74.3% discount to its estimated NAV, and on the basis the buy backs continue at the same pace for the rest of 2024 the NAV per share by the end of 2024 will be near £1.40 a share - even without further good news. It is utterly mispriced based on feeling and fact - so I swooped. |
Log
Of the 36p share price, about 10p/£100m is covered by Net cash. Available cash is over £200m so they are well placed to benefit from depressed valuations. Although the IPO market is now slowly improving.
Another 10p/£100m is covered by ONT, a solid valuation based on £80m raise last week.
That leaves 16p covered by 95p of NAV?
Two years old but interesting article |
SSIT is a good example of what I expect to see here. It also has a portfolio of very early stage companies. The shares were sold all the way down to 30p only to double from there over the following months. |
Bagpuss they are self-managed. It's all in the AR on their website. Net of income from patents and running some funds it costs around 1.9% of NAV. In fairness that's not a lot of leakage given the huge discount to NAV but in cash terms it is quite high given recent exits/realisations, dividends, and probably more importantly market cap. |
Thanks Loglorry. Whats the entity/company that takes these fees? |
Not bothered by the NAV, I think they have been sensible in valuation, my beef is managent not coming out fighting. This needs to be marketed, they sit back.
No doubt very nice people and all that, well educated, but too comfortable and lacking drive on behalf of the shareholders imho. |
The trail completed in Jan.. So should have reported by now. I assume the later reporting timetable could also be to do with this. |
In a downturn liquidity and low margin (borrowed money to invest) matter.
Someone might be under a margin call and out over their skis or need any liquidity they can get to cover demands.
Other areas of their portfolio might be forcing sales,
Sell the illiquid under performers first whilst you can rather than when panic sets in and they become no bid. The buyback offers a buyer of last resort.
As price falls first thing some do is ditch underperformers - also increasing selling pressure.
As it falls through some market cap limits some might then be forced to sell due to their mandates or as it approaches penny stock territory. Any tracker of the index will needto trim as % of the index falls.
At least a 1 for x consolidation will help get this out of penny stock zone.
Some might pull money out to invest in their listed holdings as more pure play.
I'm of the opinion this should be a private vehicle where a VC keeps an eagle eye on it. |
Could the fall in share price be related to the delayed Leramistat read out? Big holding for IPO. |
Ok thanks. I believe that sometimes they are cancelled but clearly not here/yet. I assume that in treasury though they still reduce the denominator in NAV/ share... |
Bagpuss Ref #3068: My understanding is the shares are not cancelled but held in Treasury. Not quite the same. Happy to be corrected if I'm wrong. |
ghh, re, "Why are you interested/invested in IPO if you believe NAV this grossly over inflated?"
===============
I have always had an interest in "Tomorrow's World" type companies, and have been invested here on and off for years. There is still a long term investment in IPO held in a family account. I know quite a bit about the co, and have done well out of investing individually in the constituents. eg TRX, IUG, DNL,
I continue to hope that one day management will accept that their priorities differ from those of the shareholders. No-one can have issues with extra rewards for outperformance, but the current set up, where management benefits accrue irrespective of shareholders needs is clearly unfair to us.
I hope that the worthy ESG credentials of fairness, equability and duty of care will evetually be extended to shareholders. |
No problem, just an example. |
Oh yeah... 10.89% goes down to 10.2% Sorry, good spot!
Really poor reporting |
Register for streaming realtime charts, analysis tools, and prices.
Hot Features
Premium
