Ip Share Discussion Threads

[p1nkfish] 09/8/2024 07:52

NAV reality is 100% reputational risk. Although I have extreme annoyance with the management I do think they won't jeopardise reputation through over egging the holding values.

[gemlotte55] 09/8/2024 07:50

A 4 million trade just went through, hopefully on the way to clearing the seller.

[bagpuss67] 09/8/2024 07:03

Web site says Berenburg and Nunis are also company brokers. Why are there no analyst reports and price targets from these research tree?

[loglorry1] 09/8/2024 07:02

I'd agree it is a cheap way to get exposure to a NAV figure that has a decent chance of evaporating while the company spends the cash as fast as they can realise it. An optimist might argue that the NAV will be realised and more as the IP is commercialised.

As an aside why is the Helium green when the company makes electrolysers. Surely its just green if you run the electrolysers on green electricity?

[bagpuss67] 09/8/2024 07:00

It is a bit rubbish they only have one broker issuing notes and poor if the company broker isn't promoting the comoany through research and a price target. That would be time to get a new broker

[palisz] 09/8/2024 06:52

Companies can't been seen to be favouring one shareholder over other, leads them open to messy legal complications. Seller may have approached a broker to place the holding, but not like the price offered. (too big a discount ) As previously mentioned BoA although a company broker do not research the company, so would not be keen to place them, ( making for a lousy bid). No other big banks produce research either. Again, this has been pointed out to the CEO! Why do BoA who get most of the fees not produce research. Answer is, cos the CEO hasn't pushed them to do it. Weak!

[palisz] 09/8/2024 06:34

Net cash at year end 2023 was £92m.

[palisz] 09/8/2024 06:31

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.

[bagpuss67] 09/8/2024 06:28

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?

[palisz] 09/8/2024 06:18

I would suggest net cash after debt, which would give a lower more realistic number.

[ghhghh] 09/8/2024 06:17

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?

[wunderbar] 08/8/2024 18:18

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.

[bagpuss67] 08/8/2024 18:11

Sorry who are they paid to?

[p1nkfish] 08/8/2024 15:30

Running costs.

[bagpuss67] 08/8/2024 15:08

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?

[gemlotte55] 08/8/2024 14:30

Thanks for sharing above post by Oak Bloke, Ghhghh.
Interesting conclusions and look forward to results

[ghhghh] 08/8/2024 14:24

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.

[ghhghh] 08/8/2024 14:21

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

[orinocor] 08/8/2024 13:44

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.

[loglorry1] 08/8/2024 13:19

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.

[bagpuss67] 08/8/2024 12:45

Thanks Loglorry. Whats the entity/company that takes these fees?