Molten Ventures Share Discussion Threads

[brexitplus] 07/12/2020 15:27

Competitor

“Bloc Ventures, which raised £30m earlier this year, invests in “deep tech” start-ups, businesses working advanced technologies such as quantum computing and advanced semiconductors.

Bloc has hired Michael Dimelow, a former corporate executive at Arm, as its chief commercial officer, who will advise its portfolio companies.

Michael Dimelow, Bloc's chief commercial, said: “Investing in deep tech businesses is hard to get right, it helps if you understand the journey that the founders are about to go on. Bloc understands that journey and brings a wealth of product, technology and business building expertise, combined with a permanent capital structure. A patient approach to venture investing is unique within the UK and Europe and enables Bloc to take a long-term view with the founders we back. Funding the next wave of technology innovation and helping to shape Bloc Ventures long term growth was an opportunity too good to be missed.”

It is understood Bloc is “gearing up” for a stock market listing that could present a rival to London listed Draper Esprit.

Bruce Beckloff, Bloc's chief executive, said: "An initial public offering is one of several options. If you look at Draper Esprit, the market is wide open for a venture model. The most obvious [exit] would be an IPO."

See full article here:

[stef25] 01/12/2020 05:10

rest of IC article:

"At the end of October, Draper joined several investors including London Stock Exchange (LSE) and Fidelity in funding a $50m Series B round for PrimaryBid, the platform that allows retail investors to participate in capital raises for listed UK companies. Chief executive Martin Davis, convinced by the acumen of the platform’s management team, sees “no reason” why the group’s strong run this year won’t continue.

Three more as-yet unannounced investments have been signed, including a new stake in what Mr Davis termed the passion economy – the fast-growing infrastructure around social media influencers. The focus on deep-tech, for which “Covid has just been a blip”, remains steadfast.

While tech-themed hyper-growth sectors have been the flavour of 2020, Draper Esprit shares also appear to have benefited from the rotation to value. They now sit at a premium to Numis’ forecast NAV of 623p per share for March 2021, though this quickly slips back to a 9 per cent discount against FY2022 forecasts.

Little about the company’s market support, portfolio outlook or desire to re-invest cash realisations suggest growth is about to grind to a halt. Buy.

Last IC View: Buy, 596p, 6 Oct 2020"

[stef25] 01/12/2020 05:03

From Investors Chronicle:

Nov 30, 2020 Update: Buy at 650p

We said BUY at 490p on 16 Jan 2020 Tip performance to date+33%
By Alex Newman

•Portfolio demand maintained despite realisations
•Shares now sit at premium to NAV

While terrible for many sectors, 2020 has been a turning point for some. Aim-listed Draper Esprit (GROW), the technology-focused venture capital fund, is in the latter camp.

Despite realising £106m from portfolio stake sales in the six months to September, its gross portfolio value has remained unchanged at £702m. With either a great appetite for higher-risk funds, or a newfound appreciation for Draper’s track record, the market has woken up.

Deals struck since the period-end – and a £110m fundraising – suggest the pipeline remains active.

[stef25] 30/11/2020 14:26

The reason I am fixated on revenue per core holding multiples to create NAV/share is as follows.

1) if the multiple of revenue of the core holding per share is the same as 2019 finals (5.08)
2) If the September 2020 interims estimate of revenue per core holding of 240m holds
3) if shares in circ on year end 2021 are 139m
4) than 5.08x240m/139m=nav/share of 8.73 for March 31 2021

Of course we may never get 5.08 again but looking at these US pre IPO tech averages maybe we will. Maybe more.

[stef25] 30/11/2020 13:59

I looked back to the interims for 2019 and found the meaning of the revenue core holdings chart. A = actuals and B= estimate. So the 240m is the estimate for year end 2021 which is good.

Assuming no further dilutions between now and March 31 2021 shares in circ will be 139m so 240 m is a healthy increase in core revenue per GROW share. Indeed core total revenue per share has been increasing sharply from 2019 onwards -after flat lining between 2018 and 2019 (a year which saw a massive increase in NAV/share).

Assuming finals agree with the estimate we will have had a 70% increase in core revenue per GROW share over just 2 years -a much faster rate of increase than reported NAV/share.

I think it adds up to hidden value. I don't think the NAV/share reported for 2019 finals was too high based on too generous a methodology. Investors Chronicle agreed with it for good reason due to benchmarks of US pre ipo tech firms at 7 or 8 revenue and I think we will get to 2019 valuation revenue multiple averages again once the covid dust settles.

[stef25] 30/11/2020 13:21

brexit

they actually marked graphcore down on NAV between March 31 2020 and September 30 2020. That is silly. Company is flying.

Better to have gas in the tank than to be running on fumes but I do think they should have started to unwind the covid induced "conservative" nav assumptions on the half yearly.

There is a hint of a massive increase in revenue generated within the core holding on page 6 which I don't understand as the labelling is unclear.

Good buying opportunity over the next 5 months but I'm out of funds.

[brexitplus] 30/11/2020 09:31

Watch Graphcore.

[stef25] 30/11/2020 08:30

Dogwalker

I agree they left the gas on the tank for next time by leaving the valuation adjustment to a post Covid scare level for the future.

Not bad results but I was hoping for a jump based on increasing revenue for the core holding.

[dogwalker] 30/11/2020 08:17

Doesn't nod towards stef25's take on what NAV etc should look like, I don't think. But, wtfdik.
Reads pretty well to me.

[steeplejack] 30/11/2020 08:04

Slightly better than forecast by the company a month back.

[brexitplus] 30/11/2020 07:39

Excellent results.

[stef25] 30/11/2020 04:44

big day today. We get the half yearly results. I think they will show there was no overall negative covdid 19 impact on the core portfolio and maybe even some acceleration of earnings made within the core portfolio.

I'm expecting better than "at least" 5.95 nav/share or forward guidance that there will be significant growth based on unbundling the overly conservative valuations made dated March 31 2020 in the middle of the covid panic.

I look at the core portfolio and I can't see any that might have been covid impacted in a negative way. Just did not happen.

I think we have circa a 45% uplift due once the overly conservative NAV valuations made last are fully undone and we are back to 2019 nav/share multiples of core portfolio earrings per share of 5.08. This is on top of organic nav growth. So a lot of gas (or hydrogen or stored electricity) in the tank/battery/fuel cell so to speak.

I suspect they will not unbundle that fully in this half yearly and will want to space it out a bit -if the accountants let them. I am keen to see revenue/sales growth of the core portfolio from 187m as reported in year end to anything at all above that. That is not a number open to subjective adjustments. Any increase good and means in fact covid had minimal or no impact. Nav revaluations towards 5x revenue of core portfolio will then follow sooner or later.

[stef25] 25/11/2020 13:28

dogw

yes may be true but when the market recognizes it an gives our share price a boost is anybody's guess. going back (to an average of nav/share being 5.08 x revenue/share of the core holdings we had in 2019 year end report from current 4.14x revenue of core holdings) will help if they do it in whole or in part on this update. Depends a bit on the luck of the draw on recent purchases within the core portfolio they can use for valuations.

IC was right to draw attention to the revenue per share calculation within NAV/share. It takes out the year by year volatility and lack of transparency of which bit of the core holdings gets which valuation methodology.

Looking at revenue per share we did not do well between 2017 year end report and 2019 year end report yet our share price went up sharply and all brokers and IC recommended buy. However between 2019 and 2020 on revenue per share calculations there is unrealized value.

I suppose the higher multiples of revenue/share of core holding to Nav/share of GROW we have had since launch is justified by the larger more mature companies attracting more last round funding to benchmark we now hold.

[dogwalker] 25/11/2020 11:05

I hope you're right too. Looks very encouraging indeed.

[stef25] 25/11/2020 10:45

dogw

thanks I looked at the link. IC comment was relevant.

Yes you are quite right. The conclusion is that the portfolio of GROW if traded on the market would have higher valuations. GROW's same % of those companies would be worth more.

ON my reckoning the difference is about 2x. GROW's P/E equivalent is 7.2. It would be more like 14 if the components were traded publically or GROW was structured for accounting purposes as a conglomerate directly reporting the profit and loss of the J/V's it owned. The trust structure and reporting only NAV changes as profit obscures the deeper value of the portfolio. Of course if GROW hang on until at least IPO and exits in whole or in part as retail investors come in this undervalue will correct itself in time.

[dogwalker] 25/11/2020 09:40

As a follow up, it was the article in Nanalyze highlighted here in post 265 by p1nkfish above which maybe explains a difference in opinion from yours stef25....?

[dogwalker] 25/11/2020 08:20

So, the whole is valued at less than the sum of its parts? Is that the gist of your observations stef25? I'd thought we were at a bit of a premium in that regard but am presumably missing the point.

[stef25] 25/11/2020 07:03

new posting here and appreciate checking and pushback on my assumptions.

I've been looking at revenues per GROW share of the underlying core portfolio compared to Nav/share of Grow and the related multiple of revenue per share to create NAV.

there was a steady increase in the multiple of total core revenue per share to create total core nav per share from 3.0, then 4.0 then 5.0 in 2017, 2018 and 2019. Mostly due to an increase in recent transactions to aid valuation. Then in 2020 a retrace to 4.1 core portfolio revenue per share to total GROW nav per share relationship due to a substantial decrease in recent transactions to aid valuation plus some covid era adjustments downwards in projections of forward earnings.

My take on that is we have a bit of gas in the tank.

I am at essence a deep value investor due to my ISA holding. I believe the trust structure undervalues the core holding relative to the accounting that would happen if they were recorded as joint ventures over the 20% ownership threshold that trigger profits and losses being recorded directly in the parent and not just the delta in lagging and bureaucratically calculated valuations that we get as a trust. Even recent transaction based valuations lag reality and are conservative as they are not retail investors.

profit and loss of the core portfolio if reported directly at the level of GROW would create an ability to directly compare the GROW portfolio to traded companies in the sector.

The P/E would be 7.1 right now (based on revenue as reported in March 31 2020 on shares in circulate of 139m and % of revenue being profit of .67) if profits within the core portfolio were reported directly and not just changes in nav.

Following the strategy laid out on page 14 of the 2017 results I can't believe my good luck I can buy those UK/EU private fast growing tech companies at an equivalent P/E of only 7.1. I think it is a temporary niche in the market that over time will level out to sector averages.

good luck all.

[mysteronz] 14/11/2020 19:26

Appreciate the NAV comment but in my view this should trade at a premium. The NAV looks back not forward, you can expect 20% NAV uplift a year so should factor that in, a bit like an EPS uptick each year

[p1nkfish] 13/11/2020 23:49

It had a tip in Nanalyze but also highlighted premium to NAV that makes it look a little rich in valuation.

[steeplejack] 30/10/2020 09:23

Berenberg reiterate buy recommendation and up target to £7 from 690p

[dogwalker] 29/10/2020 08:27

A very encouraging update this morning.

[p1nkfish] 28/10/2020 10:55

Hope not. I looked at the chart and sold out as there were multiple attempts at the recent high and latest attempt looked insipid on the volume front.

If it goes below placing by a decent degree I will look to rejoin.

Right now anything could happen including another massive sell-off before April 2021. Possibly taken down by USA stumbling leading to some panic or other.

Love this portfolio but could see big volatility.

[steeplejack] 28/10/2020 09:29

Back to the placing price of 555p.It'll interesting to see in this shaky market if that price holds.