LON:SUPP | SUPP | Cheshire

13th Jun '20 by Cheshire

38 comments 1988 reads

Wonder any other member holds SUPP and what do you think its prospect is ?

I bought when woodford launched it and wonder any point to hold on to it or sell it .

Many thanks for your opinion

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Cheshire

Premium Member

38 comments

Momoko Miyamoto

14th Jun '20

I’ve held this since IPO and was looking at cutting my losses but it’s on a huge discount to NAV and some of the large position portfolio companies e.g. Benevolent AI and Oxford Nanopore have done very well in the corona-crisis and may see valuation uplifts when they announce trading updates. Have a watch of the recent Schroders presentation:

https://www.brighttalk.com/web...

Picking through Woodford’s wreckage is not a bad investment theme as there is some great value to be had still.

turbo

8th Apr '21

7 April RNS provides unaudited Net Asset Value as at 31 December 2020 of £318m or 35.01 pence per share as at 31 December 2020, representing a decrease of 20% relative to the NAV as at 30 September 2020 (£398m or 43.84 pence per share).

Outlook statement

"The scale of this reduction to the NAV is disappointing to both the Board and the Portfolio Manager, however we would highlight the significant progress that has been achieved post-period end which will result in the Company's debt position being significantly reduced and expected to be fully paid down with proceeds received from the Kymab sale. In addition, the Company has refinanced its credit facility to place it in a strong financial position enabling the Portfolio Manager the opportunity to improve the portfolio's diversification going forward."

I bought into this to have exposure to Nanopore, what do people think, opportunity to add or perhaps bail out?

gus 1065

8th Apr '21

Hi turbo.

I have a residual position in Schroder Uk Public Private Trust (LON:SUPP) buried somewhere in my ISA from its Woodford days - heavily underwater. I’m inclined to let it run as a punt on Oxford Nanopore and some of the other mainly Bio/Tech legacy positions. Not sure I’m in the market to top up but will monitor the situation. Here’s why I’m holding on ......

Back of a fag packet calculation - very rough and ready but gives an idea of possible impact of a successful exit from the Oxford Nanopore investment. Approximately 18% of the SUPP NAV as of Dec 2020 was attributed to the book valuation of Oxford Nanopore (“ON”) in which, I believe, SUPP hold 4% of the equity.

This equates to about £57m (.18 x £318m) on the SUPP books - giving a gross current book value to all of ON of (£(57/.04) = £1.425 billion. ON confirmed on March 30th its intention to IPO in the latter part of 2021. Plenty of hype about possible valuations running from £5bn to £22bn or more. This would imply an increase in the Schroder Uk Public Private Trust (LON:SUPP) NAV of £140m (4% of £5bn - £1.425bn) to £820m (4% of £22bn - £1.425bn) i.e. an increase to £458m £318+140m) to £1,138m (£318+820m) i.e. 44% to 257%.

This would imply an approximate price per Schroder Uk Public Private Trust (LON:SUPP) share of 46p to 114p compared to today’s c.32p close. Think that makes sense - not an exact science but an idea of the direction and possible magnitude of travel.

Gus.

turbo

8th Apr '21

Thanks for that interesting reply gus. By the way, the RNS does give some more detail as to the reasons for the drop in NAV,

JohnEustace

8th Apr '21

I added to my SUPP position on the news of the Oxford Nanopore float but the RNS yesterday is a reminder of the amount of dross in the old Woodford holdings along with the Nanopore jewel. They clearly weren't as aggressively written down as I hoped. I'm expecting the low end of the hyped numbers in the ON IPO - maybe £3-4bn. The question is how much is left when that is gone.

I also have ON exposure through Ip (LON:IPO) and am wondering if that's a safer bet.

Momoko Miyamoto

9th Apr '21

The NAV writedown does mean that Schroders gets a lower annual fee and has to work harder for the performance fee. I'm surprised about the Rutherford writedown as they've had some positive news recently with NHS contracts etc. I've held on due to the Nanopore holding but I've only bought Ip (LON:IPO) since 2020 to get further exposure to Nanopore.

timarr

9th Apr '21

I don't know if it's just me but the April 7th announcement doesn't appear on either investegate or the LSE platform? Which I don't think I've ever seen before.

The write downs expose how weak the fund's position has been - for instance, they've had to accept dilution on the Atom Bank stake at a point in the cycle where you'd think the valuation is at its lowest. Similarly they've not been able to support Rutherford Health (noting that I don't know if they would want to anyway) who recently did a £40 million fundraise backed by their freehold properties, presumably because they couldn't get funding any other way. In fact I think both Atom Bank and Rutherford ought to do OK from here.

Meanwhile Carrick and Mission were revalued because SUPP chose to take lower valuations in order to get the cash out of Rosetta - which they needed to get the debt levels down. They need to get the debt levels down so they can actually start to do some proper management, and start funding portfolio companies and some new stuff.

It's all a grim echo of the Woodford legacy. The only saving grace is that the closed end structure meant redemptions didn't take them under - which leads to, as gus 1065 points out, the reasonable hope that the Oxford Nanopore float will see better days ahead.

timarr

gus 1065

9th Apr '21

Announcement today (9/4/21) of realisation of Kymab shares disposal to Sanofi. Not sure if it is already in the numbers/market appraisal of Schroder Uk Public Private Trust (LON:SUPP) NAV but here are the headline details from the RNS.

“The Company's holding in Kymab has been revalued to £70m reflecting the terms of the agreed sale generating a fair value gain of £52m when compared with the holding value of £18m as at 30 September 2020.”

Gus.

timarr

9th Apr '21

Announcement today (9/4/21) of realisation of Kymab shares disposal to Sanofi. Not sure if it is already in the numbers/market appraisal of Schroder Uk Public Private Trust (LON:SUPP) NAV

This was the exact wording in the NAV update on the 7th April so already included in the NAV.

timarr

GrahamF

9th Apr '21

The mention of Industrial Heat in the RNS is a reminder that Woodford and his team were investing in tech they really had little understanding of. With the many biotech investments, Northwest Biotherapeutics, Circassian, etc I doubt that they were any better at choosing investments than any of us might be.

With many of the investments the outcome may be rather binary. So, how to value a binary outcome, 0.5? If Industrial Heat has not been written down to near zero value already it suggests to me that there may still be more write downs to come.

I held for a short while after launch until I realised that Woodford was basically taking far too many very risky biotech punts without any successful previous track record in this area. If I was still invested here I think that I would treat the losses so far as sunk but sell out as soon as Nanopore has come to market as that could well be the high point.

JohnEustace

9th Apr '21

Hi Tim,

I don’t see the RNS on investegate either. Which is annoying as I’m coming at things a day or so later than I would have done and trying to catch up.

I’ve sold. I’ll take a more considered look over the weekend but there are other opportunities that I’ll likely use the cash for.

abtan

9th Apr '21

Schroder Uk Public Private Trust (LON:SUPP)
Would someone be kind enough to link the RNS' from April 7th and 9th?

I can't find them anywhere, even on the SUPP website.

Cheers

JohnEustace

9th Apr '21

Abtan, I found it here on this site on the News tab in the stock report

abtan

9th Apr '21

Well that's embarrassing.

I wonder why it is appearing nowhere else, not even on the company's website?

Sorry to waste your time, and thank you!

JohnEustace

9th Apr '21

No problem - the lack of news where I expected left me flustered as well!

timarr

9th Apr '21

Hi John

I don’t see the RNS on investegate either. Which is annoying as I’m coming at things a day or so later than I would have done and trying to catch up.

Weird isn't it?

I'm actually in profit and I was fully expecting the Atom Bank write down (it's public domain) and half expecting the Rutherford one. Part of the reason for the write downs is SUPP's inability to provide funding - Rutherford has had to borrow against its freeholds to fund growth despite the obvious post-pandemic opportunity.

The kicker here is all about Oxford Nanopore. Beyond that it comes down to confidence in the ability of the Schroders team to manage their way out of the mess. From here the portfolio is best viewed in VC mode - the odd spectacular success can more than make up for a whole bunch of failures.

I do think this shows exactly what a fiasco the whole Woodford farrago was. That the man has the chutzpah to come back for more cash perhaps indicates the lack of self-awareness that lay behind the meltdown in the first place. Beware star managers, they come bearing begging bowls.

timarr

JohnEustace

9th Apr '21

Hi Tim,

From here the portfolio is best viewed in VC mode - the odd spectacular success can more than make up for a whole bunch of failures.

I'm sure that's correct and in principle I'm perfectly happy with that. But I can't get over them attaching any portfolio value whatsoever to Industrial Heat. I'm sure Link Solutions will have followed a defensible process etc. but it fails my smell test. It was that holding that made me sell out of WPCT at a profit after they published their first holdings spreadsheet and it's made me take my sliver of profit today as well.

Of course I could be making a mistake but then I often do.

abtan

9th Apr '21

Hi Gus

To confirm, I have the same workings as you for SUPP's possible ONT-inspired upside, with an upside range of +7% to +230%.

No position for me, though the downside from here does look limited.

Cheers

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Cheshire

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