The era of cheap money and financial engineering has now past. This is one occasion where past performance is highly likely not to have any bearing on the immediate future. Valuations will be determined by actual financial performance and strength of balance sheet, not the momentum of money pumping asset prices ever higher. While manufacturing is outsourced to the cheapest denominator. Resulting in ever widening profit margins.

Seems that share trading volume activity on the LSE is currently down nearly 25% on March 2022. Appears that liquidity is in indeed beginning to dry up. Reducing market volatility in the process. .

Yes, could just be a capitulation with big bounce to come, and you have managed funds before so presumably have a better handle on all this. I perhaps change my holdings around the edges a little too much, but generally not what I regard as my 'core' positions. This makes it psychologically harder - I sold current holdings at about breakeven in the end and have taken profit in the past - did sell briefly over the Covid drop, back in for 21 and never say never - but I think I just need to free myself of any sense of loyalty - did the same with SMT/FS/LTGE and that worked ok. As I say, for the moment I cannot see how the reason most people would have purchased RCP will re-establish itself easily - the premium perhaps related to the steady stewardship - but this has perhaps gone awol for the moment? At the end of the day who knows? I think I have done what feels right for me, and so be it.

The current climate of possibly higher interest rates to come and probably higher for longer due to sticky inflation just doesn’t look well for any PE investments. Don’t think the bottom is in yet for RCP.

I want to like RCP as a long term core but can't anymore. I have tailgated some of MR GL's discount trades in the past.

I looked through the holdings and was surprised that so much of the PE is actually VC - so very early stage and the direct PE investments are not household names - I had not heard of any of them.

So discount wise. The 40% of VC could be worth half (like other LPE's) so that is 20% discount. The rest of the funds (40%) all sound quite expensive so we are fees on fees in a fund of fund style. That at best would be a 5% discount (maybe 10%) so that is another say 3% overall discount.

This gives a worse case (but plausible) discount of 23% say.

But the problem is that the 60% non-VC is probably also over-valued (like most markets) so I would expect that side of the NAV to decline over the coming year and I have not attached any discount to that. So we could see further SP falls.

The VC funds probably will never get properly valued in this cycle so a largish discount will apply until we are out the otherside and things start getting floated/sold at good prices.

I think this would be a brilliant discount pay in normal markets but in over-valued markets it could take a long time to come good. Maybe better just to bet on the discount on HVPE? Might be a better risk/reward ratio?

I have my RCP money on BH Marco now - not a discount play but expect it to profit from this current market position unwinding.

I will most likely be wrong now and MR GL will make enough to buy a new 911 next month....

RIT CAPITAL PARTNERS PLC (LEI: P31Q1NLTW35JJGHA4667)

20 February 2023

Net Asset Value

The unaudited diluted net asset value of RIT Capital Partners plc as at 31 January 2023 (with debt at fair value) was 2,440p per £1 ordinary share (31 December 2022: 2,388p).