Agronomics Limited: Difference between revisions
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=== Investing policy === | === Investing policy === | ||
The | The company will invest in opportunities within the life sciences sector, concentrating on, but not being limited to, environmentally friendly alternatives to the traditional production of meat and plant-based nutrition sources (“Clean Food”). The company will focus on investments that provide scalable and commercially viable opportunities. | ||
The | The company will invest in equity and equity related products in both quoted companies, which offer the benefits of liquidity, and in unquoted companies which offer the attraction of additional capital gains upon completion of a successful IPO. The company may also invest in shares of collective investment schemes with exposure to the life science sector and in long-term equity anticipation securities the underlying securities of which will be based on life science sector securities and/or indices relating to the life science sector. The Fund may invest in life science sector debt. Investments in life science sector debt shall not exceed 15 per cent. of the net asset value (NAV) of the company. | ||
The | The company will be ungeared. The company will be a passive investor. | ||
The | The company aims to deliver capital growth by realising capital gains when it considers that the valuation of individual investments looks to be excessive or, as is often the case in this sector, as a result of trade sales. | ||
Assets and investments will be held by the | Assets and investments will be held by the company directly or through the individual share custodians of the brokers used by the company to acquire the shares. | ||
Any material variation to the | Any material variation to the investing policy will require the approval of Shareholders at a general meeting of the company in accordance with the AIM rules for companies. | ||
=== Portfolio companies === | === Portfolio companies === | ||
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{| class="wikitable" | {| class="wikitable" | ||
|+ | |+ | ||
! | !Company | ||
! | !Product Focus | ||
! | !NAV Weighting | ||
|- | |||
|Liberation Labs | |||
|Contract Manufacturer for Precision Fermentation | |||
|11.4% | |||
|- | |||
|SuperMeat | |||
|Cultivated Poultry | |||
|9.7% | |||
|- | |||
|VitroLabs | |||
|Cultivated Leather | |||
|6.9% | |||
|- | |||
|Formo | |||
|Precision Fermentation - Dairy Proteins | |||
|5.7% | |||
|- | |||
|All G Foods | |||
|Precision Fermentation - Dairy Proteins | |||
|5.2% | |||
|- | |||
|Geltor | |||
|Precision Fermentation - Collagen | |||
|4.9% | |||
|- | |- | ||
|BlueNalu | |BlueNalu | ||
| | |Cultivated Bluefin Tuna | ||
| | |4.6% | ||
| | |- | ||
| | |Meatable | ||
| | |Cultivated Pork and Beef | ||
|4.3% | |||
|- | |||
|The EVERY Company | |||
|Precision Fermentation - Egg Proteins | |||
|4.3% | |||
|- | |||
|Onego Bio | |||
|Precision Fermentation - Egg Proteins | |||
|3.7% | |||
|- | |- | ||
| | |Solar Foods | ||
| | |Novel Air Protein | ||
| | |3.2% | ||
|- | |- | ||
| | |Good Dog Food | ||
|Cultivated Pet Food | |||
|3.1% | |||
| | |||
| | |||
|- | |- | ||
| | |The LIVEKINDLY Collective | ||
|Plant-based Meat | |||
|3.0% | |||
| | |||
| | |||
|- | |- | ||
| | |Clean Food Group | ||
|Fermentation - Palm Oil | |||
|2.3% | |||
| | |||
| | |||
|- | |- | ||
| | |GALY | ||
|Cultivated Cotton | |||
|1.9% | |||
| | |||
| | |||
|- | |- | ||
| | |Mosa Meat | ||
|Cultivated Beef | |||
|1.9% | |||
| | |||
| | |||
|- | |- | ||
| | |Tropic | ||
|Gene-Edited Crops | |||
|1.6% | |||
| | |||
| | |||
|- | |- | ||
|CellX | |CellX | ||
| | |Cultivated Chicken | ||
| | |1.4% | ||
| | |- | ||
| | |California Cultured | ||
| | |Cultivated Coffee and Cocoa | ||
|1.1% | |||
|- | |||
|Ohayo Valley | |||
|Cultivated Beef | |||
|0.8% | |||
|- | |||
|Bond Pet Foods | |||
|Precision Fermentation - Pet Food | |||
|0.5% | |||
|- | |||
|Rebellyous Foods | |||
|Plant-based Chicken and Equipment | |||
|0.2% | |||
|- | |||
|Legacy Investments | |||
|N/A | |||
|0.2% | |||
|} | |} | ||
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=== Total addressable market (TAM) === | === Total addressable market (TAM) === | ||
ccc | Here, the total addressable market (TAM) is defined as the global market for environmentally friendly alternatives to the traditional production of meat and plant-based nutrition sources, and based on a number of assumptions, it is estimated that the size of the market as of today (14th September 2023), in terms of revenue, is $ccc billion. | ||
=== Serviceable addressable market (SAM) === | === Serviceable addressable market (SAM) === | ||
Here, the serviceable available market (SAM) is defined as the US market for environmentally friendly alternatives to the traditional production of meat and plant-based nutrition sources, and based on a number of assumptions, it is estimated that the size of the market as of today (14th September 2023) is $ccc billion in terms of revenue. | |||
=== Serviceable obtainable market (SOM) === | |||
Here, the serviceable obtainable market (SOM) is defined as the US market for environmentally friendly alternatives to the traditional production of meat and plant-based nutrition sources, and based on a number of assumptions, it is estimated that the size of the market as of today (14th September 2023), in terms of revenue, is $ccc billion. | |||
== Financials == | |||
ccc | ccc | ||
Most recent | |||
ccc | ccc | ||
= | |||
Interims | |||
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Full-year results | |||
ccc | ccc | ||
{| class="wikitable" | |||
|+ | |||
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!2018 | |||
!2019 | |||
!2020 | |||
!2021 | |||
!2022 | |||
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== Risks == | == Risks == | ||
As with any investment, investing in Agronomics carries a level of risk. Overall, based on the Agronomics' | As with any investment, investing in Agronomics carries a level of risk. Overall, based on the Agronomics' adjusted beta (i.e. 1.40)<ref name=":4">Research shows that an investment has two main types of risks: 1) non-systematic and 2) systematic. Systematic risk is the risk related to the overall market, and non-systematic risk is the risk that's specific to an individual investment. Evidence shows that taking on non-systematic risk is inefficient, and it's, therefore, best to eliminate it; and in most cases, elimination is fairy easy to do [by holding a diversified portfolio of investments (i.e. around 15 investments)]. Accordingly, when assessing the riskiness of an investment, it’s best to look at the systematic risk only (i.e. ignore the non-systematic risk). A key measure of systematic risk is beta, and a main way to determine the riskiness of an investment is to compare the beta of the investment with the beta of the market, which is 1. For estimating an asset's beta, in terms of time period, and frequency of observations, the most common choice is five years of monthly data, yielding 60 observations. One study of U.S. stocks found support for five years of monthly data over alternatives. The beta value in a future period has been found to be on average closer to the mean value of 1.0, the beta of an average-systematic-risk security, than to the value of the raw beta. Because valuation is forward looking, it is logical to adjust the raw beta so it more accurately predicts a future beta.</ref>, the degree of risk associated with an investment in Agronomics is 'medium'. | ||
Here, to estimate the adjusted beta, we used the iShares MSCI World ETF to represent the market portfolio; and in terms of the time period and frequency of observations, we used five years of monthly data (i.e. 60 observations in total), which is supported by a study and is the most common choice. The beta value in a future period has been found to be on average closer to the mean value of 1.0, and because valuation is forward-looking, it is logical to adjust the raw beta so it more/most accurately predicts a future beta. In addition, here, we have assumed that for an investment to be considered 'medium' risk, it must have a beta value of between 0.5 and 1.5. Further information about the beta ratings can be found in the appendix section of this report. | Here, to estimate the adjusted beta, we used the iShares MSCI World ETF to represent the market portfolio; and in terms of the time period and frequency of observations, we used five years of monthly data (i.e. 60 observations in total), which is supported by a study and is the most common choice. The beta value in a future period has been found to be on average closer to the mean value of 1.0, and because valuation is forward-looking, it is logical to adjust the raw beta so it more/most accurately predicts a future beta. In addition, here, we have assumed that for an investment to be considered 'medium' risk, it must have a beta value of between 0.5 and 1.5. Further information about the beta ratings can be found in the appendix section of this report. |
Revision as of 15:25, 14 September 2023
Agronomics Limited is a principal investment firm specializing in investments in funds, equity and equity related products. The firm invests in quoted and unquoted companies. It prefers to invest in the alternative proteins company with a focus on cellular agriculture, nascent industry of modern foods, biopharma sector and will establish a portfolio of investments in biotechnology and biopharmaceutical companies. The firm may also invest in shares of collective investment schemes with exposure to the biopharma sector and in long-term equity anticipation securities the underlying securities of which will be based on biopharma sector securities and/or indices relating to the biopharma Sector. It may invest in biopharma sector debt, where investments shall not exceed 15 per cent of the net asset value of the company. Agronomics Limited was founded on May 3, 2011 and is based in Ramsey, Isle of Man.
Operations
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How did the idea behind the company come about?
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What's the mission of the company?
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Investing policy
The company will invest in opportunities within the life sciences sector, concentrating on, but not being limited to, environmentally friendly alternatives to the traditional production of meat and plant-based nutrition sources (“Clean Food”). The company will focus on investments that provide scalable and commercially viable opportunities.
The company will invest in equity and equity related products in both quoted companies, which offer the benefits of liquidity, and in unquoted companies which offer the attraction of additional capital gains upon completion of a successful IPO. The company may also invest in shares of collective investment schemes with exposure to the life science sector and in long-term equity anticipation securities the underlying securities of which will be based on life science sector securities and/or indices relating to the life science sector. The Fund may invest in life science sector debt. Investments in life science sector debt shall not exceed 15 per cent. of the net asset value (NAV) of the company.
The company will be ungeared. The company will be a passive investor.
The company aims to deliver capital growth by realising capital gains when it considers that the valuation of individual investments looks to be excessive or, as is often the case in this sector, as a result of trade sales.
Assets and investments will be held by the company directly or through the individual share custodians of the brokers used by the company to acquire the shares.
Any material variation to the investing policy will require the approval of Shareholders at a general meeting of the company in accordance with the AIM rules for companies.
Portfolio companies
ccc
Company | Product Focus | NAV Weighting |
---|---|---|
Liberation Labs | Contract Manufacturer for Precision Fermentation | 11.4% |
SuperMeat | Cultivated Poultry | 9.7% |
VitroLabs | Cultivated Leather | 6.9% |
Formo | Precision Fermentation - Dairy Proteins | 5.7% |
All G Foods | Precision Fermentation - Dairy Proteins | 5.2% |
Geltor | Precision Fermentation - Collagen | 4.9% |
BlueNalu | Cultivated Bluefin Tuna | 4.6% |
Meatable | Cultivated Pork and Beef | 4.3% |
The EVERY Company | Precision Fermentation - Egg Proteins | 4.3% |
Onego Bio | Precision Fermentation - Egg Proteins | 3.7% |
Solar Foods | Novel Air Protein | 3.2% |
Good Dog Food | Cultivated Pet Food | 3.1% |
The LIVEKINDLY Collective | Plant-based Meat | 3.0% |
Clean Food Group | Fermentation - Palm Oil | 2.3% |
GALY | Cultivated Cotton | 1.9% |
Mosa Meat | Cultivated Beef | 1.9% |
Tropic | Gene-Edited Crops | 1.6% |
CellX | Cultivated Chicken | 1.4% |
California Cultured | Cultivated Coffee and Cocoa | 1.1% |
Ohayo Valley | Cultivated Beef | 0.8% |
Bond Pet Foods | Precision Fermentation - Pet Food | 0.5% |
Rebellyous Foods | Plant-based Chicken and Equipment | 0.2% |
Legacy Investments | N/A | 0.2% |
Team[1]
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Board of directors
Non-executive chairman
Richard Reed was the co-Founder of Innocent Drinks, Europe’s largest and most environmentally sustainable juice company, successfully exited to Coca Cola in 2013 for $600m. Now co-founder of Jam Jar Investments, a consumer goods VC, with early-stage investments in category defining companies such as Deliveroo, Blue Bottle Coffee, Graze.com and Tails.com.
Executive chairman
Jim Mellon, based in the Isle of Man, is an author, entrepreneur and an investor with interests in a number of sectors. He has substantial real estate holdings in Germany and the Isle of Man, as well as holdings in private and public companies through his private investment company Burnbrae Group.
After leaving Oxford, where he studied Philosophy, Politics and Economics, he worked in Asia and the United States in two fund management companies, GT Management and Thornton Management (Asia) Limited, before founding Regent Pacific Group Limited in 1991, subsequently quoted on the Hong Kong Stock Exchange.
Mr. Mellon is the co-author of five books, all written with a view to identifying emerging thematic trends leading to investment opportunities. Notably, in his book Wake Up!, he forecast the global financial crisis of ’08-’09. His latest book played a small role in bringing ageing research into the mainstream, and lead to the formation of the company which is co-founder and Chairman, Juvenescence which is a leader in the field. Mr Mellon is a non-executive director of Condor Gold plc, the executive chairman of the board of Manx Financial Group plc, and the non-executive chairman of the board of SalvaRx Group Plc, all of which are listed on the Alternative Investment Market of the London Stock Exchange. He is also co-founder and Chairman of Regent Pacific Group Limited, (which is listed in Hong Kong), and a non-executive director of Portage Biotech Inc (which is dually listed on the Over the Counter Bulletin Board of NASDAQ of the United States and the Canadian Securities Exchange.
Non-executive director
Marisa Drew is the inaugural Chief Sustainability Officer (CSO) of Standard Chartered Bank Plc. She assumed this role in July 2022 and is responsible for setting the bank’s sustainability strategy and the delivery of the firm’s commitment to net zero carbon emissions by 2050 as well as overseeing the sustainable finance client-facing activities of the bank. At Standard Chartered, Ms Drew is a member of the Corporate, Commercial Investment Banking (CCIB) Management Team and the Global Reputational Risk Committee. She also serves as Chair of the Sustainability Forum and Co-Chair of the CCIB Diversity and Inclusion Council.
She previously held the CSO role for Credit Suisse and also held the role of CEO of the Sustainability Strategy, Advisory & Finance Group (SSAF) since 2020. Ms Drew Co-Chaired the Sustainability Leaders Committee and served on the ESG Steering Committee, the Climate Risk Strategy Steering Committee and the UK Reputational Risk Committee of the bank.
Before this, Ms Drew ran several businesses for Credit Suisse over her 19 years at the bank, including EMEA Investment Banking and Capital Markets. Ms Drew also worked for Merrill Lynch for eleven years and relocated to London in 1999 where she was instrumental in the formation of their European Leveraged Finance Group. Prior to joining Merrill Lynch, Ms Drew worked for a private equity firm and the investment bank, Kidder Peabody.
Ms Drew serves as a Non-executive Director (NED) of Liberty Global Plc, the publicly listed telecoms and broadband operator, and was a NED for the Swiss publicly-listed telecoms company, Sunrise AG.
She further serves on the advisory boards of numerous leadership, sustainability, humanitarian, environmental and civil society organisations. She sits on the Advisory Board of the City of London Corporation, the Aspen Institute UK and the Milken Institute Center for Strategic Philanthropy. She is also a member of the FCA’s Markets Practitioner Panel and served on several High Level Working Groups (HLGs) sponsored by the World Economic Forum and the UN, including as co-chair of the HLG for Humanitarian Aid and the Oceans Panel. Ms Drew’s external activities also include the EMEA Advisory Board for the UK charity, Room-to-Read.
Ms Drew received a BA in Finance and Marketing with distinction from the University of Virginia’s McIntire School of Commerce in 1986 and an MBA with distinction from the University of Pennsylvania’s Wharton School in 1992.
Non-executive director
David Giampaolo is the founder and Chief Executive of Pi Capital. David previously founded, built up and sold several businesses and health club chains in the US and Europe. He has financial interests in several other businesses and industries and has been involved as an investor, advisor and board member of some of the largest and most successful health & fitness companies in the world including Fitness First, 24 Hour Fitness, Zumba Fitness and SARVA (India’s largest chain of yoga, mindfulness and beyond).
He is on the board of Coalition for Inclusive Capitalism, Chairman of Gousto and is a senior advisor to AMG (Affiliated Managers Group, Inc.) and BC Partners. David is a member of YPO and CEO global business organisations and a trustee of Speakers4Schools.org and Pro BonoEconomics.
Finance director
Denham Eke is the Managing Director of Burnbrae Group Limited, a private international asset management company. He began his career in stockbroking with Sheppards & Chase before moving into corporate planning for Hogg Robinson plc, a major multinational insurance broker. He is a director of many years’ standing of both public and private companies involved in the financial services, property, mining, and manufacturing sectors.
He is Chairman of Webis Holdings PLC, Co-Chairman of Billing Services Group Limited, and Chief Executive Officer of Manx Financial Group PLC – all quoted on the London AIM market.
Operations Team
Co-founder
Anthony Chow began his career working for ANZ Banking Group in Sydney Australia, where he worked as an analyst for four years in the corporate banking, leverage finance and private equity teams before moving to London in 2007 to work for Burnbrae Group. He has spent the past 15 years working directly with Jim Mellon, looking closely at investments within the field of biotech and pharma, inclusive of longevity. In 2018, he co-founded Agronomics alongside Jim Mellon. Anthony holds a Bachelor of Economics and Finance from The University of Sydney and a Post Graduate Diploma in Accounting from Macquarie University. He was awarded the CFA designation in 2010.
Anthony sits on the board or is a board observer to a number of cellular agriculture portfolio companies, including Formo, VitroLabs, California Cultured, Onego Bio, SuperMeat, All G Foods, HydGene and Meatable.
Principal
Laura Turner joined the team in July 2019. She holds a M.Chem Chemistry degree from the University of Oxford, and spent time during her fourth year masters project working in the Chemical Biology department at UC Berkeley, California, focused on the genetic modification of aldolase enzymes. This technology is identical to the precision fermentation tools utilised by companies within the field of cellular agriculture to produce valuable animal proteins via the genetic engineering of microbes. Laura conducts sector research, assists in due diligence of prospective companies and monitors deal flow amongst many other things.
Senior Associate
Hamood Al Fanna has a MBS in Finance from Massey University, BSc in Biotechnology from Sultan Qaboos University. Conducted research on production of cellulase from thermophilic bacteria. Over 5 years experience in venture capital, main focus in Biotechnology and Healthcare.
Head of investor relations
Melissa Moon joined Agronomics in January 2023 as Head of Investor Relations and Corporate Communications.
Previously Melissa held the post of Head of Marketing and Corporate Communications for Berkeley Energia, a Spanish uranium mining company, listed on LSE/ASX/BME which raised over $100 million of capital.
As an experienced Investor Relations Consultant in the Natural Resources sector, Melissa oversaw marketing strategy and corporate communications for numerous London and Australian listed companies – including the AIM IPO of Trident Royalties and the ASX IPO of GreenTech Metals.
Melissa holds an LLB Law (Hons) and the Certificate in Investor Relations from The IR Society.
Market
Total addressable market (TAM)
Here, the total addressable market (TAM) is defined as the global market for environmentally friendly alternatives to the traditional production of meat and plant-based nutrition sources, and based on a number of assumptions, it is estimated that the size of the market as of today (14th September 2023), in terms of revenue, is $ccc billion.
Serviceable addressable market (SAM)
Here, the serviceable available market (SAM) is defined as the US market for environmentally friendly alternatives to the traditional production of meat and plant-based nutrition sources, and based on a number of assumptions, it is estimated that the size of the market as of today (14th September 2023) is $ccc billion in terms of revenue.
Serviceable obtainable market (SOM)
Here, the serviceable obtainable market (SOM) is defined as the US market for environmentally friendly alternatives to the traditional production of meat and plant-based nutrition sources, and based on a number of assumptions, it is estimated that the size of the market as of today (14th September 2023), in terms of revenue, is $ccc billion.
Financials
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Most recent
ccc
Interims
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Full-year results
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2018 | 2019 | 2020 | 2021 | 2022 | |
---|---|---|---|---|---|
Risks
As with any investment, investing in Agronomics carries a level of risk. Overall, based on the Agronomics' adjusted beta (i.e. 1.40)[2], the degree of risk associated with an investment in Agronomics is 'medium'.
Here, to estimate the adjusted beta, we used the iShares MSCI World ETF to represent the market portfolio; and in terms of the time period and frequency of observations, we used five years of monthly data (i.e. 60 observations in total), which is supported by a study and is the most common choice. The beta value in a future period has been found to be on average closer to the mean value of 1.0, and because valuation is forward-looking, it is logical to adjust the raw beta so it more/most accurately predicts a future beta. In addition, here, we have assumed that for an investment to be considered 'medium' risk, it must have a beta value of between 0.5 and 1.5. Further information about the beta ratings can be found in the appendix section of this report.
The key risks can be found below. For us, currently, the biggest risk to the valuation of the company relates to ccc.
Valuation
Absolute Valuation
What's the expected return of an investment in the company?
The Stockhub users estimate that the expected return of an investment in the company over the next five years is ccc%, which equates to an annual return of ccc%. In other words, an £1,000 investment in the company is expected to return £ccc in five years time. The assumptions used to estimate the return figure can be found in the table below.
Assuming that a suitable return level over five years is ccc% per year or less, and Pantheon Resources achieves its expected return level (of ccc%), then an investment in the company is considered to be an 'suitable' one.
What are the assumptions used to estimate the return?
ccc
Sensitivity analysis
The main inputs that result in the greatest change in the expected return of the Pantheon Resources investment are, in order of importance (from highest to lowest):
- The size of the total addressable market (the default size is $ccc);
- Pantheon Resources peak market share (the default share is ccc%); and
- The discount rate (the default time-weighted average rate is ccc%).
The impact of a 50% change in those main inputs to the expected return of the Pantheon Resources investment is shown in the table below.
Main input | 50% worse | Unchanged | 50% better |
---|---|---|---|
The discount rate | ccc% | ccc% | ccc% |
The size of the total addressable market | ccc% | ccc% | ccc% |
Pantheon Resources peak market share | ccc% | ccc% | ccc% |
Appendix
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Transactions
Name | Funding type | Funded company | Funding amount raised (USD) | Investment | Funding round date | Funding round investor |
---|---|---|---|---|---|---|
Number of Securities in Issue
The company’s issued share capital consists of 993,152,034 fully paid Ordinary Shares of £0.000001 each (‘Ordinary Shares’), each share having equal voting rights.
The Company does not hold any Ordinary Shares in treasury and therefore the total number of Ordinary Shares with voting rights is 993,152,034.
(Last updated: 31st July 2023)
Name | Number of Ordinary Shares | % of Share Capital |
---|---|---|
Jim Mellon[3] | 154,553,366 | 15.56% |
Hargreaves Lansdown (Nominees) | 86,850,033 | 8.74% |
BlackRock, Inc. | 62,133,460 | 6.24% |
Canaccord Genuity Wealth Management | 54,970,000 | 5.53% |
Interactive Investor Services | 50,755,773 | 5.11% |
JPMorgan Chase Bank | 39,239,575 | 3.95% |
Jupiter Asset Management | 23,069,979 | 2.32% |
As of 31st July 2023.
Name | Number of Ordinary Shares | % of Share Capital |
---|---|---|
Jim Mellon | 154,553,366 | 15.56% |
Richard Reed[4] | 6,354,412 | 0.64% |
David Giampaolo | 2,434,783 | 0.25% |
Denham Eke | 739,390 | 0.07% |
Cost of equity
Input | Input value | Additional information |
---|---|---|
Risk-free rate (%) | 4.297% | Here, the risk free rate is the US 30 year treasury bond, and is calculated as at 3rd September 2023. Research suggests that for the risk-free rate, it's best to use one that has the same or similar maturity to the estimated remaining lifespan of the company. Here, we have assumed that the estimated lifespan of the company is 30 years years or longer, so we have used the longest maturity, which is 30 years. |
Beta | 1.40 | Here, to estimate the adjusted beta, we used the iShares MSCI World ETF to represent the market portfolio; and in terms of the time period and frequency of observations, we used five years of monthly data (i.e. 60 observations in total), which is supported by a study and is the most common choice. The beta value in a future period has been found to be on average closer to the mean value of 1.0, and because valuation is forward-looking, it is logical to adjust the raw beta so it more/most accurately predicts a future beta. |
Equity risk premium (%) | 7.98% | Research suggests that for the region of equity risk premium, it's best to use one that is the same or similar to the region of the beta market portfolio. Here, the region of the beta market portfolio is the world/global, so we have used the world/global region for the equity risk premium, and is calculated as at 5th January 2023. |
Cost of equity (%) | 15.469% | Cost of equity = Risk-free rate + Beta x Equity risk premium. |
Relative valuation
As noted earlier in this report, research suggests that in terms of estimating the expected return of an investment over a period of 12-months or more, the approach that is more accurate is the discounted cash flow approach, so that's the approach that Stockhub suggests using to determine the estimated value of the company (the valuation based on the discounted cash flow approach can be found in the valuation section of this report); nevertheless, for completeness purposes, separately, the valuation of the company is also estimated using the relative valuation approach.
What's the expected return of an investment in Pantheon Resources using the relative valuation approach?
Stockhub estimates that the expected return of an investment in Agronomics over the next 12-months is ccc%. In other words, an £1,000 investment in the company is expected to return £ccc in one year time. The assumptions used to estimate the return figure can be found in the table below.
What are the assumptions used to estimate the return figure?
ccc
Sensitivity analysis
The main inputs that result in the greatest change in the expected return of the Agronomics investment are, in order of importance (from highest to lowest):
- The compound annual growth rate of the Agronomics book value (the default figure is ccc%);
- The price-to-book value multiple (the default multiple cccx); and
- Agronomics most recent book value figure (the default figure is $ccc).
The impact of a 50% change in those main inputs to the expected return of the Agronomics investment is shown in the table below.
Main input | 50% worse | Unchanged | 50% better |
---|---|---|---|
The compound annual growth rate of the Agronomics book value between one year ahead and the most recent value | 113% | 185% | 266% |
The price-to-book value multiple | 42% | 185% | 327% |
Agronomics most recent book value figure | 42% | 185% | 327% |
Beta risk profile
Beta value | Risk rating |
---|---|
0 to 0.50 | Low |
0.50 to 1.50 | Medium |
1.50 to 3.00 | High |
3.00 and above | Extremely high |
Agronomics beta calculation
Date | iShares MSCI World ETF unit price (USD) | Agronomics share price (GBP) | iShares MSCI World ETF unit price change (%) | Agronomics share price change (%) |
---|---|---|---|---|
01/10/2018 | 85.25 | 3.25 | ||
01/11/2018 | 86.21 | 3.25 | 1.13% | 0.00% |
01/12/2018 | 78.87 | 3.45 | -8.51% | 6.15% |
01/01/2019 | 84.96 | 3.65 | 7.72% | 5.80% |
01/02/2019 | 87.49 | 4.15 | 2.98% | 13.70% |
01/03/2019 | 88.79 | 4.35 | 1.49% | 4.82% |
01/04/2019 | 92.09 | 4.5 | 3.72% | 3.45% |
01/05/2019 | 86.76 | 4.5 | -5.79% | 0.00% |
01/06/2019 | 91.02 | 7.75 | 4.91% | 72.22% |
01/07/2019 | 91.86 | 8.375 | 0.92% | 8.06% |
01/08/2019 | 89.84 | 9.25 | -2.20% | 10.45% |
01/09/2019 | 91.78 | 6.75 | 2.16% | -27.03% |
01/10/2019 | 94.12 | 5.75 | 2.55% | -14.81% |
01/11/2019 | 96.76 | 5.825 | 2.80% | 1.30% |
01/12/2019 | 98.78 | 9.25 | 2.09% | 58.80% |
01/01/2020 | 97.73 | 7.875 | -1.06% | -14.86% |
01/02/2020 | 89.67 | 6.125 | -8.25% | -22.22% |
01/03/2020 | 77.93 | 5.25 | -13.09% | -14.29% |
01/04/2020 | 86.36 | 6.85 | 10.82% | 30.48% |
01/05/2020 | 90.7 | 7.35 | 5.03% | 7.30% |
01/06/2020 | 92.14 | 5.25 | 1.59% | -28.57% |
01/07/2020 | 96.65 | 5 | 4.89% | -4.76% |
01/08/2020 | 102.96 | 4.85 | 6.53% | -3.00% |
01/09/2020 | 99.52 | 5 | -3.34% | 3.09% |
01/10/2020 | 96.53 | 5.5 | -3.00% | 10.00% |
01/11/2020 | 108.94 | 7.1 | 12.86% | 29.09% |
01/12/2020 | 112.41 | 12 | 3.19% | 69.01% |
01/01/2021 | 111.49 | 13 | -0.82% | 8.33% |
01/02/2021 | 114.27 | 17.2 | 2.49% | 32.31% |
01/03/2021 | 118.49 | 28.3 | 3.69% | 64.53% |
01/04/2021 | 123.61 | 28.8 | 4.32% | 1.77% |
01/05/2021 | 125.6 | 23.7 | 1.61% | -17.71% |
01/06/2021 | 126.57 | 24 | 0.77% | 1.27% |
01/07/2021 | 128.83 | 23 | 1.79% | -4.17% |
01/08/2021 | 132.02 | 19.1 | 2.48% | -16.96% |
01/09/2021 | 126.46 | 27.5 | -4.21% | 43.98% |
01/10/2021 | 133.84 | 28 | 5.84% | 1.82% |
01/11/2021 | 131.1 | 24.5 | -2.05% | -12.50% |
01/12/2021 | 135.32 | 22.5 | 3.22% | -8.16% |
01/01/2022 | 128.32 | 18 | -5.17% | -20.00% |
01/02/2022 | 124.58 | 17.8 | -2.91% | -1.11% |
01/03/2022 | 128.16 | 19.2 | 2.87% | 7.87% |
01/04/2022 | 117.42 | 17.9 | -8.38% | -6.77% |
01/05/2022 | 117.94 | 19 | 0.44% | 6.15% |
01/06/2022 | 106.88 | 16 | -9.38% | -15.79% |
01/07/2022 | 115.57 | 17.64 | 8.13% | 10.25% |
01/08/2022 | 110.28 | 17.4 | -4.58% | -1.36% |
01/09/2022 | 99.95 | 12.5 | -9.37% | -28.16% |
01/10/2022 | 107.42 | 15 | 7.47% | 20.00% |
01/11/2022 | 115.44 | 14.5 | 7.47% | -3.33% |
01/12/2022 | 109.25 | 11.75 | -5.36% | -18.97% |
01/01/2023 | 117.01 | 13.6 | 7.10% | 15.74% |
01/02/2023 | 113.98 | 12.25 | -2.59% | -9.93% |
01/03/2023 | 117.67 | 10.9 | 3.24% | -11.02% |
01/04/2023 | 119.79 | 11.25 | 1.80% | 3.21% |
01/05/2023 | 118.6 | 10.25 | -0.99% | -8.89% |
01/06/2023 | 124.52 | 10.4 | 4.99% | 1.46% |
01/07/2023 | 128.54 | 10.15 | 3.23% | -2.40% |
01/08/2023 | 125.7 | 9.7 | -2.21% | -4.43% |
14/09/2023 | 124.52 | 10 | -0.94% | 3.09% |
Beta type | Agronomics |
---|---|
Beta | 1.60 |
Adjusted beta | 1.40 |
References
- ↑ https://agronomics.im/board-and-operations/
- ↑ Research shows that an investment has two main types of risks: 1) non-systematic and 2) systematic. Systematic risk is the risk related to the overall market, and non-systematic risk is the risk that's specific to an individual investment. Evidence shows that taking on non-systematic risk is inefficient, and it's, therefore, best to eliminate it; and in most cases, elimination is fairy easy to do [by holding a diversified portfolio of investments (i.e. around 15 investments)]. Accordingly, when assessing the riskiness of an investment, it’s best to look at the systematic risk only (i.e. ignore the non-systematic risk). A key measure of systematic risk is beta, and a main way to determine the riskiness of an investment is to compare the beta of the investment with the beta of the market, which is 1. For estimating an asset's beta, in terms of time period, and frequency of observations, the most common choice is five years of monthly data, yielding 60 observations. One study of U.S. stocks found support for five years of monthly data over alternatives. The beta value in a future period has been found to be on average closer to the mean value of 1.0, the beta of an average-systematic-risk security, than to the value of the raw beta. Because valuation is forward looking, it is logical to adjust the raw beta so it more accurately predicts a future beta.
- ↑ Shares are held directly by Jim Mellon and through Galloway Limited, which is indirectly wholly owned by Jim Mellon, Denham Eke is a director of Galloway Limited
- ↑ Richard Reed’s shares are held via Reepa Limited.