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What's Up With GSV Capital?
The development-stage company has been under pressure.
Michael Comeau    

This article was originally posted on the Buzz & Banter, where subscribers can follow over 30 professional traders as they share their ideas in real time. Want access to the Buzz plus unlimited market commentary? Click here to learn more about MVPRO+.

Minyanville reader Peter writes:

Michael,

What is happening with GSV Capital (NASDAQ:GSVC)? Why is its price so disconnected from the NAV?

GSV Capital is a closed-end investment fund focused on acquiring stakes in high-growth public and private technology companies, which isn't exactly an ideal mix for the current market environment.

I last took a position on March 5 but was stopped out for a loss as the market went risk-off, driving down hot momentum stocks like FireEye (NASDAQ:FEYE) and Splunk (NASDAQ:SPLK).

The ugly market action put a hit on GSV Capital's portfolio, and its heavy concentration in Twitter (NYSE:TWTR) hasn't helped.

Twitter is down 37% since it reported earnings in February, and down 8% since its first trading day on November 7, 2013.

Last year, GSV Capital was largely seen as a way to get into Twitter pre-IPO, and that was a great trade -- for a while.

As you can see in this chart, the smart money was selling GSVC as Twitter went public. (Twitter is represented by the purple line.)


Click to enlarge

This year, investors view GSVC as an extreme high-beta tech fund -- and that's what's creating the disconnect from NAV.

At year-end, GSVC's NAV per share was $14.91, and based on recent market prices, it's still above $13.

GSVC is technically trading at a 30%+ discount to NAV, but because it owns illiquid stakes in private companies, the market sort of slaps on an extra discount to account for associated uncertainty.

Some of GSVC's private holdings -- like Spotify, Dropbox, Palantir, and Lyft -- could very well end up being blockbuster IPOs or acquisition targets.

But for now, investors are running straight away from high-beta tech stocks, which results in diminishing expectations for the IPO market.

Even Facebook (NASDAQ:FB), which reported blockbuster earnings last week, is having trouble holding a rally.

Investors may also be fearful of holding GSVC ahead of Twitter's first-quarter earnings report due Tuesday, given the beating the stock took last time around.

Ultimately, buying GSVC is a bet that high-beta momentum stocks make a comeback, and it could snap back extremely hard in that type of scenario.

Until then, it will, at best, tread water as risk remains out of favor.

Twitter: @MichaelComeau

Follow the markets all day every day with a FREE 14 day trial to Buzz & Banter. Over 30 professional traders share their ideas in real-time. Learn more.

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No positions in stocks mentioned.
The information on this website solely reflects the analysis of or opinion about the performance of securities and financial markets by the writers whose articles appear on the site. The views expressed by the writers are not necessarily the views of Minyanville Media, Inc. or members of its management. Nothing contained on the website is intended to constitute a recommendation or advice addressed to an individual investor or category of investors to purchase, sell or hold any security, or to take any action with respect to the prospective movement of the securities markets or to solicit the purchase or sale of any security. Any investment decisions must be made by the reader either individually or in consultation with his or her investment professional. Minyanville writers and staff may trade or hold positions in securities that are discussed in articles appearing on the website. Writers of articles are required to disclose whether they have a position in any stock or fund discussed in an article, but are not permitted to disclose the size or direction of the position. Nothing on this website is intended to solicit business of any kind for a writer's business or fund. Minyanville management and staff as well as contributing writers will not respond to emails or other communications requesting investment advice.

Copyright 2011 Minyanville Media, Inc. All Rights Reserved.
What's Up With GSV Capital?
The development-stage company has been under pressure.
Michael Comeau    

This article was originally posted on the Buzz & Banter, where subscribers can follow over 30 professional traders as they share their ideas in real time. Want access to the Buzz plus unlimited market commentary? Click here to learn more about MVPRO+.

Minyanville reader Peter writes:

Michael,

What is happening with GSV Capital (NASDAQ:GSVC)? Why is its price so disconnected from the NAV?

GSV Capital is a closed-end investment fund focused on acquiring stakes in high-growth public and private technology companies, which isn't exactly an ideal mix for the current market environment.

I last took a position on March 5 but was stopped out for a loss as the market went risk-off, driving down hot momentum stocks like FireEye (NASDAQ:FEYE) and Splunk (NASDAQ:SPLK).

The ugly market action put a hit on GSV Capital's portfolio, and its heavy concentration in Twitter (NYSE:TWTR) hasn't helped.

Twitter is down 37% since it reported earnings in February, and down 8% since its first trading day on November 7, 2013.

Last year, GSV Capital was largely seen as a way to get into Twitter pre-IPO, and that was a great trade -- for a while.

As you can see in this chart, the smart money was selling GSVC as Twitter went public. (Twitter is represented by the purple line.)


Click to enlarge

This year, investors view GSVC as an extreme high-beta tech fund -- and that's what's creating the disconnect from NAV.

At year-end, GSVC's NAV per share was $14.91, and based on recent market prices, it's still above $13.

GSVC is technically trading at a 30%+ discount to NAV, but because it owns illiquid stakes in private companies, the market sort of slaps on an extra discount to account for associated uncertainty.

Some of GSVC's private holdings -- like Spotify, Dropbox, Palantir, and Lyft -- could very well end up being blockbuster IPOs or acquisition targets.

But for now, investors are running straight away from high-beta tech stocks, which results in diminishing expectations for the IPO market.

Even Facebook (NASDAQ:FB), which reported blockbuster earnings last week, is having trouble holding a rally.

Investors may also be fearful of holding GSVC ahead of Twitter's first-quarter earnings report due Tuesday, given the beating the stock took last time around.

Ultimately, buying GSVC is a bet that high-beta momentum stocks make a comeback, and it could snap back extremely hard in that type of scenario.

Until then, it will, at best, tread water as risk remains out of favor.

Twitter: @MichaelComeau

Follow the markets all day every day with a FREE 14 day trial to Buzz & Banter. Over 30 professional traders share their ideas in real-time. Learn more.

< Previous
  • 1
Next >
No positions in stocks mentioned.
The information on this website solely reflects the analysis of or opinion about the performance of securities and financial markets by the writers whose articles appear on the site. The views expressed by the writers are not necessarily the views of Minyanville Media, Inc. or members of its management. Nothing contained on the website is intended to constitute a recommendation or advice addressed to an individual investor or category of investors to purchase, sell or hold any security, or to take any action with respect to the prospective movement of the securities markets or to solicit the purchase or sale of any security. Any investment decisions must be made by the reader either individually or in consultation with his or her investment professional. Minyanville writers and staff may trade or hold positions in securities that are discussed in articles appearing on the website. Writers of articles are required to disclose whether they have a position in any stock or fund discussed in an article, but are not permitted to disclose the size or direction of the position. Nothing on this website is intended to solicit business of any kind for a writer's business or fund. Minyanville management and staff as well as contributing writers will not respond to emails or other communications requesting investment advice.

Copyright 2011 Minyanville Media, Inc. All Rights Reserved.
What's Up With GSV Capital?
The development-stage company has been under pressure.
Michael Comeau    

This article was originally posted on the Buzz & Banter, where subscribers can follow over 30 professional traders as they share their ideas in real time. Want access to the Buzz plus unlimited market commentary? Click here to learn more about MVPRO+.

Minyanville reader Peter writes:

Michael,

What is happening with GSV Capital (NASDAQ:GSVC)? Why is its price so disconnected from the NAV?

GSV Capital is a closed-end investment fund focused on acquiring stakes in high-growth public and private technology companies, which isn't exactly an ideal mix for the current market environment.

I last took a position on March 5 but was stopped out for a loss as the market went risk-off, driving down hot momentum stocks like FireEye (NASDAQ:FEYE) and Splunk (NASDAQ:SPLK).

The ugly market action put a hit on GSV Capital's portfolio, and its heavy concentration in Twitter (NYSE:TWTR) hasn't helped.

Twitter is down 37% since it reported earnings in February, and down 8% since its first trading day on November 7, 2013.

Last year, GSV Capital was largely seen as a way to get into Twitter pre-IPO, and that was a great trade -- for a while.

As you can see in this chart, the smart money was selling GSVC as Twitter went public. (Twitter is represented by the purple line.)


Click to enlarge

This year, investors view GSVC as an extreme high-beta tech fund -- and that's what's creating the disconnect from NAV.

At year-end, GSVC's NAV per share was $14.91, and based on recent market prices, it's still above $13.

GSVC is technically trading at a 30%+ discount to NAV, but because it owns illiquid stakes in private companies, the market sort of slaps on an extra discount to account for associated uncertainty.

Some of GSVC's private holdings -- like Spotify, Dropbox, Palantir, and Lyft -- could very well end up being blockbuster IPOs or acquisition targets.

But for now, investors are running straight away from high-beta tech stocks, which results in diminishing expectations for the IPO market.

Even Facebook (NASDAQ:FB), which reported blockbuster earnings last week, is having trouble holding a rally.

Investors may also be fearful of holding GSVC ahead of Twitter's first-quarter earnings report due Tuesday, given the beating the stock took last time around.

Ultimately, buying GSVC is a bet that high-beta momentum stocks make a comeback, and it could snap back extremely hard in that type of scenario.

Until then, it will, at best, tread water as risk remains out of favor.

Twitter: @MichaelComeau

Follow the markets all day every day with a FREE 14 day trial to Buzz & Banter. Over 30 professional traders share their ideas in real-time. Learn more.

< Previous
  • 1
Next >
No positions in stocks mentioned.
The information on this website solely reflects the analysis of or opinion about the performance of securities and financial markets by the writers whose articles appear on the site. The views expressed by the writers are not necessarily the views of Minyanville Media, Inc. or members of its management. Nothing contained on the website is intended to constitute a recommendation or advice addressed to an individual investor or category of investors to purchase, sell or hold any security, or to take any action with respect to the prospective movement of the securities markets or to solicit the purchase or sale of any security. Any investment decisions must be made by the reader either individually or in consultation with his or her investment professional. Minyanville writers and staff may trade or hold positions in securities that are discussed in articles appearing on the website. Writers of articles are required to disclose whether they have a position in any stock or fund discussed in an article, but are not permitted to disclose the size or direction of the position. Nothing on this website is intended to solicit business of any kind for a writer's business or fund. Minyanville management and staff as well as contributing writers will not respond to emails or other communications requesting investment advice.

Copyright 2011 Minyanville Media, Inc. All Rights Reserved.
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