Alpha Growth Share Discussion Threads

[2mex] 01/1/2020 20:20

Daniel, as news on the signing of the credit facility appears we should see a great surge in the share price but the real gains will be made from holding. This company has a lot of positives short, medium and long-term.

(1) Well, for starters $100m facility is the short-term trigger
(2) The focus is then on potential and time to 10bag, 20bag as it is scalable.
(3) With the projected increments, the FUM will be approaching $2Billion within 8 years.
(4) Alpha has a unique situation with specific talents amalgamated for Life Settlement
(5) Potential for asset manager(s) to increase credit facility
(6) Relatively low cost to operate
(7) Extensive networks brought in by key people
(8) The market is expanding and currently $57B annual trade there to be sourced

The initial $100m trade target for year 1 indicates confidence of business developing quickly.

[tim000] 01/1/2020 16:36

Burford has grown enormously over time by dominating a new global industry, namely providing litigation finance to trading companies in exchange for a high proportion of the profits of successful litigation. Maybe ALGW is a similar kind of business, and has the same kind of growth prospects? I do think that there is the potential for a snowball effect - once the business attracts funds from reputable fund managers and HNWIs, and hits targets for rates of return, then more funds should follow quickly.

[2mex] 01/1/2020 16:14

Jungmana exactly that.

Justin Waite on microcaps (Lesson 3)

"..the difference between a company that will outperform and one that won't is the potential of its assets, or its products or whatever it is selling. Now, ask yourself this question next time you are researching a company: CAN THIS BE A TEN BAGGER? By that I mean 'can its assets have the POTENTIAL to generate VALUE 10x its current valuation?'..and that will narrow your search down.."

[jungmana] 01/1/2020 15:58

Simply an investment to hold for 12 to 24 months for a 10 bagger .One of my top 6 picks for 2020

[2mex] 01/1/2020 15:27

VOX interview on Black Oak Fund, 20 Dec 2019 (further transcription)

Francesca Morgan: "..how exactly is Alpha going to benefit, as we look into the new year more specifically, from being the (Black Oak) fund manager.."

Gobind Sahney: "..We collect a gross annual management fee..and a performance fee based on realised gains.. For the next 12 months our goal is to achieve $100million in investment..and the succeeding 12 months to achieve another $250million investment..so you can do the math, our objective with this fund is that it is open-ended is to grow beyond our $250million target from 2 years onwards. Incrementally our expenses don't necessarily go up as the size of the fund goes up. We expect to produce a good margin just based on the management fee, not counting the performance fee. So Alpha will benefit from the revenue that we earn: providing our investors with a superior service and returns that they expect from life settlements being a non-correlated asset.."

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So Year 1 target $100m, Year 2 increment by $250m

End of year 2 FUM $350m. @3.3% fees would be $11.5million (~£8.7m)

Halving that with SLIM (if equal partnership) gives Alpha £4.35m gross profit... and increment by £3.1m each year. For example end of year 8: £23m gross profit.

[tim000] 01/1/2020 14:49

I made an error originally in post 4239, now corrected. The company will be a sustainable business with about $100 mn FUM, but it needs to attract multiples of that from private clients for the share price to hit 10p, imho.

[daniel81] 01/1/2020 14:41

whats ALGW worth when we have the 100m Finance deal agreed...

Some say 10p but im now say ALGW will be worth much much more...

Do you think we ALGW will issue dividends ?

[tim000] 01/1/2020 12:10

Finally, given the size of the US market, if Danny is as good as he says, and a history of successful investment brings in a growing number of clients and hence FUM, then the underlying economics summarised in my posts above suggest that there is plenty of scope to grow into a much much larger company than one with a mkt cap of $100 mn.

[tim000] 01/1/2020 12:02

Just to recap, as 2mex has said, the fee structure is 1.5% plus 20% of returns above 7%, with an expectation that the average total return may be 16%. In that case, if ALGW gets access to $100 mn of funds, it can invest in policies with a $500 mn face value and make maybe 3.3% pa in fees on its $100 mn investment, ie annual gross income of $3.3 mn. The 16% gross annual return reflects the gradual erosion of the discount in the secondary market (ie the $100 mn steadily increases in value towards the $500 mn face value), as a growing proportion of policies mature and are settled in cash at full value. What I’m not clear about is whether the income is split 50:50 with its partner SLIM, or whether it entirely accrues to ALGW. [Edited to correct an error in the arithmetic.]

[2mex] 01/1/2020 11:54

Richard, Justin has his own strategy with micro caps: he looks for Biotech/Pharma, Technology or Resource. So he will miss opportunities elsewhere..but even so, he does well with the areas that he concentrates on.

Here is Lesson 3 where he states the above..

[tim000] 01/1/2020 11:52

Listening to the podcast, it seems likely that the reason there is leverage wrt the amount of policies each $ invested can purchase is because the market is illiquid (not a lot of players). Hence the “face value” of the policy, ie the sum received upon the death of the insured, is heavily discounted in the secondary market. That’s also partly because the premiums still have to be paid until the insured dies. Danny mentions a multiple of 5, ie policies with a face value of $100 can be acquired in the secondary market for $20 each. So if the company has $100 mn funds to invest, it acquires policies with a face value of $500 mn, packages them up into funds and manages them on behalf of clients, who are responsible for making the regular premium payments.

[richardjohn10] 01/1/2020 11:43

According to his podcasts he hasn't so far. The timeframe it's taken getting to this stage has put many off Id say. Hopefully be rewarded this year.

[2mex] 01/1/2020 11:24

Maybe he has invested? Or perhaps needs a nudge on this one?

When it climbed in 2018 he said this on Twitter..

3 Oct 2018

#ALGW well done holders. Some decent researchers flagged this up to me. Sadly I didn't take your advice to do some deep research.
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Response from walty_pic
3 Oct 2018

Replying to @SharePickers
#ALGW still only a tiny 3.8m market cap...
ticks the boxes on ur C.C.A.S.S.S.H method...
& unlike risky oiler's n miner's, @algwplc deals in SLS sector which is highly cash generative and recursive

[richardjohn10] 01/1/2020 10:41

Wonder why Justin hasn't invested here, thought it would of been right up his street.

[tim000] 01/1/2020 10:31

I had forgotten that the company promises to give quarterly updates; a Q4 update should be published in early January.

[2mex] 01/1/2020 10:16

Vox podcast 12 Nov 2018

Justin Waite
"..have you got a target, a valuation in the next 3 to 5 years, where you are hoping to take the company?.."

Danny Swick
"..Yes, I think the ultimate goal which I think about on a regular basis is where we get to a point where we have a market cap in excess of $100million.."

Justin Waite
"..could you give the listeners three quick reasons why they should add you to their watch list please?.."

Danny Swick
"..Sure, I think number one is the experience in the life settlement space..and even going back to one of the questions that you asked about me being involved in other successful businesses and then coming over here, you have to remember that just because I am leaving other businesses I am also bringing over a lot of relationships that I have had for many, many years.."

"..and I would say the second thing is it is a micro cap stock so there is plenty of room for growth.."

"..and then when we raise money and we put it into one of our structures, those assets become sticky. So, those assets will be with us for multiple years, say 10 years. So, for 10 years, we will be generating management fees and also different types of promote structures on those assets. So, for a long period of time, we will be generating revenue.."

[cone123] 31/12/2019 16:29

Or Thursday?

[jungmana] 31/12/2019 13:33

Thanks. Wish you and everyone here the same.

[tewkesbury] 31/12/2019 13:32

Hopefully retest 2.5p next week.

[tim000] 31/12/2019 12:51

Steadily higher highs and lows, a good sign. I'm not a chartist but the chart is pointing to a share price over 3.

[2mex] 31/12/2019 12:37

Have a great New Year all!

[bullrun1] 31/12/2019 11:45

Yes, nice work cracking post 2mex.

[daniel81] 31/12/2019 11:40

Absolutely the best post I’ve ever read here bravo 👏👏👏👏8079;

[andyview] 31/12/2019 11:10

yes excellent post 2mex, thanks

[jungmana] 31/12/2019 10:48

Top post there, 2mex