Juridica Share Discussion Threads

[pillion] 01/11/2013 12:47

Bought into JIL the other day
Special divi payers often come good medium term; take BJU as an example

How do we pronounce the C in Juridica ?
Like sea
or ch in Church ?

....or like a kicking K ?

[orchestralis] 31/10/2013 11:09

14p is a 11% divi for me. Lets hope they keep it.

[azalea] 31/10/2013 10:42

Lavalmy
I do not think Invesco Perpetual(31.61%), not to mention other major holders, is sitting on an investment valued currently at circa £46.34m just to see it paid back in dividends without making a profit and if taking into consideration inflation ending up making a loss. Equally, I do not see the business of litigation around the world ending any time soon.

[jonwig] 31/10/2013 09:52

azalea, David's possibly cryptic reply goes back to a series of posts, #184 to #200.

I'm actually agnostic on the interpretation. Anyway, the test of an investment case will probably be measured by the time it takes for the share price and/or NAV to recover after a likely 14p fall on 4 Dec. In earlier cases, it's happened quite smartly!

By the way, the 14 Nov EGM circular is here:

[lavalmy] 31/10/2013 09:41

Azalea

It is NOT a 10% return on your money in two months. It is a 10% return OF your money in two months.

Cheers

David

[azalea] 31/10/2013 09:26

A 10% return on you money in 2 months time is money for old rope, with more expected next year.

[djderry] 30/10/2013 18:24

Yes,the fund managers seeking income will be happy,the capital appreciation is the icing on the cake.

[lavalmy] 30/10/2013 07:07

Hi All

The extra 4p dividend mooted previously has been declared, making for 14p in January.

Cheers

David

[its the oxman] 22/10/2013 18:51

Yes I was thinking the last news was having a delayed affect in which case the share price could correct 10% plus which takes us a bit further than we are now and serves as a reminder that talked about nav is not guaranteed. That said people like the story so it may not fall that far. Either way for what it's worth I think I am going to hold fire and hope for a buying opportunity nearer 130-135p.

[jonwig] 22/10/2013 18:29

It's possible the possible negative outcome in posts #203, 204 (1 Oct) has leaked into the market: a full $15m write-off would amount to about 14c of asset value.

I'm also tending to agree that a discount to NAV is more appropriate than a premium, given that the NAV itself is based on a set of probability calculations rather than the value of marketable securities!

Of course, returns *are* very transparent once they appear as cash! It's the lead-up which isn't.

I'd still view a fundraising (post-the meeting next month) as a real possibility: they floated in Dec 07 and had a further placing in March 09, so they have form.

[its the oxman] 22/10/2013 16:01

What do people attribute the share price fall to? Last news a bit disappointing. Or as LaValmy states an unexpected share price rise into which he was a seller. I like the story from fact it is un correlated to stock market and will give me diversification, but realise a discount may also apply to jil as returns are not very transparent. Guess I am tempted to buy and wondering what upside people see from this level and what discount to nav is appropriate if willing to discuss. Cheers.

[wan] 21/10/2013 09:09

LaValmy...Thank you for your efforts, it's very much appreciated (I fully appreciate the time and effort required in order to put a decent post together).

I am sure many would agree that Juridica 'is' a complicated beast, thus for many it will sit at odds with "keep it simple and invest in what you know". I get what Juridica does, but I don't like the complexity of its structure, not to mention necessary changes due to a divorce (never come across that one before for a listed equity).

Perhaps Juridica will indeed become a 'simpler' beast, however, I have decided that the dividend is not enough to maintain my interest in seeing if that becomes a reality. I am not saying Juridica is a bad investment, and perhaps for those who make the effort, it will produce the goods (a niche investment?).

It will thus be interesting to see if a combination of the dividend and the complexity is discounted more into the share price ahead of the EGM on the 14th November.

[djderry] 20/10/2013 23:54

Many thanks again,David.

[lavalmy] 20/10/2013 19:03

Jonwig

I don't think that anything as complex as that is under discussion. Simply a fund or funds that co-invest, with the requirement that the manager devotes enough time to the existing fund and treats all fairly. Simple was what Richard seemed to want. There is the issue of the performance fee on the existing folio, some of which may flow to his ex-wife. He said that the existing JCML would just have this tail, but that in effect is history.

Nothing complicated is my read

[jonwig] 20/10/2013 14:59

Thanks - but a future fund-raising could take an innovative form: these have been done by reinsurance ("CAT") funds, infrastructure funds, distressed debt funds, etc.

"Side Pocket" - new shares issued clean of any existing potential liabilities, to invest in new cases (in JIL's situation). Issue "C" shares - or whatever - on a non-pre-emptive basis usually and merge with the ords once the valuation becomes clearer.

Usually the new share trade separately until the two can be merged. With JIL that could be a problem, in that the interim period would be longer than usual. Merging would have to be done on a basis of trusting a stated NAV.

Anyway, such fundraisings are usually restricted to institutions ... and it looks as though they could issue as many shares as they want without pre-emption, if I've read their announcements right.

But from a PI point of view, there wouldn't be dilution.

[lavalmy] 20/10/2013 11:00

Jonwig and djderry

I certainly do not mean to put a cat amongst the pigeons here. Regardless of the tax structure, the underlying investments are more than sound. It would not surprise me in the least if the NAV were to approach £2.50 in the next twelve months. Of course, the share price would have to follow for us to benefit.

I have lightened my own holding because after the rather unexpected share price rise I was somewhat outsized, and I have a couple of other things which I like, otherwise I would have kept my whole position. Indeed, if something happens to my other positions that lead them to be outsized (wishful thinking, I know), I could well switch some funds back.

DJ, there will not be a capital raise from existing shareholders, merely capital reinvested. Any new funds will be totally separate. Again, it would not surprsie me if it was an unquoted fund - fund managers who stick cash in would not have to mark to a quoted price, but could stick to the NAV. OTOH, I like the possibility of us minnows being able to access the asset class and long may it continue.

As a complete aside, the US may try to tax the assets class, in a similar fashion to the traded life policy market. It is probably too small as yet for them to bother, but nimble footwork should enable the fund to become UK tax resident (avoiding any US withholding) and able to distribute dividends with a tax credit. Even if I can't benefit myself, I'm sure my esteemed fellow shareholders on this board would welcome that.

If my £2.50 guess is right, there is a lot left to go for. Maybe rash to bail out now?

Cheers

David

[djderry] 19/10/2013 21:15

Yes,indeed,thanks for the insights David.It's good to know you have access to Richard.I'm somewhat concerned by the tax structure and its possible effects on the distributions.I uisually hold stocks for a minimum of five years,no reason to change that stratagy.If there's a fund-raising,I'll need to think further.

[jonwig] 19/10/2013 16:36

Thanks for that, David.

Odd that, the more I "know" about this company, the less I seem to understand it. As you suggest, the tax structure appears to be wagging the dog.

So should I stay invested in something as complex as this, despite the fact that I've had good returns and - more important to me - they would be un-correlated to a general market fall?

Reducing my holding might be as far as I take it.

[lavalmy] 19/10/2013 12:20

With regard to the accounting policies and what have you, my chat with Richard Fields was enlightening in many respects.

Firstly, the loan structure was designed primarily to allow Fields Law (and predecessors) to pay out to JIL the proceeds from the Antitrust Portfolio without pesky tax issues. In effect, receipts would be balanced by interest payments and/or credit default insurance. Ultimately, the risks and rewards of the portfolio remain with JIL. There is a theoretical boundary of $500 million after which Fields Law would be the beneficiary of any receipts. This explains the caveats about tax when the loans are mentioned in the various RNS's. Also the change from 33% principal repayment to a formula of 1+n, as IRS practice changed. It also explains the sale of 8% of Riverbend to show that it had a real value (despite the put option)

This is no excuse for PWC allowing the different treatment for these assets compared with directly held investments. Richard did say that he was not an accountant, that this was all very novel at the time, that it would not be repeated, and that yes it has led to a possible over distribution and lack of reinvestment. We are stuck with it, I surmise. He also said that as a result of the implementation of new IFRS's that the year-end accounts will be much simpler, which I for one welcome heartily.

So what are we stuck with exactly? A pig of a thing unless they can unwind the structure. There is some 8-9 million of the 15% interest still hanging around - more in 2014, based on the principal outstanding, call it $14mn. Anything after that gets stuck apart from $27 mn which will be booked as principal repayment in 2014 (and a similar amount in 2015). Richard reiterated a few times his conviction that there was a 50% chance that the cases, except for the statutory claims one, would settle before next year end. My read across this was that if they do indeed settle, then they can unwind the structure somehow. But it is a tangled web, and it seems that the tax tail has got the better of the investment dog.

Richard did talk also about attitudes towards dividends. It appears that the big funds (Invesco, Baillie Gifford etc) are delighted to receive any and all payouts. I did mention that they do not pay tax - indeed their annual fees can be set off against this sort of income. He reckons that 30-40% of the shareholder base would welcome a regular, predictable, yield. For myself, the way I am structured means I am ambivalent to the income/capital distinction. Richard did say that he would prefer to have more capital to invest.

Overall, an interesting chat, made all the more poignant by an email I received the same day from another investee company of mine - "we don't normally reply to questions from individual investors". This from investor relations! Richard did seem as if he got bored hanging round for these cases to bear fruit. He also mentioned that they had lined up new investments that would pay out in a 2-3 year frame, but not far removed from the type of case they already have. He was most excited about the iPCreate thing. And agreed that possibly they were young and foolish to dive headlong into patent area, but they are sorted now with this relationship, from which he expects big things.

If there is anything garbled in the above, please ask. If I can't answer it, I might be able to persuade Richard to clarify.

One more thing before I go. He did say that PWC were keen on increasing the NAV (on several occasions) but he preferred to err on the cautious side. My comments regarding the discrepancy between JCML's valuation and the carrying value in books of the cases from which JCML expects performance fees did not meet with a stony silence, but of course nor could he say that that my 50-60p guess was ballpark.

Which I think it is. So IC talking about NAV is so much hot air. As is waffle about discount/premium. An average fund has fees and expenses which a tracker doesn't, which naturally detracts from the value of the fund. The values used for the NAV ratchet up by 15% p.a. unless something goes wrong in the quantum or timing. A totally different beast.

Cheers

David

[wan] 17/10/2013 08:41

Yes indeed and duly noted ;-)

It strikes me that the 'expertise' in valuing the litigation portfolio might not be quite the same as for valuing the portfolio of the average fund, hence the previous discussions etc.

[westcountryboy] 17/10/2013 08:31

I agree, but all the same I had to smile at this, one of the greatest lines about the investment universe I have read recently :-)

'At most investment companies, management's 'expertise' is one reason why their shares trade below NAV.'

[wan] 17/10/2013 07:58

I thought that there was real potential for a notable increase above the current NAV, or at least that was my interpretation. It will thus be interesting to see if Mr Bearbull ends up kicking himself!

[speedsgh] 16/10/2013 22:31

Appears Mr Bearbull (Investors Chronicle) has decided not to stick these in his income portfolio after all...

"A week ago it seemed odds-on that shares in Juridica (JIL) would go into my income fund. Actually, they won't. At 149p, they trade above net asset value (about 136p) and to pay more than NAV introduces a new - and risky - element. Buy the shares for less than NAV and you would have got the estimated payout to Juridica of all the US legal cases it has helped to fund for less than 100¢ in the dollar. As the case load is mature and Juridica's managers expect big awards during 2014, that should have been good business. But if you buy Juridica's shares today, you have to believe its legal advisers will repeat the trick of identifying likely cases, striking a deal with the plaintiffs and so on. Quite likely they can, but betting on management's expertise is quite different from betting that a portfolio of illiquid investments will eventually realise its estimate of fair value. At most investment companies, management's 'expertise' is one reason why their shares trade below NAV. There is no compelling reason why Juridica should be an exception to that rule."

[djderry] 16/10/2013 20:00

Most interesting LaValmy,thank you.

[wan] 16/10/2013 08:14

Thanks LaValmy, I look forward to your further update.