Juridica Share Discussion Threads

[keyno] 12/9/2014 08:10

Analysts at Liberum Capital initiated coverage on shares of Juridica Investments Limited (LON:JIL) in a research report issued to clients and investors on Thursday. The firm set a “buy” rating and a GBX 157 ($2.55) price target on the stock. Liberum Capital’s price objective points to a potential upside of 18.05% from the company’s current price.

[djderry] 08/9/2014 17:45

Most interesting speedsgh,thank you.

[speedsgh] 08/9/2014 11:28

Extract from Crystal Amber's final results today. I see the CRS holding in JIL as very reassuring.



Juridica Investments Limited ("Juridica")

Juridica is a listed investment vehicle that provides capital for corporate claims in the US. In the US, corporates are faced with high costs of litigation. Shareholders, however, expect an efficient use of cash flows. To facilitate litigation without overburdening corporates, US law firms developed contingent fee litigation models, also known as 'no win, no fee'. Law firms take a case and assume their own costs over the legal process for a share in the proceeds of the settlement. In the process, law firms take considerable funding risk, as they need not only to cover their own high operating costs, but also the expenses incidental to the process. If defendants avoid early settlement, cases can continue beyond the expected timescale. Some law firms have failed as they entered a death spiral of low cash generation, a growing contingent claims book and turnover of key income generating partners.

Funding vehicles such as Juridica can contribute to paying for the case's expenses, reducing the financial risk to the law firm, without reducing the claim value. Litigation funders will acquire a share in the claim, similar to buying equity in a company. As the US legal system does not provide for adverse cost awards, in case of loss the litigant will not have to pay for the legal costs of the other side.

Juridica raised $210 million in two tranches in 2007 and 2009 to invest in what was then a developing asset class. It has since invested $189 million in 31 cases, and contrary to other listed vehicles, these are all in the US. Its defendants are mostly Fortune 500 companies, with deep pockets and likely to settle. The portfolio has generated gross cash proceeds of approximately $194 million before tax. $ 64.3 million has been returned to shareholders by way of dividends. Ten complete exits to date have generated a blended IRR of nearly 40 per cent.

Juridica looks for strong cases with potential for large damages, probability of settlement and case leadership in the hands of lawyers with good track records. The deal structure is also critical to the success of the investment. For example, Juridica structures a deal so that it will be the first party to be paid back from the claim proceeds, ahead of the law firm and the claimant, limiting its downside.

A typical case turns over in three to four years. Having invested substantially all of its initial funding proceeds by 2008, and the 2009 fundraising over that year, Juridica now has a maturing portfolio.

In our view, Juridica has succeeded in demonstrating the process and the potential for returns. As its portfolio of cases turns into cash, decisions need to be taken whether to reinvest the proceeds generated by the current vehicle or to restructure it. The Fund opened this position in December 2013 and we look forward to engaging with the company on those issues to maximize shareholder value.

[wirralowl] 05/9/2014 17:13

Also added some today, via IG.

[alter ego] 05/9/2014 15:52

It's possible to buy below the quoted mid price, even in decent size, so published buy/sell numbers are misleading. I've added in anticipation of a healthy dividend before too long.

[wirralowl] 05/9/2014 09:49

Thanks DB.

That report confirms that proceeds from Cases 1208-A and 5208-E exceed $70m, so I guess that means we're in line for another bumper dividend towards the end of the year, hopefully we'll get confirmation later this month.

[jonwig] 04/9/2014 11:48

Thanks for that - I'll copy across to the BUR thread if I may.

This bit:

Price Discipline: BUR’s insurance business has decided to retain its price discipline in the face of competitive pressure: in BUR’s opinion, competitors’ attempts to retain volume are reducing prices and writing new policies at premium levels we consider inevitably loss-making

At least one new entrant went bust in the past year: it backed a loser, was under-capitalised and folded. You can only reduce prices (ie. slash your expected returns) if you skimp on the due diligence. JIL has apparently huge costs, but without them its track record would have been a lot poorer.

[davebowler] 04/9/2014 10:13

Investec;
BUR vs JIL;
Litigation Finance

Burford Capital (BUR) Half Year Results for the six months ended 30 June 2014

¢ NAV: We Estimate the NAV to be 105.3p, an increase on the prior period (103.1p)

¢ Profit before tax: BUR posted an increase in profit before tax to $18.2m (June 2013: $9.7m)

¢ Burford’s income for the six months was $27.4 m, a 40% increase on the prior year (June 2013: $19.5m). The increase reflects:

¢ - an 85% increase in income from the litigation portfolio amid continuing increases in

¢ - activity levels; UK insurance income steady at $10.2m (June 2013: $10.2m)

¢ Track Record: Since inception, 26 investments have generated $174m in gross investment recoveries and $67m net of invested capital, producing a 63% net return on invested capital.

¢ Material increase in cash generation: Burford generated $42m of cash from the investment portfolio in the period, an increase of 93% over the comparable 2013 period

¢ Ongoing demand for Burford’s capital reflected in $62m of new capital committed in the period, a five-fold increase over the comparable 2013 period

¢ Retail bond issue on the main market of the LSE post period end, raising over $150m (£90 m) of capital.

¢ Dividend: Moving towards a more traditional structure enables BUR to pay out a more steady , predictable semi-annual dividend going forward. BUR will pay will pay a further dividend of 1.74¢ (one-third of the amount and the full year 2013 dividend of 5.23¢) in December

¢ It is noteworthy that BUR have expanded their range of investable opportunities from the basic set of funding litigation cases to a broader range of corporate finance solutions where knowledge of litigation and arbitration is required to fully understand the assets and liabilities of a business.

¢ Duration: BUR previously classed their portfolio into “short duration”, “core” and “special situations”. BUR have elected to discontinue the use of these labels and will instead begin providing actual information about portfolio duration

¢ Portfolio: At 30 June 2014, the investment portfolio stands at total commitments of $281m across 40 investments, with 26 further investments having concluded for total commitments since inception of $423m.

¢ Both The weighted average duration of concluded investments is presently 1.9 years, along with the current weighted average duration of the outstanding investment portfolio, also 1.9 years.

¢ IFRS accounting: At 30 June 2014, the litigation assets on the balance sheet included only $41.5m of unrealised gain, approximately 11% of the total asset value and less than 20% of the balance sheet value of the litigation investment portfolio.

¢ Outlook: “We are seeing some signs of life in the demand for new insurance coverage. While after the event insurance may have lost the straightforward marketing proposition of being “free” to buyers”,

¢ “the fact remains that in a fee-shifting environment such as exists in English litigation, there will always be categories of plaintiffs who cannot or chose not to bear the risk of an adverse costs award against them and seek insurance against that risk. As a result, while still small compared to historical levels, we are seeing increasing demand for coverage as 2014 develops.”

¢ Price Discipline: BUR’s insurance business has decided to retain its price discipline in the face of competitive pressure: in BUR’s opinion, competitors’ attempts to retain volume are reducing prices and writing new policies at premium levels we consider inevitably loss-making

¢ Staff turnover: In June Andrew Langhoff stepped down as COO and Jeremy Garber was welcomed into the role. Also Nick-Rowles-Davies joined as a new Managing Director.

Investec Insights:

¢ BUR has a market cap of £245.5 and trades at a premium to NAV of +13.9%, which is at the lower end of its one year history.

¢ The litigation finance portfolio itself has performed well with an 85% increase in litigation portfolio income with the insurance income remaining stable.

¢ Our preferred stock in the area remains JIL, largely because many of the older vintage cases are coming to maturity and as the chart below shows, have brought successful results to the company

¢ Ten complete exits to date generating a blended IRR of 66.67%, delivering a total of US$44.4m in gross proceeds.

¢ JIL - Six cases, related to four investments and which are multi-defendant in nature, had partial settlements or expense recoveries amounting to approximately US$80.4m.

¢ What is most striking is that out of the completed JIL cases there is only one example of a loss, which was only partial, resulting in an IRR of -27.6% and actual cash loss of c.£0.9m. Relative to the rest of the portfolio, it was a small write down in an otherwise impressive track record.

¢ Latest JIL Developments

¢ Cases 1208-A and 5208-E have recently settled in their entirety. Case 8008-L has also produced additional proceeds on a smaller settlement with one defendant. JIL is entitled to proceeds as per the terms of the Company's loan facility for these cases. The investment manager expects that total gross proceeds will be in excess of $70m prior to accounting for any potential tax liabilities. Approximately $67m of this figure is attributable to Cases 1208-A and 5208-E.

¢ This is a strong result from JIL. In the statement on 31 March, the manager, Richard Fields, outlined that the case could be worth in excess of 15% of NAV. The June 24 announcement, although not detailing net terms, should provide investors reasonable comfort that the $67m of realisations will represent 15% or more of NAV.

[djderry] 03/9/2014 14:04

I'll be interested to hear what they have to say as well,jonwig,feeling quite sanguine about it all,but they were probably feeling the same way on the Titanic pre-iceberg!

[jonwig] 03/9/2014 07:22

djd - yes, I don't think they would say "we are in run-off mode". Of course, supplemental investments could be essential to maintain progress in a case.

As it stands, the life of the company was extended by just three years to Dec 2016 (IIRC) so we'll need strategy updates before too long, including new cases if they arise.

I can't help comparison with Burford Capital [BUR] which has been nowhere near as rewarding an investment as JIL, but is building a sustainable business model. (I hope it is, anyway!)

[djderry] 02/9/2014 21:53

Repetition for emphasis!!

[djderry] 02/9/2014 21:52

Hi all,jonwig,just a note re your post,I don't see it as being in wind-down,they made supplemental investments of about $3 million last time and stated they continue their due diligence on their pipeline of cases.They also talked about their ability to identify and manage cases through to (lucrative) conclusions.I agree completely with your point about the policy of paying out all net proceeds which is not sustainable long term but why would they kill the goose laying all those golden eggs!

[djderry] 02/9/2014 21:51

Hi all,jonwig,just a note re your post,I don't see it as being in wind-down,they made supplemental investments of about $3 million last time and stated they continue their due diligence on their pipeline of cases.They also talked about their ability to identify and manage cases through to (lucrative) conclusions.I agree completely with your point about the policy of paying out all net proceeds which is not sustainable long term but why would they kill the goose laying all those golden eggs!

[scottishfield] 02/9/2014 15:28

tks speedsgh

[speedsgh] 02/9/2014 15:25

Interim results planned "mid-September" according to the powers that be.

[tom111] 02/9/2014 10:02

Thanks jon

[jonwig] 02/9/2014 06:47

tom - no information given, and no date on the website. It's generally mid-August to mid-Sept so won't be long.

If you want news on payout prospects that will probably be given in a separate portfolio announcement.

More significant still, I think, is this from the continuation proposal of Oct 2013:

"Juridica has delivered strong returns to investors since inception. Through careful investment selection and management, the Company is now in the enviable position of having a maturing portfolio of high quality investments which we expect to deliver continued returns to shareholders. We therefore recommend shareholders vote for the fund to continue its work for the next three years."

Their current policy is to pay out all net proceeds to shareholders, leaving no money to invest in new cases.
From this we can only conclude that the company is in wind-down and will, in time, return current NAV plus write-ups for case wins, less write-downs for case losses.
That's consistent with the fact that they haven't taken any new cases for years.

Will this policy change? We ought to be told.

I still harbour the fond hope that Crystal Amber will be pushing JIL to support NBNK in a legal action against LBG. It has a recent stake in JIL and nearly 30% of NBNK. Lord Brennan is on the board of NBNK, too.

[tom111] 01/9/2014 19:07

Looks to have stabalised got back in,anyone know when the results are?

[wirralowl] 26/8/2014 10:36

Was thinking the same, speedsgh... Should put a bit of a rocket under the share price if last year's anything to go by. And we already know the dividend payment is likely to be significant again after their case wins reported in June.

[speedsgh] 22/8/2014 11:13

Interim results + news on next planned dividend payment should be due anytime now (19/8 last yr)

[tom111] 03/8/2014 14:54

sp showing signs of weakness here for some reason I bailed out and made a nice profit last week,will watch from the side lines,proobably a big mistake

[grahamg8] 30/7/2014 07:38

With my usual impeccable timing I have topped up just before the share price fell slightly yesterday. I had been triggered into action as by my estimation August is the most likely month for an announcement about the next dividend. Transparency is not a word that is in the JIL Directors vocabulary but they do seem to produce the goods, have excellent PI support, and provide a non correlated income investment. For me the positives just about outweigh the negatives. An investment for the longer term, not for trading.

[djderry] 22/7/2014 09:55

Every best wish for continued investing success David.

[lavalmy] 22/7/2014 07:50

Jonwig and others

I will not be paying too much attention to JIL from now. I have taken my profits whilst, IMHO, I could.

Re the NAV, per 2009 accounts it was $1.9044. 2013 it was $2.02. As you said, there has been a lack of investment in fresh cases. I suspect that if and when the cash is reinvested, the share price will linger in the doghouse somewhat similar to the period to 2012.

The tax issue vexes me. What tax? There is in the loan agreement provision for Fields Law to withhold an amount for potential taxes due. Given that this is in the US, one might suspect that US tax rates would apply. On what amount?

My last post on JIL, as I have moved on.

GLA

Cheers

David

[loldemort] 21/7/2014 23:32

W.r.t. the induction motor patents -- so Juridica's future is to be a patent troll? (Rather than simply acting for patent holders, which isn't really trolling.)