Juridica Share Discussion Threads

[ptolemy] 18/3/2015 11:09

"Risk & volatility are two different beasts"

True, but they're related via their sibling, Liquidity. He's absent.

0.1% (210k / 200mn) of shares were trade yesterday and the share price fell more than 7%. No one who bought in the last 9 months of 2014 are in profit in spite of the generous divi. I hold, but not impressed by management being so reluctant to engage with shareholders.

[jonwig] 18/3/2015 07:43

They had a second fundraising shortly after IPO, so there's a precedent.

What form would it take? Not a rights issue, anyway! Placing/open offer would probably depend on Invesco AM's appetite to absorb more stock.

A retail bond? Burford Capital had a successful issue at 6% last year, but then they are more UK-focussed than JIL.
I imagine the anonymous partnership was their alternative to a fundraising. Maybe.

[firtashia] 17/3/2015 12:54

"Risk & volatility are two different beasts". What a super quote.

[djderry] 17/3/2015 12:40

This is a large holding in my portfolio and the speed fall has made a bit of a dent in my returns year-to-date.But risk and volatility are two different beasts.The interesting points for me is the effort to broaden the scope of the areas they invest in.I understand 'arbitration',but what the hell was that other one? Law firm's portfolio finance or something? now,I always knew this was one set of very well paid lawyers hiring another set of very well paid lawyers but I didn't think they'd actually say it!All in all,pretty sanguine about results and happy to hold.

[speedsgh] 17/3/2015 10:56

marben - You may be right. But is the issue of scale + diversity not at least partially addressed by the New Co-Allocation Policy? This would appear to enable them to access a more diverse range of investment opportunities in partnership with the unnamed institutional investor, spread the risk + presumably access larger deals.

"The Manager has entered into an investment advisory agreement with a third party client, which is a well-established institutional investor, as permitted by the terms of the investment management agreement between the Company and the Manager. JIL has agreed to a co-allocation policy in respect of future investment opportunities presented by the Manager. This advisory agreement provides the Manager with significant capital to co-invest alongside the Company.

The co-allocation policy came into effect on 5 November 2014 and provides that where a follow-on investment in respect of an existing JIL investment becomes available, JIL shall have a right of first refusal in respect of the entire follow-on investment and where new investment opportunities arise that fall within JIL's investment policy, they will be offered to JIL and the new client pro rata to each party's deployable capital.

The new third party mandate has a number of potential benefits for JIL, including access to co-fund a broader, more diverse range of investment opportunities."

[portside1] 17/3/2015 10:17

been waiting for the drop now back in great buy . looking for 150p by aug

[marben100] 17/3/2015 10:10

I note the outlook statement:

"JIL was the first to enter the litigation finance market. Litigation finance has become an established asset class, which is especially attractive to investors because it is non-correlated and profitable. JIL is well established and performing well in this market as demonstrated by its results.

Litigation finance, particularly in the United States, is now at the next stage where scale and diversity are the challenges. The Board has been working closely with the Manager on the systems and strategy required to meet these challenges and to advance our position as a market leader in the business-to-business litigation in which we specialise.

We look forward to the continued development of the fund and its investments and thank our investors for their continued support."

Suggests to me that the company may be looking to scale up by raising fresh funds.

[jonwig] 17/3/2015 09:39

Valhamos, speedsgh - good points, both.

This certainly isn't a 'sell' but nor am I tempted to add at around NAV, which the market seems to be using as an anchor price.

[speedsgh] 17/3/2015 08:53

Also nice to see an attempt being made to reduce costs...

Reducing costs of investment

The Company's and the Manager's profile in the litigation funding market has improved access to potential investment opportunities. Increasingly, investment opportunities are being presented directly to the Manager (a process that is assisted by the increasing size and experience of the Manager's team) and this is expected to reduce the costs borne by the Company of sourcing investments. The increase in opportunities presented directly to the Manager should avoid the need to source investments through more expensive structures, such as the Fields Law structure through which the Company invested in the portfolio of antitrust and competition cases, in the future.

The cost of investment for the Company is also expected to be lowered by a number of other factors including cost benefits of investing in shorter duration cases and reduced due diligence costs as a result of making co-investments with other clients of the Manager. The Manager believes that a combination of all of these factors can lead to a material increase in the internal rate of return attributable to the Company's future investments, as compared to what has already been achieved by the Company through its investment portfolio.

[valhamos] 17/3/2015 08:40

I like the emphasis on investing in a broader range of litigation cases including those of a shorter duration. This should reduce risk though apparently without a reduction in expected return for "The Manager believes that a combination of all of these factors can lead to a material increase in the internal rate of return attributable to the Company's future investments, as compared to what has already been achieved by the Company through its investment portfolio."

[davebowler] 17/3/2015 08:35

Liberum;

Litigation Finance

Juridica Investments (BUY, TP 137p)
High costs offset portfolio gains

Event
NAV total return over 2014 was -2.5% to $1.66 per share, with the NAV progression during the period as follows:

Figure 1: JIL NAV progression over 2014


$m
Comments
NAV at Dec-13
223.6
$2.02 per share
2014 dividend payable
-34.5
20p per share
Portfolio settlements
27.5
Five settlements in antitrust and competition portfolio
Forward currency contract gain
1.3
Used to hedge 2013 dividend payout
Unrealised portfolio loss
-7.6
Change in portfolio valuation
Forward currency contract loss
-0.7
Used to hedge future 2014 dividend payout
Performance fee
-14.5
$4.7m will be returned to JIL due to its 36.2% holding in the investment manager
Operating expenses
-9.9
$2m up on 2013 due to higher management and professional fees
Amortisation
-1.1
Amortisation of intangibles
NAV at Dec-14
184.2
$1.66 per share


Source: Liberum calculations, company data



Gross cash proceeds totaled $105.7m (2013: $37.2m), with $97.7m from the antitrust portfolio in the year. c.$32m has been used to fulfil obligations on active cases, with the remainder transferred to JIL. A 20p dividend was declared in the year, with total dividends since inception of 58.9p per share ($98.9m). Total net cash proceeds from inception now stands at $198.4m

One new investment was made in 2014, with three further investments in existing patent cases. JIL expect a number of portfolio investments to see significant activity over the coming 12-24 months, with one antitrust cash in particular expected to resolve within the next 12 months, with significant upside potential.

Liberum view
2014 was JIL's most active year in terms of realisations, resulting in the high 20p dividend being distributed to shareholders. On a NAV total return basis, performance was weaker, with operating expenses and the performance fee representing 10.9% of the opening NAV (8.9% post the dividend from JCML due back to JIL).

Similar to management's rhetoric for FY13, the FY14 report also cites cash return in excess of 10% of NAV over the coming 12 months (they delivered on this last year) and we expect distribution levels to be similar to FY14, subject to no material case delays in the antitrust portfolio. JIL trades on a 12% premium to the Dec-14 NAV (using last night's closing price).

[jonwig] 17/3/2015 08:25

smarm - the loss in itself isn't relevant - the largest cash item in it is the performance fee of $14.5m ... after all, they've delivered all those dividends, so we have to throw a lump of red meat back to them.

But the carrying value of their portfolio has been written down, suggesting the remaining "old" investments are getting a bit stale. At least they're now making new ones, rather than just enhancing existing ones. I think I'd be a buyer when the share price reaches a decent discount to reported NAV. (Admitted, NAV held up thanks to USD strength.)

[guernseymoney] 17/3/2015 08:16

Just had a read, am still bullish despite, like you say, massaging down expectations.

I hope the cash generation continues and remain happy to pay/hold at a premium to NAV - I would like to think they can declare at least 10p this year.

Share price taking a bit of a hit this morning, doesn't bother me, am here for the longer term.

[smarm] 17/3/2015 08:08

Party seems over. Into loss.

S

[jonwig] 17/3/2015 08:00

here are your results, and they seem to be massaging down expectations.
NAV about 116p.
Acquisition of AC Kinetics explained - at last.

Ex-growth? Who knows?

[speedsgh] 16/3/2015 17:09

guernseymoney - all in good time. news is always a rare commodity from JIL.

[guernseymoney] 16/3/2015 17:05

Hope the results are released soon, I get the email updates from JIL investor relations so will just try and be patient.

Am looking forward for something to read, has been a quiet couple of months. . .

[speedsgh] 16/3/2015 16:44

Results this week? Last yr were on Fri 21/3.

davebowler's post 613 is worth a re-read imo...

[speedsgh] 04/3/2015 13:49

One-page spread on JIL in the latest issue of AIM Prospector -

[guernseymoney] 16/1/2015 13:21

Yes, got mine yesterday, four figures also - I plan to add shortly.

[guernseymoney] 16/1/2015 12:14

Yes, thanks Dave for that.

I hold JIL and love this share, it's just so uncorrelated to the norm and a great holding.

[pillion] 16/1/2015 11:43

Good report Dave !

[davebowler] 13/1/2015 09:43

Investec;
Burford Capital (BUR) Trading update for the year to 31 December 2014

¢ Over the year BUR completed $150m of new investments, three times 2013's level.

¢ Since inception, 32 investments have generated $209m in gross investment recoveries, or $78m net of invested capital.

¢ During 2014, BUR generated $62m of cash from the portfolio, an increase of 97% over 2013's level.

Investec Insight

¢ This trading update provides very limited detail, but seems at first glance gently bullish.

¢ While the two companies are structured and report differently (BUR is an operating company, while JIL reports and thinks of itself as a fund), we prefer Juridica Investments (JIL) in the litigation financing space.

¢ JIL has provided an uncorrelated NAV total return of c.80% over its seven year life, an annualised return of over 12% in NAV terms and close to a 14% annualised return in price terms. Given the maturity of the portfolio we would expect returns to continue to gather momentum.

¢ Furthermore, we like the commitment the company has made to return all realised cash profits to shareholders: post the recent 20pps dividend it has returned approximately $101.3m to shareholders via dividends; totalling 58.6pps or 48% of initial raised capital.

¢ This, in our view, provides meaningful support for the company’s rating. We expect JIL’s FY 2014 results (likely to be published in March) to provide a catalyst for a further rerating.

¢ We would reiterate our comment from last week that the dollar strength relative to sterling should help both companies. Since end-June last year, the USD has appreciated around 13%.

[djderry] 23/12/2014 19:34

Happy Christmas to all holders.