Juridica Share Discussion Threads

[flying pig] 20/8/2013 08:47

I am just sorry I did not pick up a few more than I did earlier in the year.
Decent dividend and c40%+ capital gain.
Continue - yes.

[jonwig] 20/8/2013 07:23

You're right djd. How many times did they refer to continuation - at least three!

JIL is, I think, aware that BUR presents its results in a very informal style, and may well be emulating them a bit.

[djderry] 19/8/2013 20:14

Is it my imagination,or is the company giving us much more information than usual?
No need to worry,I'll be voting for a continuation.Please,bird lovers,do not kill the goose that laid the golden egg!

[djderry] 19/8/2013 17:37

Thanks guys for the brokers' reports,most helpful.

[davebowler] 19/8/2013 12:57

Investec;
Litigation

Juridica Investments (JIL) Half-yearly Results to 30 June

¢ JIL's NAV decreased from US$2.20/share at 31 December 2012 to US$2.17/share at 30 June 2013. This 1.4% reduction was primarily due to the operating expenses of approximately US$4.0m, net unrealised gain generated from change in valuation of the Company's investments of approximately US$1.4m and intangible amortisation expense of approximately US$0.4m.

¢ The Company's investments have had significant activity in their underlying cases. Beyond the recently announced settlements, the Company also has several investments in which the underlying case came to a major event for which the Company has not yet received any proceeds. There were also two supplemental investments in existing cases that were beyond initial funding commitments. These supplemental investments were made at opportunistic times and on highly favourable terms that the Manager believes increases the likelihood of greater potential return to the Company.

¢ Based on the outlook provided by the Manager, the Board expects significant returns from the Company's investment portfolio during the remainder of 2013, through 2014 and beyond. The majority of the Company's investments are reaching their concluding phase and we expect the portfolio to continue to generate significant cash returns over the next 12 months.

¢ There is also a pipeline of attractive investment opportunities consisting of: three anti-trust cases; several patent portfolios with Fortune 100 and other companies; and numerous commercial claims. Subject to continuation and expected investment proceeds, these opportunities will provide future income and capital growth for the Company.

¢ It is possible that one or more settlements may be concluded as a result of an award or judgment or prior to conclusion of a case that could result in net cash proceeds to the Company in excess of 10% of its current net asset value.

¢ The Company currently has a total of 16 investments representing 21 different cases or legal actions. Since inception, the Company has made 24 investments representing 30 different cases or legal actions. The Company's current portfolio is diversified amongst three primary groups of Antitrust and competition ($107.5m), Patents ($32.2m), and commercial ($19.7m), respective number of cases in each portfolio are 6, 8,and 7 respectively.

Investec Insight:

¢ With the portfolio maturing and investors seeing large returns through dividends the fund provides a non-correlated form of income, which in the current environment is attractive.

¢ We would expect the fund to pass the continuation vote which is coming later this year as both returns have been solid and the outlook is increasingly positive.

¢ With one dividend of 10p/share announced on 4 July 2013 which will be paid on 15 January 2014, and the potential for a further dividend of at least 4p/share to be announced before year end, investors have a degree of transparency on returns profile. Looking forward we might expect to see the fund move to a more standardised form of dividend, providing investors with a more predictable and stable level of dividend.

¢ Investors should however expect returns to be relatively lumpy, and based on the guidance there are number of investments that could see large cash returns.

¢ The fund currently trades at a c.3% premium to NAV and we would expect JIL to trade around these levels based on the current level of yield and portfolio outlook. Overall we see JIL as a very attractive way to gain diversification and a high level of dividend at a reasonable price.

[ihollins] 19/8/2013 11:45

v.positive results - the cream has not even materialised as yet - unless the outlook gets muddy its a long term hold - people will fear the nav value compared to the share price -

[orchestralis] 19/8/2013 11:36

they may not even pay the 4p

From earlier statement

"If made, such sum would be not less than 4 pence per share"

[jonwig] 19/8/2013 11:34

Dave - I don't recollect them saying the extra 4p would be paid at the same time as the 10p already declared. Not that it really matters, of course.

[davebowler] 19/8/2013 11:03

Liberum;

Juridica Investments (JIL / NR) – Cash distributions expected to remain strong

Highlights:

n NAV -1.4% – JIL's NAV fell by $0.03 to $2.17 (139p) over the 6 months to 30 June 2013, as operating expenses of $4m offset unrealised gains less intangibles amortisation of $1m.

n Dividends – At least 14p of pre-announced dividends are expected to be paid on 15 January 2014 – 10p from a $17.5m exit and at least 4p from the $12.5m partial settlement announced in the August portfolio update.

n Portfolio activity – In addition to the cases already settled year to date, Juridica believes it has several investments in which underlying cases came to a major event in H1 and likely to award nearer-term proceeds.

n New investments low – New investments during the period stood at $656k, representing supplemental investments in 2 existing cases, and substantially increasing JIL's percentage interest in one of the cases.

n One significant case highlighted – JIL identify one particular case that may complete or reach an advanced stage during the next 6 to 18 months and result in net cash proceeds in excess of 10% of current NAV.

Liberum View:

n Total distributions over 12 months to January 2013 are expected to be at least 27p, (13p paid in April 2013 and at least a further 14p expected in January) generating a distribution yield of 19%, or 10% just taking the prospective January distribution.

n We believe management's rhetoric guides towards further special distributions to shareholders over the next 12 months if the outcome of certain cases is as expected, and their significant case highlighted could add at least a further $0.22 to NAV over the next 6 to 18 months.

n JIL trades on a 2.7% premium to the 139p NAV, and on a 12 month view, assuming 10% NAV growth from profitable realisations (average IRR on realisations to date stands at 82%) and assuming total distributions in January of 17p (14p already announced), generates a total return of 20% post operating expenses.

n Maintaining a pre-distribution prospective premium of 2.7% would therefore generate a price of 172p pre distributions, 20% higher than last night's clos

[jonwig] 19/8/2013 08:41

Probably is a bit toppy, as you say, but if they can convince the market that a consistent 7% return on NAV is sustainable, there shouldn't be much downside.

The risks shouldn't be ignored, even though they've done brilliantly up to now:

Given the uncertain nature of litigation in general and the quantum of damages that trial juries may award, the Company's portfolio has the characteristics to produce a wide range of potential returns.

[lavalmy] 19/8/2013 08:28

Slightly flat actual results, with timing/quantum issues cancelling out the effective interest. The bullish tone remains though, and I like the setting up of the new pipeline - it seems to be pretty specific. I can't see large companies and their law firms sitting around for a couple of years merely talking about funding cases. JIL must be able to convince them that they will have the funds soon.

Price wise a bit toppy?

[jonwig] 19/8/2013 07:19

Interim results, about a month earlier than last year:



Some references to the continuation vote in December probably the reason for bringing results forward.

The only case they've "lost" (0608-S) is mentioned. Originally I believe they wrote it off, but now it's written down by 75%, so they obviously hope to collect something. (Links in post #20.)

[lavalmy] 13/8/2013 17:35

Hi Jonwig and others

One reason why I was very bullish about the shorter-term progress of JIL was the valuation placed on JCML in December. By my reckoning, the whole was valued at cUS$19mn, and remember that this was a transaction by insiders (on both sides of the transaction) so much more likely to give a true indication of what management expects. As the performance fee is the only real asset of JCML, this equates to a discrepancy between JIL's NAV per the accounts and the NAV of JIL that JCML's valuation suggests, of around £50mn net of fees. Call it 50p per share. Add that to the expected NAV at 30 June and we get to £2. Then add this link to an Forbes piece on JIL

hxxp://www.forbes.com/sites/danielfisher/2012/10/12/juridicia-chief-used-to-argue-lawsuits-now-he-invests-in-them/

Where at the end it says

'Going forward, Fields would prefer to reach a state where the firm distributes 6-7% dividends and reinvests the rest in expanding the litigation portfolio.'

and the 14p begins to make sense. 7% on my adjusted NAV.

We will see in September perhaps.

I could of course be completely mad.

Regards

David

[jonwig] 13/8/2013 16:22

On the point of confidentiality, BUR has quite a bit to say and it's more complicated than I thought (FY results 2012):

We believe that the use of litigation finance should be an entirely unexceptional matter. Indeed, we believe that the disclosed presence of Burford in a case should make a defendant think twice about its position, as it would then know that a dispassionate, highly skilled, profit-motivated entity had evaluated the plaintiff's case and concluded that it had real merit. So, left to our own devices, we would shout it from the rooftops.

However, the legal system has not caught up with that way of thinking. If Burford's presence is disclosed in a matter, distracting and expensive third party discovery is sure to result. In 2012, Burford spent more than a million dollars addressing third party discovery requests directed to it and other collateral attacks on its presence in pending litigation matters. Moreover, we don't quite know the impact of the presence of litigation finance on judges and juries. There are clear rules in the US about plaintiffs not being able to tell juries about the presence of insurance, and about defendants not being able to talk about contingency fees. There are no such clear rules about litigation finance. Thus, we put the business, our clients and our returns at risk when we disclose information about pending matters.

That is even true as to just the amount or date of investment. Often, defendants have financial information in discovery about the plaintiffs. Making public even the amount of an investment can lead a defendant to match that to the information it has and draw a path to us: it has happened to us before.

Moreover, this is ultimately a decision for our clients, not for us. It is the client's litigation matter, not Burford's, and it is the client's choice about what and how much information can be publicly revealed, even after a matter is concluded.

So, while we realise it is frustrating for investors, prudence counsels that we remain entirely silent about investment matters until they are entirely concluded and we are fully paid, and even thereafter our disclosures are subject to our obligations to our clients.

[jonwig] 13/8/2013 14:17

djderry, etc.... I seem to remember (will produce link when I've time) that the litigating parties are not informed of what funding arrangements are in place. In fact, confidentiality is legally binding.

But anyone who deals with Sullivan Law as plaintiff might guess there's a connection.

Of course, some stuff does leak out: Juridica with the Romanian govt and a Texas oil man (earlier in this thread - not very pleasant) and Burford with Chevron and Venezuelan natives.
In both cases the leak was caused by JIL or BUR being 'turned over' and hence initiating their own process.

Like some others here, I wouldn't be a buyer at this price (though sub-80p when nobody loved us was different), but any strategic future plans revealed at the continuation vote could be a different matter.

[davidosh] 13/8/2013 14:05

djderry....Good point although all those professionals would have to be careful about breaking insider trading rules of course. JIL surely have to notify the market immediately a significant case is won.

[m1das_touch] 13/8/2013 14:03

I like the way you've covered your back there djderry! After all you wouldn't want to end up on the wrong side of Juridica's lawyers by facing a lawsuit for defamation...or else you might be the source of our next dividend payment haha :)

[djderry] 13/8/2013 13:33

Very positive news,Juridica is continuing to prove its worth.The due diligence stage is crucial,when they risk assess the potential cases.As long as they only back winners,we're in business! As regards the 'leak',I've always been surprised there hasn't been a lot more of it in the past,all the lawyers (on both sides) know the outcome of cases,all the court officials,all the litigants etc....For example,and may I make it clear that I am not in any way suggesting this has ever happened and certainly did not happen in this case,if a defendant knew he/she was about to lose a case,why wouldn't he/she invest in the winning co.'s legal finance providers?

[speedsgh] 13/8/2013 13:23

Orchestralis - £2.00 seems a bit optimistic imo. They paid out 13p in Jan 2013 + the share price got nowhere near that. Admittedly the macro picture seems a bit more positive now + the recent remarks by BoE on holding down the base rate has served to considerably lengthen the great hunt for income but I would still be v surprised if we were to reach £2.00. I look forward to being proved wrong.

[orchestralis] 13/8/2013 13:18

This has got to be valued at £2.00 at least with a >14p divi

[m1das_touch] 13/8/2013 12:27

Likewise I won't be adding and if the share-price increases much further may need to consider top-slicing. Very reluctant to do so though, as this is one of the most consistent performers in my SIPP and the fat dividend is obviously very welcome.

Just finding it very hard to value Juridica!

[lavalmy] 13/8/2013 10:41

Jonwig

I agree that is what they are doing, but not what they should be doing. Anyway, it is only really significant fro reinvestment purposes.

I don't think the loan interest is performance-related per se, but is just added to the totals.

I am looking forward to the interims and expect a write-up of sorts (based on no evidence at all!). A steady-as-she-goes peformance based on the average dicount rate they use would give a NAV of around 155p. Can't make any sense of the share price action, given that both amounts received are already in the NAV. A very narrow discount to NAV in the absence of new write-ups, IMHO. I wouldn't be a buyer at these levels, and am happy to hold. Got my fill at an average of 107p and will not be adding.

regards

David

[jonwig] 13/8/2013 09:53

David, I'm mostly going by statements such as this (AR 2012 p3):

During the year ended 31 December 2012, the Company received gross
proceeds totalling approximately US$38.4 million related to the final
settlement of two cases, partial settlement in several cases with multiple defendants, and recovery of expenses related to an antitrust case.
The time from initial commitment through collection on these proceeds ranged from 2.5 – 4.2 years. The vast majority of these proceeds
were returned to the Company in the form of interest on the loan to Fields Law Firm PLLC (Formerly "Fields Sullivan PLLC"). Total cash
profit based on these returns was approximately US$38.1 million,
all of which has been recognised in past reporting periods as unrealised
gain.

I think the loan interest is performance-related.

NB: Interims mid-September.

[lavalmy] 13/8/2013 08:58

Jonwig

Agreed, but all of the 17.5mn and this 12.5mn is treated as previously recognised gains. Not one dollar is considered as the initial investment. Lets take your 130 - if they received 65 of that in cash proceeds, then distributale profit is 15 and return of capital 50. But they are not doing that. Sure it allows them to declare dividends, which would otherwise be smaller, but the downside is that they are not reinvesting in new cases.

I am sure we will see what the plans are before the vote, possibly at the interim stage?

Regards

David