Juridica Share Discussion Threads

[lavalmy] 16/10/2013 07:54

And BTW, he has already rounded up over 75% of the vote in favour of continuation, so as long as they actually vote, things are fine.

[lavalmy] 16/10/2013 07:53

I talked to Fields yesterday and will post about the accounts etc later. This new structure is designed to get rid of legacy shareholders in the old management company (including I understand an ex-wife) and make a clean break. It also allows him to deal with other funds and hire people into Newco with equity participation. Importantly, it cleans up the incestuous structure between JIL and JCML, and greatly simplifies the performance fee. There will be no more loans of the type given to Fields Law. Only to genuine third party law firms.

He spun the new funds as being beneficial to JIL, in the sense that it would allow JIL to participate in a broader range of cases, with co-investment from the other funds. I can't really see him being able to raise new funds until the bigger cases start paying out. After all, the actual returns to date in US$ have not been staggering.

Cheers

David

[jonwig] 15/10/2013 20:25

Don't investment companies usually have a *continuation* vote with a recommendation to vote "for"?

I hope a lot of shareholders don't - carelessly - read it wrong.

Haven't got round to the detail yet.

[djderry] 15/10/2013 20:01

Of course we'll vote against the dis-continuation motion,we'd be like turkeys voting for Christmas otherwise! The change in investment manager is a bit puzzling.Instead of main man Richard W. Fields,we'll have....Richard W. Fields.Oh,yes,and change the investment management name to 'Juridica Capital Management,blah,blah'.Why not change the company name instead to : The Richard W. Field's Litigation Fund!!

[wan] 14/10/2013 08:26

It would appear Juridica is more than likely going into the IC Bearbull income fund. Maybe we will see an update on this next week.

[lavalmy] 03/10/2013 16:38

Just to keep all informed. Our Chairman has been travelling and will call me some time next week. I have asked that we arrange a time in advance, but would actually prefer the matter to be discussed via email. Nothing worse than doing 'if you look at note 8 on page 29, where it says ..' over the phone. But there you go. Our Chairman has his preferences too, and I like to think that I am gentlemanly enough to defer.

Cheers

David

[whilstev] 01/10/2013 11:24

Thanks jonwig i thought that was probably the case but as you say they dont give much away.

[jonwig] 01/10/2013 10:16

Presumably "negative" means negative for JIL. They don't tell us much, do they!
(Your ignorance excused!!)

If the investment was constituted as a loan to Fields Law, there may actually be no impact. (At the gross level ... a nod to the ongoing discussion...)

[whilstev] 01/10/2013 10:06

The negative decision referred to with US$15 million invested, is that good or bad news for juridica? Pardon my ignorance! Anyone!

[davebowler] 01/10/2013 09:22

Investec;
Litigation

Juridica Investments Limited (JIL) Portfolio update

¢ As at 30 June 2013 the carrying value of the Antitrust portfolio was US$139 million. It comprises five antitrust cases and one statutory claim.

¢ The portfolio includes three Antitrust price-fixing cartel cases:

¢ Two of these three cases have been set for trial in 2014.

¢ The third cartel case does not have a trial date set yet but a trial in this case is possible in 2014 given that the case is near completion of pre-trial proceedings.

¢ The portfolio also includes two monopoly cases:

¢ One of these is in the final stages and is awaiting trial court rulings after having been sent back to the trial court following a successful appeal of liability issues. It is expected that this case will likely go to trial in 2014 on damages sometime after the ruling on certain pre-trial motions that are awaiting decision by the court.

¢ The trial court has dismissed the other monopoly case, in which US$15 million was invested, and that negative decision has recently been affirmed on appeal. However, further appeals remain to be pursued before a final result is known.

¢ Finally, certain of the claims in the statutory case have also been set for trial in early 2014.

¢ The Company expects that its Antitrust portfolio will produce significant returns to shareholders over the next 18 months.

[djderry] 29/9/2013 16:04

Boys,you're brightening up a rather dreary afternoon in my country (not UK).I find the debate most interesting.With due respects to all,I'm with LaValmy on this one.

[wan] 29/9/2013 10:29

Yes, I duly noted the relationship/s. But again I assume you (and most investors) were aware of that from the beginning of your investment. I also note that JIL is a 36% shareholder in JCML, along with the fact that JCML has agreed to reduce the investment management fee due to JCML in 2013 by US$425,000.

Anyway, it certainly sounds like the response from Fields will be, at the very least, interesting.

[lavalmy] 29/9/2013 10:21

Wan

Also your quote that

"Juridica Capital Management uses proprietary underwriting guidelines that are based on the team's 50+ years of combined experience as corporate plaintiff lawyers representing the world's largest companies. Juridica Capital Management's team of financial, legal and business experts identify the best investments for the portfolio through an exhaustive evaluation process."

The team still includes Sullivan. Who has left. As well as the chap whose shares in JCML we bought last December.

I note that you didn't explain why you think the track record is excellent. 23% in total since 2008. I don't get out of bed for that.

So why do I own the shares? Firstly I bought at much lower prices. Secondly, I think that the maturing portfolio is undervalued in the books. Thirdly, it is possible that some froth might develop. OTOH, I really didn't like the leak before the recent dividend declaration. I am perturbed by the unjustified narrowing of the discount to NAV. So overall it is touch and go for me.

As always DYOR

Cheers

David

[lavalmy] 29/9/2013 09:22

Hi Wan

As you have posted above:

'For the six month period ended 30 June 2013, gross cash proceeds from settlements totalled approximately US$17.5 million. These proceeds will be paid to the Company at 31 December 2013 in the form of interest on the loan to Fields Law Firm PLLC ("Fields Law").'

That is gross. Not net of the cost of investment.

What they should be doing is discounting the $17.5 mn back to the date of the original investment by approximately 15% p.a. (which is the effective interest rate that they use for the assets held on our behalf by Fields Law). The 15% p.a since the original investment should be recognised as income. The rest is capital.

In contrast to you, I have a significant holding, and this blatant disregard of their own stated accounting policies worries me, as does the rather incestuous relationship between Fields Law, JCML, the group of lawyers involved with the anti-trust assets (who also get a performance fee). I am hoping that, come the continuation vote, things will be less convoluted. I also expect a response from Fields to an email outlining my concerns, which I will send tommorow. No point ruining a chap's weekend.

Cheers

David

[wan] 29/9/2013 08:08

LaValmy...I am not trying to be controversial, but I am interested in discussing the fundamentals and we may all learn something (albeit I have not exactly got a large investment here (yet), so don't expect me to get too involved). I am not sure what you are going to ask Fields, but I welcome and look forward to your update.

In response to your question; "I understand that Fields is a lawyer, not an accountant, so what expertise are you referring to?"

I was indeed referring to the expertise from both a law and financial aspect. I assume that you must know that Juridica Capital Management Ltd is the exclusive worldwide manager for Juridica Investments, so the expertise of the "managers" that I referred to is indeed in part made up by who you are going to speak to, but for completeness -



Juridica Capital Management uses proprietary underwriting guidelines that are based on the team's 50+ years of combined experience as corporate plaintiff lawyers representing the world's largest companies. Juridica Capital Management's team of financial, legal and business experts identify the best investments for the portfolio through an exhaustive evaluation process.



Hence, I am comfortable with their interpretation,valuation and expectations from the portfolio.

Returning to the $17.5m; why do you think it is not a realised gain? According the the Half Year Results it is (I assume accrued) interest on a loan -


For the six month period ended 30 June 2013, gross cash proceeds from settlements totalled approximately US$17.5 million. These proceeds will be paid to the Company at 31 December 2013 in the form of interest on the loan to Fields Law Firm PLLC ("Fields Law").
(END)

And the same again here, post the Results period -

Subsequent to the six month period ended 30 June 2013, additional settlements were reached on a multi-defendant case in the Company's portfolio. These settlements will generate approximately US$12.5 million in cash proceeds which will be paid to the Company at 31 December 2013 predominantly in the form of interest on the loan to Fields Law.
(END)

And my main thrust, particularly the Manager's knowledge of the discussions and likely outcomes, also from the HY Results -

Based on the above mentioned cash proceeds, as well as the Manager's knowledge of current settlement discussions which are in an advanced stage, the Company has declared a dividend of 10 pence per share totalling US$16 million payable on 15 January 2014 to shareholders on the share register at 13 December 2013.
(END)

I rest my case ;-)

Seriously though, I look forward to your update/interpretations etc.

Regards

Wan

[lavalmy] 28/9/2013 09:22

Jonwig

Yes I am with you re accounting being useless at certain things.

What JIL are doing is saying that all the proceeds they receive are profits. This is not arcane. They are not accounting for the costs of their investments. If they were selling clothes, you would expect them to deduct the amount they paid for their stock. This is not what they are doing.

As I said, I will be asking Fields about this, and will report.

Cheers

David

[ammons] 28/9/2013 09:07

Thanks Lav. Look forward to your update. Not an accountant myself so your take on results etc makes a good read. You remind me of geswan though he recently stopped posting.

[jonwig] 28/9/2013 09:07

David (La Valmy) is right, but so are the rest of you/us, I believe.

The statement in post #187 is a cash-based statement; the notes referred to in post #189 is an accountancy convention statement. When drawing up accounts under IFRS, the company needs to reconcile money committed in one period with money received in another. The discounting back of receipts is the way it's done.

Quite honestly, I believe IFRS accounting is pretty useless when dealing with companies such as this: for example, BUR has just reported a $26m loss on an accounting basis following a reorganisation which (as they point out) has no cash relevance whatsoever!

(And IFRS accounting is totally incapable of dealing with life insurance companies - it's hardly worth reading these accounts and the companies themselves only use them when they need to present results.)

To me, if JIL commits $100 in one period and later receives $120 net of costs, that's a profit of $20. And a dividend of - just about - $20.

As for net asset value, this shouldn't change much from just before a case settlement to just after: before, it's an unrealised gain, after, it's a realised gain. Then when the cash is paid out, the NAV will drop by the dividend amount.
If the NAV were actually falling over time, it would mean that JIL was truly eating into its capital base. As it happens, NAV is steady or even rising over time.

[lavalmy] 28/9/2013 08:49

Wan

I don't have a relationship with any of my investments. And I am financially literate. As I said, I will ask Fields next week, and when he repies will update accordingly.

I understand that Fields is a lawyer, not an accountant, so what expertise are you refering to?

And what track record? From the 2008 accounts "For Sterling investors, the early returns and currency gain resulted in significant annual growth in the NAV of the portfolio, which had increased by 30% to 130.6p per ordinary share at 31 December 2008". Since when they have paid 20p in dividends and increased the NAV by 10p (using 2013 H1 results @ 1.55 GBP:$).

It is now 2013, what sort of return is that?

Cheers

David

[wan] 28/9/2013 08:09

LaValmy...You appear to have a strange relationship with this investment, but everyone to their own! Again though, I would highlight that you have not got the benefit or experience of interpreting the portfolios, or individual case outcomes. The managers on the other hand has, and these are the same managers who you have a lot of faith in substantially increasing the NAV. In short; the managers have assessed that $17.5 million is a realised gain, but you don't think so, as opposed to know so. Myself, and it would appear a lot of others, would prefer to stick with the experts opinion on that, especially given their track record to date!

[lavalmy] 28/9/2013 08:01

Azalea

I have no doubts, but I will ask Richard Fields about it.

Cheers

David

[azalea] 28/9/2013 07:11

David
Why don't you put your questions and doubts to the company.

[lavalmy] 28/9/2013 06:17

From the accounting policies notes

'Proceeds received by the Group are allocated between return of original principal and any gain based on the following process:
Proceeds are discounted back to the original investment date at a discount rate equal to the internal rate of return of the most recent valuation;
This discounted value represents the portion of proceeds attributable to a return of investment with the remainder representing a gain associated with the partial settlement;'

How does that square with the following from the latest RNS declaring a dividend:

'Juridica, a leading provider of strategic capital for corporate legal claims to both businesses and the legal markets, is pleased to announce that partial settlements from an investment within its maturing portfolio have generated gross cash proceeds of US$17.5 million. These settlements were completed in June and the Company will receive the cash proceeds at year end.

The proceeds represent a realised gain on the Company's investment and not a return of capital.'

The short answer is that it doesn't.

Given the intrisically uncertain valuation of litigation finance assets, I would prefer the borad of directors to apply the accounting policies that they say they have adopted. Blatantly ignoring the said polices is not inspiring - makes me wonder why they are doing it.

Cheers

David

[wan] 28/9/2013 05:21

LaValmy...As I said, accountancy is not exactly my strong point, but your interpretation/example of events would appear to imply that the management can work wonders, if as you say you are expecting a substantial increase in the NAV. Likewise you should be thrilled about the dividends in the interim of that. Whilst it is then possible they could reinvest, they do not appear to be exactly strapped for cash either!

The amount of dividend would also take account of the managers view of new cases/investments, but perhaps more importantly, the interpretation and expectations of the existing portfolio (which makes for an interesting read), which according to my reading is an important, if not critical aspect.

[salvorhardin] 27/9/2013 19:45

They're paying out the vast majority of the profits, including capital gains, as dividends but no more than that.

From the 2012 annual report:

Comprehensive income attributable to shareholders: $37,614,010 (see page 13)

Total dividends declared for 2012: $33,562,775 (see page 27 under note 11)