Litigation Capital Manag... Share Discussion Threads

[jackson83] 02/8/2023 19:28

heading bck DOWN to 70p's or 69p's again lol


probably be some big SELLING / without fresh news / nice LOO PAPER lol

x

[jackson83] 02/8/2023 19:28

heading bck DOWN to 70p's or 69p's again lol


probably be some big SELLING / without fresh news / nice LOO PAPER lol


what number is Trish house as on way now


x

[chuckol] 01/8/2023 10:14

Well said, Maddox. And it needed to be said in explicit terms to prevent the naysayers from chipping away at LIT's fundamental stability.

[maddox] 01/8/2023 09:59

Thanks for the link - good article.

Thankfully, LITs statement states that LIT were aware of the risk of LFAs falling within scope of DBAs and thus framed their contracts to avoid this.

'The decision has the potential to impact litigation funding arrangements entered into within the United Kingdom only to the extent that the funders interest or return is solely calculated as a percentage of the Courts award in favour of the funded party.

As investors are aware, LCM structures its funding contracts so that its return is calculated as a rising multiple of invested capital over time. This has been a deliberate decision and those arrangements are unaffected by today's judgement. Therefore, LCM's existing investments and its business model moving forward is not adversely affected by the decision. This has been a focus of management discussions for an extended time and this ruling underlines the importance of this planning. The decision neither came as a surprise nor does it pose a risk to LCM's current investments or its business model. As stated above, we welcome this as a potential positive differentiator.'

[mtioc] 31/7/2023 21:35

Sorry, repeat. Will stick to PC rather than phone.

[mtioc] 31/7/2023 21:10

Obviously, there was a parting a few years ago, but I was not aware of the exact circumstances.

That said, as I understand it, he has been involved in litigation finance via Vanin, Burford, Chancery and LCM almost since its inception in the UK.

His article is an initial view on the Supreme Court decision and the potential impact on the industry in the UK, and not re any individual company. As such, I thought it helpful.

[chuckol] 31/7/2023 19:53

Don't forget that Rowles Davies was sacked, yes literally sacked, by LCM.

[mtioc] 31/7/2023 18:09

Will take some time to digest.

Link is hxxps://www.linkedin.com/pulse/what-next-uk-litigation-finance-industry-nick-rowles-davies/

[maddox] 31/7/2023 12:15

The notion that old completed cases could be revisited is novel - difficult to find a basis for that once everything is settled. Can you post the link please?

The IP would need to sue the Lit Fin Firm - and would probably need Lit Fin so to do;-)

[maddox] 31/7/2023 09:32

Welcome aboard MTIOC.

I anticipate that the results optics will be focused on the P&L rather than B/S - that should look fantastic - admittedly following a couple of Covid- effected years.

Sounds like you've been doing some detailed evaluation - be good to get your thoughts?

Collins St - looked at before - Value/low risk oriented aimed at Wealthy Individuals/Family Officers - i.e. aimed at wealth preservation rather than growth. I'd suggest it would be good to see more Funds on the key shareholders list to create more demand for the shares.

[jackson83] 30/7/2023 23:09

was great to be able to top up / buy more last week all thanks to the


SHORT SELLING / PANC EXITING OF SHARES lol


thanks for the cheap ! entry point of JUST 71p average ....

last week = I loaded up & now over 20% in profit NICE .. thank you sellers / SHORT SELLERS


welcome any short selling / panic selling on MONDAY


looking to add 750k soon / Monday to Friday

[mtioc] 30/7/2023 18:41

Thanks for an excellent thread. I have been working on LIT for a while and dipped my toe in last week (@c.90p and got a shock post Supreme Court!).

For what it is worth, I prefer cost accounting to fair value unless there is an agreed/understandable FV method. I think there is now following Burford/SEC discussions, so LIT is probably obliged to apply it under IFRS.

On valuation, the ranges appears to be 2x-4x NAV/Equity. From experience with other investments in the sector (e.g. Burford), does this take account of differing accounting policies (e.g. cost vs FV). I assume the NAV multiple would be higher with cost accounting. I also assume LIT will see a significant NAV increase (50+%) when FV is applied. I suspect RoE also drives this multiple and LIT's will increase significantly as the fund incentives continue to feed through.

Concur re H1 roll forward as presented above (just annoyed I didn't get there sooner!). I had not appreciated the significance of the impact of fund performance fees. For what it is worth, my guestimate is A$30-$35m PBT. As per above, lots of potential for unexpected costs or provisions.

Does anyone know about Collins Street beyond that they are a Australian family office? Over the last few years, they have been consistent buyers.

[maddox] 30/7/2023 10:14

Thanks for those figures, Tom.

The current Broker Forecast put LIT on a forward p/e of 10.3 (88.4p/8.6p) for FY23 so relatively cheap - but looking at what you’ve posted – they would be comfortably beaten.

Based on your projected Gross Profit A$83.3m suggests a Net Profit A$28.32m/£14.67m (based on Broker's Net profit Margin used of 34%) giving a fully diluted eps (119m shares) of A¢23.7 (12.27p) and a p/e of 7.2 for FY23. That would be Net Profit +58% ahead of Broker Forecast and eps +43% ahead.

And the reported figures against the prior year will look excellent - Revenue up +76%, Net Profit +3x and EPS +2x.

Of course, we have to take some healthy scepticism towards making precise forecasts, the costs are unknown, especially the financing costs – so, the Net Profit Margin has been fluctuating year to year. Nevertheless, these next results should look sparkling even taking a large margin of safety.

Really like LIT putting out RNSs on the case wins that gives investors such transparency.

[74tom] 28/7/2023 19:21

The Investec forecasts to 30/06/23 suggest the wider market is completely unaware of the cumulative value of H2 case wins here;

22/06 - A$11.5m total revenue / A$8.6m gross profit
19/06 - A$32m total revenue / A$29.7m gross profit
03/04 - A$12.5m total revenue / A$10.4m gross profit
09/03 - A$14m total revenue / A$5.75m gross profit
20/02 - A$8.6m total revenue / A$6.3m gross profit

Half year revenue - A$4.699 / A$1.1m gross profit

Total revenue = A$83.3m / A$61.9m gross profit

It looks to all the world like a 60%+ beat vs broker expectations is on the way...

[maddox] 28/7/2023 18:00

Simon Thompson has re-iterated his BUY recommendation on LIT, but missed the publication date for this weeks magazine. He cites Investec, house broker, as having been surprised by the 2.2p dividend announcement. Cash is effectively the feed stock for a litigation financier - so this obviously reflects highly positively on their cash position.

Investec are expecting LIT to report 70 per cent higher revenue of A$51.7mn (£27mn) in the 12-month period to 30 June 2023 and increase pre-tax profit by a quarter to A$25.3mn. On this basis, expect earnings per share (EPS) of 16.4c (8.6p). Investec expects EPS to almost double to 30.6c (16p) in the next financial year to 30 June 2024, implying the shares are rated on a forward price/earnings (PE) ratio of five. These are the Broker Consensus Figures in the market.

[74tom] 28/7/2023 13:48

Oh and on Rabah, the costs have been decided as per para 62 of that doc;

“For these reasons, I make the following order:
(1) Pursuant to rule 42.14(2) of the Uniform Civil Procedure Rules 2005 (NSW), vary order 3 made on 2 June 2023 such that the defendant is to pay the plaintiff’s costs of the proceedings on the following bases:
(a) costs assessed on the ordinary basis up to 7 April 2021; and
(b) costs assessed on an indemnity basis on and from 7 April 2021.“

So I guess a final summing up & then it’ll be finalised & announced by LIT?

I also think that doc confirms this to be a direct balance sheet matter, based on the following;

“3. On 14 August 2019, the Company, the Liquidator and the Plaintiff entered into an Assignment Deed, by which the Liquidator and the Company assigned the claims which are the subject of these proceedings to the Plaintiff.“

Fund 1 didn’t close until March 2020, so hard to see how this isn’t balance sheet?

[boozey] 28/7/2023 12:29

L2B thank you for sharing all your research and insights - keep posting!

[74tom] 28/7/2023 11:09

Cheers for the update on Rabah @L2B.

[l2b] 28/7/2023 10:20

LCM purchased case against Rabah now at costs discussion stage
www8.austlii.edu.au/cgi-bin/viewdoc/au/cases/nsw/NSWSC/2023/869.html?stem=0&synonyms=0&query=lcm

LCM seeking $2m for costs - final number TBC.
Based on $20.2m (award + interest) for 85% share then that's a whopping return.
Hopefully then hear whether direct or 3PTY.

[l2b] 28/7/2023 10:06

Tanzania confirms annulment appeal against IDA
cdn-api.markitdigital.com/apiman-gateway/ASX/asx-research/1.0/file/2924-02691158-6A1160409?access_token=83ff96335c2d45a094df02a206a39ff4

"reviewed by lawyers representing the claimants and does not appear to represent requirements for an annulment"

They had 120 days but quick submission as the interest is ticking each day.

P.S. hopefully some topped up this week - it's funny to see the AIM just as inefficient as the ASX (if not more so!)

[someuwin] 28/7/2023 08:09

Thanks for the Simon Thompson IC link. Good to see the story getting more coverage.

"...So, LCM is well-funded, delivering positive news flow, has a modest earnings multiple and the forthcoming results will reveal material hidden value. The shares also trade on 1.8 times spot book value under conservative cash accounting – and therefore I re-iterate my buy call (‘Litigation funder LCM makes an eye-watering return’, 19 June 2023). Buy."

[boozey] 27/7/2023 23:00

Been quite a dramatic 24 hours here. I took advantage of yesterday's carnage to top up at 84p which was clearly premature, wish I waited another 30 minutes and got 70p! But never mind!! I now have an enlarged position for the long-term and hope results and outlook will be as outlined in the previous two posts. @Citywolf and others, thanks for your insights and keep posting.

[citywolf1] 27/7/2023 22:52

@74tom I was thinking the same thing when I read it. These are either out of date or clueless forecasts. We know from the RNS'd cases alone that revenue will be $80m+ and pretax profit should be in the $38m+ range. And that assumes they have disclosed all the wins via RNS which may not be the case.

If this is what the market is expecting then the results day should be a big wakeup call. The forecast for next year also looks conservative given size and maturity of portfolio...

Then on top of that you have the FV uplift. Hopefully results day is when the market finally wakes up and we break out. If the bumper results + FV mark ups + bullish outlook for next year doesn't do it, hard to see what will

[74tom] 27/7/2023 22:25

An interesting point raised in the IC article;

“Analysts at house broker Investec note that the change in accounting policy could aid the group to move its domicile to the UK from Australia and in the process attract more interest from UK institutions.“

I also note the forecast expectations;

“The brokerage expects LCM to report 70 per cent higher revenue of A$51.7mn (£27mn) in the 12-month period and increase pre-tax profit by a quarter to A$25.3mn. On this basis, expect earnings per share (EPS) of 16.4c (8.6p). Investec expects EPS to almost double to 30.6c (16p) in the new financial year, implying the shares are rated on a forward price/earnings (PE) ratio of five.“

Surely A$51.7m gets smashed?