Litigation Capital Manag... Share Discussion Threads

[greenknight1] 30/9/2021 12:16

Breaking out again

[parob] 30/9/2021 11:25

This is looking much better. Hopefully will be heading to new ATH's soon.

[74tom] 28/9/2021 09:36

Material news re. Go-Ahead Group today which is relevant to LIT's pending anti competition case that was RNS'd in July in relation to one of their other rail franchises, Govia Thameslink...



Shapps said: “There is clear, compelling and serious evidence that for years, London and South Eastern Railway Services have breached the trust that is absolutely fundamental to the success of our railways. When trust is broken, we will act decisively.”

"The government’s decision leaves the group with GTR (Govia Thameslink Railway), which runs the Thameslink, Southern, Great Northern and Gatwick Express services. Both GTR and Southeastern are run by Govia, a joint venture with France’s Keolis, dominated by Go-Ahead with a 65% share."

I think this significantly increases the likelihood of us winning this case, as if the culture within Go-Ahead led to breach of trust on LSE Railway, then the court are going to take a dim view on potentially similar behaviour on another franchise...

[tomps2] 28/9/2021 09:12

Litigation Capital Management (LIT) full year 2021 results presentation September 2021

LCM’s CEO, Patrick Moloney, Executive Vice Chairman, Nick Rowles-Davies & CFO, Mary Gangemi present full year results for the year ended 30 June 2021.

Watch the video here:

Or listen to the podcast here:

[someuwin] 27/9/2021 15:13

This is the most compelling slide imo...

[74tom] 27/9/2021 15:11

Hmmm, very unusual situation on the L2 order book at present; 58238 shares on the bid at 1.065 and 58754 shares on the offer at 1.08... I've not seen anything like this in the 12 months I've followed LIT. Doesn't mean anything per say, but irregular setups like this can often be a precursor to news...

Now to watch Funky's latest update!

[johnwig] 26/9/2021 23:48

Great stuff someuwin. Thank you.

[johnwig] 24/9/2021 16:49

Farnes. Before you type away furiously next time read the header (and elsewhere on this thread passim). I am an admirer of funky (or Mateus as I knew him) as you would have seen.

However I don't use twitter.

[farnesbarnes] 24/9/2021 15:57

Johnwig

No disrespect, but Mateus is probably more clued up on potential growth stocks than many respected investment gurus out there. For example, when Slater was buying BOTB Mateus was selling, on the basis that the growth story had changed substantially.

Don't ridicule something you know nothing about.

[maddox] 24/9/2021 15:06

Even in normal times the periodic reporting cycle does not ideally suit a business model such as that of LIT. Dependent upon when cases settle - the performance will look erratic. Covid has caused delays to both funding and settlement activity thus exacerbating this effect even further.

Of course, the other side of the coin, is that cases inevitably will settle and when conditions normalise we might then see a deluge of settlements all drop into a single accounting period. LIT will then look an absolutely fabulous business, cheap as chips and we'll all look like investment geniuses...... probably until the following period.

This volatility is inherent in the Lit Fin business model and I doubt that Mr Market will be able ever to iron-out the wrinkles.

[johnwig] 24/9/2021 15:01

For readers as bewildered as I am, 'funky' is Mateus Funkmeister. LOL. Sounds encouraging....

[parob] 24/9/2021 11:10

Funky on TwitterHad a very insightful and enjoyable chat with the team at LCM this morning, video to come Sunday PM!It's great to see management willing to engage with the private investor community, and have a laugh at the same time! Life's too short!Here's a little taster...hTTps://twitter.com/financefunky/status/1441341435005988867?s=21

[farnesbarnes] 23/9/2021 15:18

hpcg

Great post. What I would add though whilst I too have the temptation to trade the swings, the danger is that an RNS could drop any morning which could have a material upward impact on the share price. By all means trade, but not with your core holding.

[kpo115] 23/9/2021 14:48

A very interesting and even-handed analysis. I think you justify your assumptions very well.

[hpcg] 23/9/2021 13:57

I finally have a model I'm happy with. Its a bit confused, or perhaps better put delayed, by covid, and the data series is not long enough to be precise, but it shows the substantial and attractive returns that are nowhere near priced in. So I think this is best looked with a cash flow analysis. All monies, bar the two one off costs when they raised equity, convert to something like 100% cash return two years later.

This is a bit occluded in the earlier year because the spending has to be added up, but as of 2019 all expenditure is lumped together in one line. Then in 2020 we have the complication of the fund and third party movements, but these can also be unpicked from the accounts. In theory this year cash revenue should have been circa A$66m but was only A$37m. Next year we would have been looking for circa A$100m, but I imagine it will be closer to the A$66m. See my final observation at the bottom.

So, valuation then? i quite like the steady state model, where we invest A$50m each year and get back A$100m each year. What would that be worth? Let's say I'm only happy to purchase a generous 10% per year revenue stream. For A$50m, that equates to A$500m or approx £250m. Now this needs to be risk adjusted. Firstly, while turning A$15m into A$30m has been demonstrated turning A$33m into $66m has not, never mind A$50 into A$100m. Nor do we know if larger cash sums are as easy to collect as smaller ones. Note that by using cash no discount is needed for bad or late payments, those are already in the figures. Secondly we need to discount for competition. There are plenty more companies joining the party so these returns will come down. On the positive side we know the sector is growing, and this is a long duration asset with long duration returns, so worth closer to 20x than 10x.

As a result I am very comfortable with my holding right now, and I'll be adding when there is an opportunity, like I have been in this current dip. To be fair I also might look to trade given there is volatility. I would gear up with spread bets on any announcements that indicated cash revenues will be hitting the numbers outlined above.

A couple of other observations:
One can also track retained earnings which has gone from over A$8m in the hole in FY2017 to neutral in FY2018 to +$20m in FY2021.
Cash flow was greater than revenue for 2021 but normally revenue is a fair bit higher as some cash from recognised earnings will be collected in the next FY. This demonstrates the slow down in case completions. We don't know what the lag will be going forward. So we might have seen the return period delta move out from 2 years to 3 years and this does make the company slightly less valuable. It all depends on how quickly commercial courts catch up.

[transhoneyqueens] 23/9/2021 13:31

time will tell ... would be nice to see 130p again

[hotaimstocks] 23/9/2021 13:29

someone knows something.