Litigation Capital Manag... Share Discussion Threads

[jackson83] 11/7/2023 23:36

I wonder if funky finance Mateus the sunglasses faked dude with a wiggy on his Barnet will ever come back/post or even apologise to the ones who did not short it as they lost plenty due to the con man


most shorting as the share price action speaks volumes

[jackson83] 11/7/2023 23:32

SELL the SPIKE and BUY the dips ... its worded every time as this cant hold onto any rise as profit takers cash!! out ... I will add at 75p and also in the 60p's as without news we are in free fall is guess lol

[74tom] 07/7/2023 12:34

I can understand many PI's not having the desire to get involved here after the court delays over last few years or being unaware of the why the addition of the fund management arm is transformational. Once the share price starts rising I suspect more will get intrigued enough to do the research or check out the BB's - as is always the case.

Your comparison to early Burford performance was spot on in my view - it took around 5 years from the late 2009 IPO for them to break out above 140p. Almost certainly due to a lack of awareness around their business model. Once shares made the breakthrough they exploded to £12.50 over the next 2 years... Halfway through this period in April 16 they hit $1b AUM (share price £3, MC £600m)

NAV is NAV whether it's specialist or not, it just means it takes longer for the market to realise - and yes a resumption of broker coverage wouldn't hurt - especially with a nice upgrade to the target price (TP when coverage was withdrawn last July was 146p)

[someuwin] 07/7/2023 11:59

I was listening to the excellent Paul Scott (Stockopedia's main small cap commentator) doing his weekly podcast recently. I was surprised the he said that they don't comment on LIT because it's too speciaist. Maybe that indicates part of the issue here that people don't understand the business model?

I'm hoping that when the full year trading update comes out (hopefully next week) Canaccord Genuity will resume coverage with a comprehensive note.

In the meantime we can take advantage, adding before more peeps cotton on.

[74tom] 07/7/2023 11:32

@citywolf1, that's a really good post that raises some excellent points, especially on currencies. Certainly it's amazing to me that the market doesn't seem to have priced in anything for the $450m of fund management cash they are now leveraging. 3 settlements in and it's already started to transform the balance sheet. It's a 'show me' market though, so perhaps that's why buying hasn't really started yet in earnest.

I think it's always good practice to be conservative, but totally agree that there is obvious upside given the timing of deployed capital & very material acceleration in commitments that was reported in the half year results. Will be good to get a handle on whether this step change in case commitments continued in H2.

Re. currency translations, I think this is a crucial point for all of the reasons stated. You'd have to think that the CEO relocating to the UK evidences that it's a matter of time before they change the reporting currency. Timing wise, maybe once the older Australian cases work their way through? Seems like an easy win to refresh things & highlight the obvious value on offer here.

[flagon] 07/7/2023 11:05

Indiana Resources vs Tanzania. This is one of LCMs cases ... via the ICSID. As of 21/6/23 - The Tribunal declares the proceeding closed in accordance with ICSID Arbitration Rule 38(1). So should get a result soonish ...

I remember Patrick Moloney in a past podcast discussing nabbing aircraft from national carriers in lieu of compensation ... lets see if it happens.

Link :

Link :

Link :

[robsy2] 07/7/2023 10:43

BUY BUY BUY

[74tom] 07/7/2023 10:27

Ah, the daily attempt to play the bots...

TRADING UPDATE INCOMING ANY DAY NOW!

RECORD REVENUES TRANSFORM OUTLOOK

SO CHEAP DOWN HERE - CLOSE YOUR SHORTS ASAP OR GET FRIED

Sensible post to come in a few mins...

[jackson83] 07/7/2023 08:06

ANY ONE KNOW how many are SHORTING ? could make more SHORTING before buying back in lower then

[jackson83] 07/7/2023 08:04

FILL YOUR PANTS TIME ?


I will add at 60p seems overvalued now as no new news or cash this week lol

[citywolf1] 06/7/2023 16:51

Agree. This is 20% cheaper than it was in 2019. Since then the net assets have grown by more than 60% and they have raised US$450m in third party funds with a 35% carry structure!

Your extrapolation is sound to me, and tbh I think you could argue that it is in some respects conservative: the 17.8m settled should have been more than replaced by capital committed since Dec (1H run rate was A$107m/27m to LCM); 2) The 101m of cases is extremely mature (65m over 4 years and 30m over 3 years as of HY) so you'd expect settlements to be front loaded and well within 3 years. 3) A further 99m has been committed but not invested, you'd expect most of this to be invested and realised within 36-42 months, which could almost double the numbers again...

I too am surprised how little market interest there seems to be in such a weighted bet. One of the factors that doesn't help the investor engagement here is the currencies being all over the place. They report in AUD, the funds are in USD and the listing/valuation is in GBP. A nightmare to model! Now the CEO/CFO are in London and EMEA business expanding surely a matter of time until they switch to GBP reporting you'd think.

[74tom] 06/7/2023 16:03

Glad it's been useful guys. I've followed this for years & I don't think it's ever been anywhere near as cheap as it is today, following those major settlements 2 weeks ago.

@citywolf1 I agree on the PE valuation being difficult to justify due to the lumpiness. I guess you've got to consider how it would be valued in the event of a bid, and undoubtedly P/B would be the metric of choice. Your methodology of using 4x invested costs adjusted for overheads & time value of money looks about right to me.

And yes, the key is how this BV develops over the next few years, there is huge potential for it to explode when you extrapolate the numbers.

There was A$119m of LIT specific capital invested at 31/12, A$17.8m has settled in H2 driving that A$60m gross profit @ an ROIC of 340%. If the remaining A$101m was to settle evenly over the next 3 years at the same multiple it would deliver gross profit of A$343m... deduct 3x $23m for overheads, 30% tax & apply an 8% discount rate and you get a present value of A$178m.

A$178m + A$124m = A$302m * 2.5 BV / 1.9 FX = £397m / £3.30 a share price target by end of FY26.

Of course you then have to factor in additional Fund 1 settlements from the remaining 40% of deployments that will likely conclude at the end of this calendar year + any from Fund 2.

Whichever way you cut it, surely there is enough upside + margin of safety to attract some institutional investment?

Oh and you're right on the Panthera RNS - the table is a bit misleading.

[citywolf1] 06/7/2023 13:34

Thanks @74tom, great research.

To your earlier question about valuation (4/7/23) in my view this is a P/B play given the accounting methodology. The earnings are too lumpy and unpredictable for me to value it primarily on P/E. To that, I think a minimum of 2.5x book is sensible: if you look at the economics of the 3rd party fund model, they get their c.160% profit (based on historical perf.) on the 25% coinvest, plus usually a 35% carry, which in most cases equates to a similar amount again (35% x 75% = c.26%). So they are getting c.4x on balance sheet cost. Applying a discount and allowing for costs, 2.5x multiple seems sensible. Of course a lot of the balance sheet is still in direct cases only, but on the other hand it is in very mature cases which should have above average multiples as a result - and be realised very soon, thus reducing the discount one should apply.

So: if we take an assumption of A$60m gross profit based on RNSs to date, assume A$23m of costs and 30% tax. That gets us to a net profit of c.A$26m and a BV of c.A%124m, which at a 2.5x multiple is £1.40.

So in short I agree with your valuation! Now looking forward at the profit potential for next few years this share could really motor...

(Btw as I read the Panthera RNS, LCM gets the either the multiple or the % commission, whichever is higher, rather than both?)

[someuwin] 06/7/2023 12:01

Yes, cheers for your input here 74tom - very helpful.

[robsy2] 06/7/2023 11:57

Nice work 74tom on 1717-1719. Exciting times ahead me thinks.

[74tom] 06/7/2023 10:33

Also worth nothing that we just passed the 3 year mark on the Prairie / GreenX case, which is currently awaiting judgement having completed arbitration last November.

Based on the award multiples stated in the Panthera RNS on 28th Feb, we'd now be on a 3.75x multiple of invested capital + a 12.5% case commission. The claim value is for £737m although it's unlikely they'll get the full amount if successful. However, based even a £200m award would see LIT make A$47.5m in commission / success fee + A$67.5m in MOIC & leave Greenx with £140m (Greenx are trading at £145m market cap, versus ~£10m when we provided the funding).

So many irons in the fire here...

[74tom] 06/7/2023 10:09

@Someuwin, regarding the Panthera case, I suspect that they jumped the gun in announcing a 'conditional' agreement, rather than waiting for the formal LTA to be agreed.

Contrast their RNS with Prairie Mining's when they secured A$18m for a mining arbitration matter back in 2020;

In terms of value of the claim, I suspect it will similar to the Prairie / GreenX arb claim again Poland - so in the $300m-1b range.

I base this on their admission doc comments that state;

"The Board and Management is of the opinion that because the 1.74Moz resource defined represents only approximately 10 per cent. of the gold in soil anomaly
defined at the 100ppb level, further drilling will delineate a world class resource"

+

"Targeting 6.0Moz+ Au resource

o Current JORC inferred resource of 1.74Moz on a 100% basis (1.22Moz on a 70% attributable basis), defined over approximately 10% of an extensive gold in soil geochemical anomaly."

70% of the target resource would be 4.2Moz, assuming an in ground value of $100/oz you get a $420m claim.

No doubt they will ramp it up higher than that in the first instance, if they get the funding finalised.

[jackson83] 06/7/2023 08:59

get ready for 60p's ?

[jackson83] 06/7/2023 08:58

I will top up at 65p level as INTEREST PAYMENTS RISE RED FLAGS .. the share price could drop when panic selling starts

some are SHORTING NOW ?


place your bets time / fill your pants re BAG HOLDERS .. as always never trust a wig man IN DARK GLASSES and mates funky finance BIG SHORT IS PAYING OFF NOW lol

[someuwin] 05/7/2023 21:44

Anyone got any views on the Panthera Resources (LSE:PAT) litigation?

On 28 Feb 23 PAT announced a US$10.5m funding agreement with LIT.

LIT had 2 months to complete 'detailed due diligence'.

That due dilligence period has been extended twice now with the latest date being 14 July.

All seems odd to me. LIT must know by now whether the case is worth taking on or not, so possibly a lot of politics going on behind the scenes? No idea what the value of the case might be?

[74tom] 05/7/2023 16:14

The share price is clearly out of line with hugely improved fundamentals as $80m of cash inflows in the last 5 months have transformed the balance sheet.

Someone has been shorting this - wouldn’t a squeeze to 160p be amusing. That would only put shares on a forward PE of around 10 & below what will be reported for H2 23.

[74tom] 05/7/2023 15:49

Last years trading update came on 7th July, so it could land any day now. Whoever has been playing games on the order book by absorbing buys & layering the sell side + gradually dropping the ask in an attempt to create the impression of a falling share price is going to fail miserably.

[74tom] 05/7/2023 14:25

Ps. Interest rates have absolutely zero impact here

[74tom] 05/7/2023 14:24

Sureeeee, market update inbound any day now which will report record revenues & EPS. Your short games are about to get blown out of the water ;)