Litigation Capital Manag... Share Discussion Threads

[74tom] 27/9/2023 10:17

And why would that be Makinbuks? It'll be tried via the same process as GreenX & Indiana Resources, both cases have taken 2-3 years to reach the business end. The Indians will have no control over the timeline, it'll be set by the international courts & the UNCITRAL or ICSID framework. With clarity on the situation I think Panthera looks like a bargain on a 3 year view - well worth some research. If the share price re-rates to the same valuation as GreenX then it'll 10 bag.

Regarding the A$37m of old cases held at cost, I researched them a few months back & believe they are mainly Australian class actions. All look extremely complex & based on the available info on the Aussie courts system, unlikely to resolve in the next 12 months. They were;

- Gladstone Ports
- QLD tolls
- Quintis

QLD Energy looks to have a trial date mid 2024 so may or may not be included in the A$37m

[makinbuks] 27/9/2023 09:50

And 36 - 42 months for that Panthera case would be a pipe dream!! Irrespective of its validity

[makinbuks] 27/9/2023 09:48

I think the discussion between Tom and Citywolf highlights one of the main things holding back the share price: lack of transparency over exactly what cases they are involved in. Is there a problem in issuing a full table of the cases with dates, committed values and investment to date?

I think Tom is right that the length of time to resolve a case has no impact on the probability of winning it. The return could be lower if you win since the cost budget has probably been exceeded but on the other hand the award may compensate for time.

I was encouraged by the CEO's comment that we are back to a 36 - 42 month gestation time typically compared to the previously announced 49 months. But there does seem something anomalous about a group of the direct BS investments which are already outliers by some distance compared to those metrics. The company could do more to clear that up

[citywolf1] 27/9/2023 08:47

@Tom to address your points:
1) Whatever the rationale, these cases are being accounted for under the old methodology of contract cost and have not been fair valued under the new methodology
2)Given their aged status and the fact that LIT's cases are overwhelmingly priced on a rising multiple over time basis, unless they are completely out of line with LIT's extensive track record they will be mostly wins, and the multiples will be high given their age

[flagon] 27/9/2023 07:58

Game on ...

27 September 2023

Panthera Resources Plc


Gold exploration and development company Panthera Resources Plc (AIM: PAT), with assets in West Africa and India, announces that the High Court of Rajasthan ("HCR") has today dismissed Metal Mining India Pte Ltd's (MMI) writ petition based on the recent Mines and Minerals (Development and Regulation) Amendment Act (2021) ("MMDR2021"). Therefore, and taking into account the recent successful arbitration Funding Confirmation Notice announced on 25 August 2023, the Company's subsidiary, Indo Gold Pty Ltd ("IGPL") intends to focus on pursuing its claim against the Republic of India for breaches of its obligations under the Australia-India Bilateral Investment Treaty (the "BIT" or the "Treaty")... etc

Link :

[tomtrudgian] 26/9/2023 18:56

Very helpful post, citywolf1. Just a small value point: There is no reason why old cases, contracted under IFRS 15 or not, should not be fair valued ‘due to the time the contracts were entered into’. Or for any other reason. Indeed LCM by stating there is no impairment at June 2023 is doing exactly that, fair valuing them at cost. ie a loss after expenses.

Further LCM say they should resolve, not realise as you write, in the short to medium term. How do you arrive at your presumption that these cases will resolve at ‘high multiples’, or indeed any multiple, similar to the model LCM have brilliantly shown on other cases?

[someuwin] 26/9/2023 10:37

LIT board meeting with retail investors tomorrow I believe? Hopefully we'll get some feedback from attendees.

See post #1159.

[williamcooper104] 25/9/2023 12:52

Indeed; the 13 yielding debt ought to be retired

[nchanning] 25/9/2023 11:33

Very happy with the buyback here as the shares are very good value but absolutely no need for a dividend while paying 13% interest on their debt . People like dividends is not a compelling capital allocation argument

[citywolf1] 22/9/2023 16:57

Some observations on the new fair values having now gone through the accounts in detail:

On a historical cost basis the value of the cases at June is $103m. However, $37m of these are still held at cost due to their being so old (per note 12 of the accounts). As such only $66m of cases have been fair valued. Thus their valuation of $166m represents a 2.5x multiple.

Furthermore, of those $66m of cases (by cost) a significant proportion will represent capital invested in the last 12 months, showing how strongly the older cases have been valued.

In addition, those $37m of old cases held at cost are "expected to realise in the short to medium term" and, presumably, at high multiples given the rising-multiple-over-time model.

So although the headline uplift to book value may have been underwhelming, this suggests it is rather more compelling than first glance suggests.

[solonic] 22/9/2023 11:30

But they haven't started the buyback yet, have they? So we can't yet say how it affects the SP?

[williamcooper104] 22/9/2023 11:15

Appreciate they see it that way; but it's increasing their gearing and they aren't getting much credit for it in the sp

[mtioc] 22/9/2023 11:09

There is clearly a big difference between the litigation funders with solid 20+ year track records and the rest. Moloney stated there had not been discussions with PE. At current size and valuation, I fear a large alternative asset manager (ie trade) may want exposure to the asset class and LIT is one of the few attractive targets. They could provide access to capital and an attractive transaction/incentives.

Next week’s PI session should be interesting.

[maddox] 22/9/2023 10:45

Hi William,

The reason is that the Board think that buying back shares is a better allocation of capital than investing it at a potential IRR of 76%. Which indicates just how undervalued they believe the shares to be! This was PM's response to the question I asked on the results presentation.

So, buying back the debt just isn't a priority.

[kallistos] 22/9/2023 10:31

johnwig, glad you were spelling Moloney's name correctly.LOL. IC couldn't manage it.

[makinbuks] 22/9/2023 10:30

Totally agree, I wonder what the contract says about early repayment. Given that there are bonus provisions it may not be possible

[williamcooper104] 22/9/2023 10:28

I'm a happy holder here now well into the Green But we all know, or should know, that the cashflows generated by LitFin are volatile so rather than buy back shares why not just repay the expensive debt that's burning on the balance sheet Best time to strengthen the balance sheet always when the sun is shining That's the one thing that stops me taking a larger position here

[nigelmoat] 22/9/2023 10:27

The top people here who have major shareholdings must feel very frustrated with the current share price performance not reflecting recent results or prospects. What would be the barriers to a PE interest in what is a growing business class with proven high rewards?

[johnwig] 22/9/2023 09:47

That last paragraph sums up for me the strength of the CEO, along with the Chairman and management team. Would that other small companies' teams could match their orientation towards shareholders' interests. I guess it takes antipodean vigour allied with a razor-sharp intelligence. How impressive Moloney is when he explains his company's strategy!

[maddox] 22/9/2023 09:34

Taking a broad brush viewpoint - LIT's prospects look compelling.

The recent results confirmed LIT's long-term performance metrics:

'With respect to every investment completed during the past 12 years, inclusive of losses, LCM has generated a return on invested capital (ROIC) of 1.78x. On a three year rolling basis, LCM's investment performance, again including every completed investment inclusive of losses, has generated an IRR of 76% and a ROIC of 2.09x.'

So, if LIT are able to apply this performance to the growing Assets Under Management - now A$553m [£281m]as at 31 August 2023 - there is huge potential for asset value growth. [The AUM is double the current mkt cap (£140m)].

If this is then compounded over the next few years - this is a potential multi-bagger. There appears to be plenty of headroom for growth in Lit Fin and the competitive environment appears to be benign. Mr Market may ignore LIT's attractions in the current market gloom but when it becomes apparent that this is a long-term compounder the current p/e of 7 will look ridiculously cheap.

In the meantime, we now have a dividend, share buy-backs and an impending news flow of final case resolutions.

[bigalan3] 22/9/2023 09:27

The problem is that they are off the radar. With so few sellers a share buy back could do wonders for the share price.

[johnwig] 22/9/2023 09:05

Great piece of research, someuwin. It makes me feel a bit paranoid that the growth in the worth of the company has not been nearly matched by the performance of the share price More than that, the solidity of LIT's progress has proven that the company is poised for even greater future growth.

[someuwin] 22/9/2023 08:17

The impressive YoY increase in assets under management (now over $500m) is a good indicator of the underlying growth of LIT...



But when you look at the chart since listing you can see that the share price was higher 2 years ago, and at a similar level 4 years ago.

We know that the shares in issue has only increased by 10% in all that time. So we can see that the share price has a lot of catching up to do to reflect the real value here. Reiterated by the fact they are embarking on a $10m share buyback scheme.

[iq151] 21/9/2023 21:37

And this:

hxxps://www.cdr-news.com/categories/third-party-funding/19004-aussie-funder-reveals-huge-roi-following-london-arbitration

Paste this into your address box and change xx into tt.

[iq151] 21/9/2023 21:34

And this:

hxxps://litigationfinancejournal.com/lcm-announces-record-financial-results/



Paste this into your address box and change xx into tt.