Litigation Capital Manag... Share Discussion Threads

[citywolf1] 06/6/2024 14:23

Have taken a closer look at why these Zeus forecasts are so weak. From my brief analysis the key drivers of this underwhelming research forecast are:

1)No assumptions made for the 40m of direct investments held at cost, all of which are over 4 years old. That's writing off potentially 120m+ of near term revenue right off the bat
2) Only 17 realisations assumed in next 30 months. LIT has 53 investments with 23 of these already over 3 years old, 31 over 2 years old and 40 over 1 year old. Yet they are predicting just 17 of these realise in the next 2 and a half years... well if that's true LIT's expected case life of 36-42 months is going be way off. Far too conservative an assumption imv
3) They have assumed performance below the prior track record. Given the extended lifetime of many of the outstanding cases and LIT's 'rising multiple over time' model, it would require be a meaningful drop off in win ratio if the MoCs fell below the long term average

All in all, these forecasts materially understate the value here imv

[robertbarns1] 04/6/2024 22:17

i guess the buybacks are helping ? shame the share price drop today

[luweiluwei] 04/6/2024 06:24

I don't think LIT has to do anything about it other than take advantage of it with buybacks.

All litigation funders and related are too cheap.
LIT, Burford, Omni-bridge, Manolete,... it's all of them that are seemingly forgotten.

[johnwig] 03/6/2024 21:34

Thank you so much for your really fantastic input, citywolf. To the extent that I have had the time to invesigate, I fully concur with your conclusions. It is very frustrating with this share that recent dips in the share price are caused only by general lack of action rather than ANY significant selling. 74tom's analysis of the reasons for this behaviour has validity and credibility. I don't know enough about this but could the remedy be a change of the methods/structure under which LIT is quoted and dealt? And would that be possible and within the control of the company?

[citywolf1] 03/6/2024 20:14

Only had a fairly quick read so far but the forecast/valuation section is garbage imv. LIT reported net income of 34.6m and 31.5m for the two previous financial years. This report forecasts net income for the next three FY periods to be 12m (FY24), 16.6m (FY25) and 24.4m (FY26).

Well if those numbers prove to be accurate you may as well sell up now because this share is be going nowhere. Fortunately I think it is nonsense. Just do the maths... LIT has 229m of balance sheet/coinvest commitments and 119m of these are in cases that are already over 2 years old. Of these, 40m are held at cost and the rest are valued at c.2x. You would expect all those older cases to realise sometime in the next 3 periods which if historical performance is anything to go by the direct cases should be producing c.2.5-3x moic and the coinvest cases 4-6x moic with performance fees. The cashflows should be be very significant and far higher than they have assumed in their cashflow forecasts.

Ironicly most of the share price returns they assume (see robsy2 post below) are driven by a multiple re-rating assumption. They seem to have missed the point that the shares are unlikely to re-rate if profits are falling per their forecasts

[brileyloucan] 03/6/2024 16:50

Available through research tree. Need to register but free to read.

[robsy2] 03/6/2024 16:24

Sorry it is behind a paywall. Not sure if they post this stuff up on the companies website?

[luweiluwei] 03/6/2024 16:11

Do you have a link?

[robsy2] 03/6/2024 06:27

Very detailed new research report from Zeus this morning. Seems pretty bullish.

Here is my takeaway

Over the next 30 months, as LCM’s business model fully transitions to the fund management model, we expect equity shareholders to grow by 24% (i.e. 9% CAGR) and the multiple on which LCM equity trades to rise, creating a total shareholder return of 29% p.a.3 3 e.g. rise from 1.3x to 2.0x over 30 months is 19% CAGR; compounded with 9% CAGR in equity growth, should deliver total shareholder return of 29% p.a.

[tourmaline44] 28/5/2024 07:30

They haven't stopped. Just look at the top of this page. johnwig has got a running tally of all the "Transactions in Own Shares" !

[robertbarns1] 24/5/2024 18:49

looks like the buybacks have stoped for now so a decline in share price this week

[flagon] 24/5/2024 13:06

The deadline for Tanzania’s Reply on Annulment is today wrt Indiana Resources. The ICSID case number is ARB/20/38.

[kallistos] 24/5/2024 09:07

Is there anybody clever enough to explain what's going on with this share?

[johnwig] 13/5/2024 08:02

The pretty regular buying back by the company, even though it's in rather small volumes, seems to be quite effective in pushing up the share price

I cannot understand why some of the gnomic know-alls oppose it so dogmatically!

[flagon] 10/5/2024 10:53

Just a reminder the Queensland Energy Class Action begins trial on 3rd June 2024 with an estimate of 8 weeks.

The relevant link is :

[leadixon] 07/5/2024 16:30

@warno01 - i think we've made good progress with the share price over the last few months, personally i think it's just consolidating till we get some further updates. Nothing to be concerned about and agree i can easily see a path towards 140 to 150, given that's still very conservative against the bottom up estimates.

[gallamar] 02/5/2024 14:12

The fair value i believe is driven by stages. Given where we are now.
The moic i think looks at the return on conclusion.

I also struggled with this and i think lcm could explain it better.

The terms are not really defined or how they interact

[luweiluwei] 01/5/2024 17:37

Buyback pauzes and the manipulation on almost no volume already back.

[warno01] 01/5/2024 14:03

Hits 121.1 on the buy and then the sell price dropped right away.
Been a steady rise. Hoping this is a tree shake only. Really feel this should be pushing 140 to 150