Litigation Capital Manag... Share Discussion Threads

[nchanning] 13/7/2024 07:36

Tbh it's probably a pretty dull job being CFO of LIT as there's not really anything to do day to day

[tourmaline44] 12/7/2024 16:02

Starting a family??

[makinbuks] 12/7/2024 14:40

Thank you I hadn't seen that. My thoughts are that its interesting Collins has been there since the beginning of the year as an advisor. You might ask advising on what? And why was that necessary? Perhaps Mary's nose was somewhat put out of joint by this. On the other hand it is re-assuring that she remains on the board and is leaving only after a hand over. That leads me to the conclusion that she prefers Australia to the UK and simply wants to go back.

[enronhubbard] 12/7/2024 05:47

No discussion of the fact that Gangemi is out as CFO and someone new is in?

I don't like CFO turnover. It wasn't that long ago that she joined!

[nchanning] 10/7/2024 13:23

No question of current Polish government not paying its international judgements

[nchanning] 10/7/2024 13:20

Believe LIT suggested a 12-18 month timeline for award to be rendered and ~19 months have passed

[nchanning] 10/7/2024 13:16

Green X metals case judgement must be due any day now . Seems pretty straightforward that Poland expropriated , quantum of judgment complicated but not that important to LIT ( beyond a minimum )

[boozey] 04/7/2024 06:21

Morning L2B thanks for your continued posts. Let's hope the suspension is for positive reasons.

[l2b] 04/7/2024 05:23

IDA suspended til 29th July
Tanzania negotiating or playing games??
announcements.asx.com.au/asxpdf/20240704/pdf/06580jsjhv0z26.pdf

Remember Annulment hearing takes place 26th July

[tourmaline44] 02/7/2024 09:04

Somebody got in a nifty 45k order this morning at an excellent price! Wake up world, this feels like a winner!

[johnwig] 02/7/2024 08:44

Great sleuthing, L2B! Thanks.

[l2b] 02/7/2024 05:33

Great start to the year - IDA enters TH regarding settlement with Tanzania.

We'll find out details by Thurs, albeit for LCM settlement is the key point.
Reminder LCM official repayment terms are
"In return for the providing the financing facility, LCM shall be entitled to receive either repayment of any funds drawn plus 10% of the funding facility or an amount equal to between 1.25 and 5 times the amount of any funds drawn from the funding facility, whichever is greater and depending on the time frame over which funds have been drawn."
In simple terms funds invested are >US$4m and expect ~US$20m total repayment (per recent IDA announcements).

It's a double win for those who are IDA SHs too (am hoping settlement discount is reasonable)

announcements.asx.com.au/asxpdf/20240702/pdf/0655bnh1hxp5tg.pdf

[l2b] 20/6/2024 13:27

LCM is funding a class action against Aristocrat Leisure Limited (listed on ASX) & gaming apps for unconscionable conduct.
Details light for now.
lcmfinance.com/class-actions/aristocrat-class-action/

[robertbarns1] 17/6/2024 14:53

i will add more if we see 100p again

[mtioc] 11/6/2024 14:27

Probably easier to forecast NAV and profit based on FV movements (same set of assumptions applied across the group). Issue is that will bear little resemblance to cash (realisation dependent).

Are your realisations derived from Exhibit 24?

Agree share price will not move until actual realisations show FV is sound and LCM can covert to cash.

[citywolf1] 11/6/2024 13:33

Maddox - agree that forecasting here, particularly now under FV accounting, is a fool's errand. But even so their assumptions don't pass a basic sense check. LIT has 53 cases on the books, and 23 of these are over 3 years old. Yet over the next 2 and a half years, they only assume 17 realisations (less than 7 per year)... makes no sense at all

I suppose it's a reasonable forecast if you are super bearish on resolutions, but to predict such a low number of cases coming through while also arguing that the share price is going to double in the same timeframe is ridiculous imv

[citywolf1] 11/6/2024 13:25

I'd love to know the rationale behind the buyback strategy here. A few weeks ago they were buying 30k shares a day at 120p, now the shares are at 108p they're buying far less and even none on some days. Surely if they were happy to buy at 120p they should be filling their boots at this level...particularly given there is still quite a bit of dry powder to get through

[rcturner2] 11/6/2024 07:11

I have bought in here today. I think this is a good long term value play.

[maddox] 10/6/2024 11:45

Litigation funding is a mega challenge for Analysts. How do you predict in which period cases are going to be realised? This dictates a hugely conservative approach to the numbers - so I think that we have to view this research in that context.

[johnwig] 08/6/2024 22:50

Super analysis MTIOC. You, citywolf, and 74tom put to shame anything that I could manage. But then I'm a mere Oxford Greats man (long ago) and Boris Johnson has shown the world how terminally useless we are, even having in the past more or or less ruled Great Britain. My other excuse is that the firms I ran or chaired were in the Media sector where more abstract criteria are paramount, even though the companies were always very profitable, I'm glad to say.

[mtioc] 08/6/2024 11:11

I read the Zeus note.

Anything that raises LITs profile and explains an unusual business to a wider audience should be welcome.

Robin Savage is an experienced analyst who has been at Zeus since 2015 and was formerly at Canaccord (LIT’s current broker). Given that, I was a bit disappointed. Most of the note, if you are being polite, was a “representation” of previously provided company information. There appear to be typos and inaccuracies: 1999 instead of 2019 for third party funding, Exhibit 1 FV error and Exhibit 27 duplication etc.. Lawyers are proudly pedantic, and I wonder if LIT “proofreadR21; in advance.

Zeus positions LIT as an emerging fund management business that should be valued on a NAV rather than earnings basis. As the company can control the quality of its assets, but not the timing of realization, I suspect this is correct in theory, but most will always look at the earnings too. Initially, I was confused by the “algebraically” reference, but it seems to be sub-11+ maths: if the NAV is £100m and ROE is 10%, the earnings are £10m and, if the valuation is 1.2x NAV (£120m), the implied multiple is 12x.

For me, the new or interesting bits were:

• Commitments: 2023-£140m, 24-£150m, 25-£167m and 26-£173m
• Realizations: 2023-70, 24 – 40, 25 – 33 and 26 – 42
• Tax rate: 25% versus 10% for Guernsey listed Burford
• First North American investment (suspect Canada)

I agree with Citiwolf: the assumptions seem very conservative or pedestrian. I wonder if these were sense checked with the company. All recent company presentations have anticipated a significantly increased deployment rate over the next few years.

The potential tax rate gain from moving offshore is far more material than shaving a few basis points off of a low debt quantum.

The analyst was a bit disparaging about the LCM balance sheet business, but appeared to fail to realize that it funds all the admin costs because the funds do not have a management fee. As CW points out (and is noted in the note), the legacy assets held at cost are not valued. The analyst did not comment on the fund management quality of earnings where it is all derived from enhanced performance rather than management or other fees. The analyst also did not appear to appreciate the uniqueness of a successful litigation operation/franchise. These take longer and cost more to build than most other private capital businesses (e.g. you could create a profitable private credit fund in year but would take at least five to create a profitable litigation funder).

Overall, while helpful, it could have been much better. Like others, I suspect we will need to wait a while for the share price to reflect underlying value.

[luweiluwei] 08/6/2024 08:57

I feel like without buybacks this would be 50 pence now.

Insolvencies everywhere going up. Insolvency stocks at all time low multiples.
The amount of mature cases has never been higher and due to covid lengthening cases the ROIC will also be higher.

LIT and all other litigation and insolvency cases all have a huge disconnect between valuation and what's on their books and coming in as cash for reinvestment.

Some news soon on the next fun would be nice.

[l2b] 07/6/2024 20:15

The ‘biggest ever’ class action (£1bn) will be filed to a London Tribunal on Thursday against Amazon over allegations it has illegally misused data etc.
LCM is to be the funder. 
Let's hope for a better outcome than the google case!
uk.finance.yahoo.com/news/amazon-hit-biggest-ever-uk-130715825.html

Queensland Energy case currently being heard - follow links if you want to watch the case online
www.qldenergyclassaction.com.au/latest/

Been a slow few months on the results side but few others expected to pick up too....

[johnwig] 06/6/2024 16:44

Now here's a question an answer for which I shall quite soon have to ask an experienced tax accountant, (damn it!) or the LIT management.

Every single share I and my family own in our various portfolios is protected within an ISA. (We started many years ago with PEPs). Our largest holding by now, believe it or not, is LIT. I have assumed that LIT shares, since they are quoted on AIM, will be exempt for IHT purposes i.e. will be free from that tax after my death. Yippee!

However a very clever friend who is not an accountant says that it might not be as simple as that. She says that each share is looked at individually at the time of probate. It appears that if the company in question holds proportionally a larger amount of cash than normal it might lose some or all of that protection. (I think we must thank our spiv friends for pumping up the cash held in their vehicles for that very purpose.)

My question is simple. Is there anyone here who has experience of this diminution happening in a probate situation specifically with LIT?

[johnwig] 06/6/2024 14:54

Thanks again, citywolf! I certainly find your posts very reassuring. My expertise is in running companies, successfully I hope. I have little understanding of and even less patience with all the city-type manoeuvres although perforce I have spent many a late night in the Square Mile dealing with these delightful and oh so trustworthy types .... I know nothing of 'Zeus' but I have to ask myself if I really can trust their skills or probity.

Please stick around:I know that many here appreciate your posts.