Manolete Partners Share Discussion Threads

[williamcooper104] 01/11/2023 21:27

What a little puppy this is Insolvencies back up to 2009 levels, bounce back loans and yet here we are some 30 percent below IPO price, the IPO price was probably too high given BUR was trading at a huge premium at the time it floated, but still v disappointing Keep looking to get back in; and each time I come back to look the share price is materially lower

[pogue] 01/11/2023 19:49

Mano presentation at Proactive on 26th Oct 23

[rmjpb] 18/10/2023 16:12

From the most recent presentation I understood that Mano pay £5000 for a BBL case, the proceeds of which bring in generally £50,000 - which half goes to HMRC and half to MANO - and the impression I got was that initially Mano send a 'letter' - which often results in early settlement - so it could be really easy money, and lots of it. This business stream did not even exist pre-covid.

[maddox] 18/10/2023 15:46

Hi sallad,

My understanding is MANO have a fixed price per case deal with an IP firm for their work and MANO has para-legals managing the case progression - so apart from a bit of oversight the internal costs are limited.

So, a 36% gross margin c. £18k per case and there is a big number of BBLs to go for - which mean that you should be able to drive-up the efficiency and contribution as you scale. It would be good to see this reported separately.

[sallad3] 18/10/2023 13:42

I do think it is useful to apply a different yardstick to the Barclays/BBBL cases that are stated to realise a £18k profit to Mano (presumably before own costs) (see CFO's statement in stat acs p16) and an immediate valuation for accounts purposes of >£11.5k each on acquisition.

That implies £14k in external legals and £18k to each of Barclays and Mano. There can't be a money multiple equivalent as its all contingency but a 50% uplift on realisation from initial valuation which does sound to me about the right level of caution
BUT one needs to take into account the internal cost/overhead allocation for what is after all a sophisticated "bailiff" operation on a known fixed debt. At usual own solicitor costs rates (£200+ per hour) its not an insignificant number so value on Day 1 may be nearer to 100% of monies that are recovered later.

Cost control will be all in this part of the "granularity" of the portfolio but it should provide a reasonable additional return for a shortish period of time.

[maddox] 18/10/2023 12:15

Yes the IRRs are based on the top-line case results before accounting for expenses and admin etc. - but more directly comparable for that.

All three Lit Fin firms have been Covid-effected, albeit in different ways, MANO's cases dried-up but they settled cases very well, whereas BUR and LIT had loads of case investments but couldn't settle cases. So, results of the three have been disappointing and thus ROE and other metrics similarly.

Covid-19 is now in our rear-view mirror and the attractions of the Lit Fin sector will start to shine through - particularly its uncorrelated returns.

[blackhorse23] 18/10/2023 12:15

Out now & going to buy GATC

[williamcooper104] 18/10/2023 12:02

Downside with MANO relative to LIT is MANOs costs are higher so net IRRs not so amazing - hard to separate out costs incurred to grow the business from costs to service the existing assets - so don't know for sure how much of a drag there is Good point on MANO being lumpy; which is why they really ought to reduce debt rather than buy back shares

[riverman77] 18/10/2023 11:39

You're right the short duration and granularity of lots of small cases is one thing that did attract me and should in theory provide nice steady earnings. On the high IRRs, I take these with a pinch of salt as they don't necessarily bear any resemblance to the actual returns on equity (BUR has the same problem with ROE a lot lower than the IRRs they like to report).

[maddox] 18/10/2023 11:26

Hi riverman,

As you know I'm in LIT too - prospects look excellent. It's interesting to compare and contrast - MANO has better IRR figures but this is compensated by LIT's higher investment capital. As MANO's trajectory looks much more rosy with the cases coming through - it's difficult to predict their fortunes one versus another. A couple of factors also favouring MANO is the granularity of their case input and the far shorter timeframe to resolution. LIT's cases are getting larger and predicted to get even longer to conclude - probably leading to highly lumpy results. Mr Market doesn't like lumpy - so MANO's smoother revenue might be valued more highly? Pure conjecture but we'll have to wait and see.

[williamcooper104] 18/10/2023 10:11

I got out at c550 It was an insane valuation; frothy markets and poor liquidity pumped it up Was never worth anything close to 550-600 Have been watching since; but not felt urge to jump back in Prefer BUR and LIT

[riverman77] 18/10/2023 10:04

Yes back in 2019 market was giving eye watering valuations to all sorts of blue sky shares that weren't even close to making a profit, so I wouldn't use the earlier 550-600p level as any sort of benchmark. Market has probably now gone too far in the other direction.

[theborn] 18/10/2023 09:48

So we have a business that was valued at c.550-600p per share pre-Covid when it was investing in 141 new cases per annum, vs a business today trading at 75% discount to that value which is investing in 359 cases(>150% more that 141).

In between those numbers is a justified crater when market shut down for 2 years and a more prudent rebasing of live case values (so arguably the value of the 359 new cases has more upside available than those 141 cases pre-covid).

They've invested ahead of time to take advantage of an expected significant upshift in case load - big tick.

Profit today is partly an irrelavance as the valuation metric here is plumbing in 1.5x more turover above a cost base which has increased maybe 0.5x?

Would be a 900p share in 2019 market. Food for thought.

Current AIM / sub-FTSE 100 markets are at an all time low. They won't remain in the doldrums forever as fund managers seek out value plays.

[cfro] 18/10/2023 09:43

Conversely it might be bad luck we need and in spades in an ironic kind of way for MANO to really benefit magnificently from.

I do feel your frustration however riverman77 and i am 100% with you. Watching the share price fall almost daily is incredibly depressing.

Putting some positive spin on this though and just imagine growth in case acquisitions and completions continuing at the rate it currently is. Even if growth slows to say 60 or 70% as an example then fast forward three, four five years that is some growth..

Thats the reason why i will continue to hold despite the frustration of it all.

[riverman77] 18/10/2023 09:32

While not bad results I can't say I'm tempted to buy back in and certainly don't regret my decision to sell. The fact is they are only barely profitable, at a point where by now they should surely be reaping the rewards? For me LIT looks better on pretty much every metric, so that's where I'll be putting my money, but good luck to holders.

[maddox] 18/10/2023 09:09

Key point out of this trading update is that we're heading back to a full-recovery position only at far higher levels than 2019. Add to that the BBL proposition is gaining traction with another bank based on success with Barclays.

Whilst 1H24 profitability is marginally down on 2H24 it'll look fantastic against 1H23 the normal comparator - because 1H23 was awful.

The share price slide has un-nerved investors so not expecting an immediate full recovery. But there is nothing here to substantiate investors' fears. Shares are suffering from redemption-forced selling by funds. So, until that money finds its way back to the market share prices will remain depressed.

[xpertgreeny] 18/10/2023 08:39

Cannacord analyst note this morning ... "This could be one of the best recovery plays in financials though 2024."

[cfro] 18/10/2023 07:44

Overall i reckon the update is pretty good though. Whether growth has peaked remains to be seen as H2 is usually stronger ( as they point out) and they are still gearing up with new hires so clearly they must be expecting more work going forward.

Taking the economy into account it's tough out there and with Sept inflation figures in at a sticky 6.7% ( and two major wars going on) it's not improving any time soon by the looks of it which all should equate to more work for MANO one would naturally think.

[riverman77] 18/10/2023 07:25

Well finally we have some news. No major nasties in the update, although the sharp rebound in activity does seem to be petering out a bit - earlier updates suggested an almost an exponential rise in new cases, but looks like they've already peaked. Looking at the bottom line, profits will be marginally down on H2 23, which isn't great when they're meant to be in full on recovery mode, although this is partly due to higher costs.

[gusrezo] 18/10/2023 07:24

9M gross receipts - the company retains 30% net after paying external lawyers and insolvency practicioners.... probably it doesn't cover administrative expenses , according to last year report, taking into account the staff count keeps on growing.

[riverman77] 17/10/2023 23:16

There hasn't been a profit warning, at least not yet. I think it's just the complete lack of any news from the company for months which is unsettling investors, no doubt compounded by poor market sentiment and very thin liquidity.

[truant2tb1] 17/10/2023 22:20

I've no position here but it looks interesting, what's the key reason for the sharp fall? Profits warnings?

[theborn] 11/10/2023 11:34

As a long term holder I'm equally disappointed with current share price. However, I think we might be jumping the gun and reading to much into this. The UK stock maket, particularly AIM and 250 has taken a pummelling these last 12 months and very few stocks are immune.

As for market comms, if you go back through Manos reporting history, they don't tend to provide many updates outside of the usual annual and semi-annual reports. I've been expecting a trading update som time between now and mid Nov by way of update on the 6 months to 30 Sept.

This share is so thinly traded with a ridiculous spread, I'd be careful to assume no news is definitely bad news - particularly if no news is consistent with how they've always reported. In fact, reports outside of the norm are usually bad news when it comes to Mano, so even more of a case for no news is good news.

I follow Manos socials and news updates and they are continuing to hire and are constantly out on the road drumming up new regional business. More business and new hires to support that is consisent with their most recent updates.

I could be completely wrong and totlly naive but I'd expect a positive update within the next month and given the limited shares available, that would quickly see a return to the more recent 220+ range

[riverman77] 11/10/2023 10:21

Well I'm out now - by far and away the most frustrating company I've ever had the misfortune to come across. Not a huge part of my portfolio but still a 5 figure loss, which could easily have been prevented if the company had just kept investors udpated about what the hell is going on. Feels so much better to have cleared out all the junk from my portfolio.