Member Info for acearp

Close Brothers plc share price crashed after the litigation notes provision last year and then issued debt to fund a share buy back. abrdn has reduced its shareholding in close as its funds impacted which could result in withdrawals and further share price falls. Both abrdn and close are shorted. Maybe more bad news to come ?

I like many of the investments and have not held this trust which has Hargreaves, and Burberry and some finance stock. Unilever and Diageo had underperformed, LSE above water, and RElX and Sage have returned 30-40% share price growth, in the last few years. Does the Trust still hold Rightmove or Fevertree which have also not performed.

Why pay a fee if nothing changes?

There are many IPO's such as Mano in Dec 2018 which many funds hunted and the price spiked to £5.8 in early 2019. There are four shareholders with around 60% and many micro cap funds with tiny investments. Mano usually buys a litigation case and retains the profits. Mano also funds cases and should split the proceeds with the IP firm. THe 2017 Cartel case has been revalued at £14m, up £1.2m compared to 2022 which was revalued up by £5m. The Government suspended litigation from June 2020 til ! April 22. The year was H1 slow and Mano then revalued down assets and reported a loss in H1 2023.

Mano hasan accounting policy to revalue new purchased cases on day 1 and this causes the problem as it takes a year to conclude a case and another year to get paid.If you read the 2023 Annual Report, a disgrace, they blame the write off of a lost claim of £2.8m . Included was £1.8m of profit.The details show that £2.3m was expensed in H1 and £0.5m in H2 when they had a good second half.When a claim is settled at the end of year 1, it is deemed realised revenue and not unrealised.

The amount is considered recoverable and moved to receivables. Another year and sometime they agree that the cash can be arranged over several years. There is around £7m from 2021 and another £9m which has been funded for nine years.

They market that they have security over assets not seem to finance via the HSBC facility.Had the CEO or CFO spread the £2,8m half half and not revalue the Cartel of £1.2 and £5m evenly they bust the bank covenants. HSBC charged a waiver fee and increased the interest margin from 2.9% to 3.7%. That cost £1m in extra interest charge and the RCF extended until 2025. I qualified as a Corporate Treasurer and the CEO was employed in Corporate Finance with HSBC.Both the CEO and CFO lack previous plc experience and refer to the highly skilled staff! Excluding the CEO, the other three shareholders of which one or two have over 20% could demand to appoint their own NON Exec Director. HSBC would not allow a dividend despite Mano repaying £3m of debt. In my opinion the Mano way overvalues cases and then the revenue reported falls when they adjust the revenue down. Burford Capital are better at marketing and reporting smooth results. THere are now two Lords as NON executives and one has bought 150,000 shares.The CFO has 500 shares. They have just awarded zero cost options which can be sold for cash. The insolvency market is booming so their share price is up. Litigation cases are uncertain and when the Cartel case is settled and another write down HSBC would default and game over. There is a big difference in the talk and the walk. When they overvalue cases they pay more tax and then claim it back when there is a write down.when a company fails to meet expectations and reports a loss usually a new CFO with experience is headhunted.

I sold my shares years ago around £17 as the profits reported were too smooth and unrealised. They are an illusion with cash from debt and "private funds" . Some Term debt must be refinanced provided the US insurance companies or pension funds like the maturity and fixed coupon. Close brothers purchase some litigation notes which have been written off and their shares crashed . Legal cases take time and are uncertain as to the courts decision. I worked in Argentina and the money will never be paid!

1B for Argentina in the balance sheet. Realised gains of $44m, unrealised gains up and salaries/ bonuses/stock options continue to drain cash. I don't understand the accounts despite my financial qualifications. The Q1 accounts report cash which is from the last US private placement. Operating cash flow excludes the $20m of finance cost. Burford remains shorted . What assets do they manage? $6b of litigation assets, Market Cap and share price continue to reflect headwinds.

Have a look on LinkedIn for SSON. The discount of the share price to NAV of around 10% impacts the management fees hence the ongoing share repurchase program. If you google the US investments, you will find the bad snail.

No shock that the RNS provided the pathway for the shares to tank as over 5% of Boohoo was shorted. FCA website provides the information.

A J Bell costs are running up and the Fintech earnouts, are capitalised, and therefore without the interest income, included in revenue, the platform operates at a loss. Hargreaves and the ii both reported the impact of high interest rates. A J Bell needs a CEO/CFO with previous plc experience.

The trading update before the interims were released impacted the share price and the bounce back was not the first time in the last few years that the city has reacted in a weird manner. Check out changes to institutional shareholdings which should be on the LSE website. Fevertree is shorted by 6.2% expecting that as Fevertree runs for revenue growth, costs are out of control. The Directors have announced a new LTIP, 60% on revenue growth, 20% on ESG, and 20% on EBIT.
The share price jumps as there are fund managers including Nick Train have recently increased their investment.

Burford reported results, and then issued a bond for $400m for general funding . The share price spikes which is normal, and following previous patterns may fall. I sold my shares in 2019 when results released and the price spiked to £19, before the share price closed 20% down . Legal firms don't provide funding as too risky. The legal case started against Link , re Woodford, was actioned only after funding by a third party.
US pension funds focus on the Bond Yield and maturity. The new bond does not rollover a bond maturity which would have been normal. The AIM listing reporting requirements provide less information than a Main Listing. Directors buy shares , tell a good story, good cash collections, so why issue another Bond?

Fund managers who bought at the IPO stage are reducing their exposure. I excited with a profit as legal cases drag on. Manolete has lost the opportunity to issue shares and not rely upon a UK Bank.
Cashi s King not unrealised revenue

I note that investment fund managers are selling . The Company revalues purchased cases each period and therefore the profit overstated as not yet realised. The Cartel cases dragging on and Manolete will need to refinance or issue shares which will depress the share price. Cash is king!

Your comments re future commitments can be turned off if there is a liquidity problem. Burford has existing commitments just below 1B which exceed cash ! I noted they blame Woodford but did not mention Invesco. A well managed company with a good story would have worked together with Woodford and Invesco to offload their position to another Investment fund! There report and accounts are muddled unlike Manolete, its recent share price recovered after announcing good cash generation?
From experience investment funds prefer cash generation and rising dividends. I excited this equity march 19 and july 19 when results were published and the price spiked before falling back. It is quite possible the share price will spike upon and next results, Exit?, before Burford either tap the Bond Markets for long term finance!

It is fundamental that cash generation is critical and when the final dividend was not declared this suggests all is not well. . Institutional investors are selling resulting in adverse share price movements. Neil Woodford biggest investment was in Burford and likewise Invesco still hold a big chunk and are regular sellers. Perhaps the new Fund Manager of Invesco will
exit Burford . I would!

From recent press via the LSE Link hold around 5% and Investec 12%. Maybe more downside risk although the shares could be placed with another fund.
Will Burford need to raise cash as last year which resulted in a steep fall.
Several weeks ago Manolete results based up unrealised gains saw a 25% share price drop!

Both sets of results have not been well received by the markets. Cash conversion is poor and unrealised revenue increased by over 140% . The 65 new cases cost £2.1m and are valued at £3.5m.
The devil is in the detail.

Ignoring Brokers who rush their reports focusing on the margin and profit decline.
The dividend increase was well below the norm of around 8% over the last ten years.
The dividend yield of 2.35%, is in the range between 2% and 3% over the last five years, therefore I hold my position and wait for the dust to settle.
The Company should have made their intentions clear on the distribution of the sale proceeds between a special dividend or a share buy back.

The company has completed a US private placement which provides long term finance which is an alternative source of capital to expensive bank debt.

The appointment of Jim Kilman as CFO, an investment banker is rather puzzling. Charles Utley, the Chief Accountant, was overlooked, why? Miss O Connel has not left the company.
How many listed companies have investment bankers as Chief Financial Officers.
Why not bring in a firm of accountants to audit the company and clean the air?
Seems like a logical step.

Indeed, profit, but is it real or based upon accruals for profit. Many companies are subject to hedge funds shorting . Going forward Neil Woodford will have to sell his significant investment in order to return cash to his investors. Investec also have a major equity stake. I am a chartered accountant and worked as a Treasurer for a plc. In the long term how can Burford continually raise capital to finance long term law cases. The yield would suggest that Burford is a growth company although the dividend percentage growth does not dovetail with the increase in profits. Cash is king!