Indication of low ball Fair Value case valuation19 Mar 2023 10:06
The crux seems to be is the current Fair Value case valuation too high as Muddy W suggested or is it “fair” or is it “a low ball valuation”. As a shareholder i hope its lower thus the result will boost the SP … this is from the 2021 annual report
Notably, the settlement was executed in the late afternoon of December 31. It is not uncommon for year- end to be a driver both of litigation resolutions and of new business, and it is one of the reasons that our results for any particular period can be volatile and wholly unpredictable. Almost $100 million of our new business this year closed on New Year’s Eve itself. And some cases we were watching for potential resolution did not resolve, leading to a lighter year for realizations than we would have wished.
This example is also a demonstration of the potential value of older matters. Yes, it took eight years, but we achieved a handsome result. Previously, we reported a
34% ROIC and a 19% IRR for the 2013 vintage; with this realization, the vintage now stands at a 90% ROIC and a 21% IRR, with two matters still ongoing. Not every older matter will perform this way—some will lose—but all age means in litigation is that the process is continuing to unfold in its labyrinthine way. It’s simply incorrect to give up on the value creation potential in the continuing matters in older vintages.
Finally, this case also shows our fair value policy in operation. This case was held at cost originally, written up slightly when we won the initial motion to dismiss, written down following the initial trial court dismissal, written back to cost when reinstated following appeal, and written up when the case survived summary judgment. Ultimately, when the case settled, we had recognized slightly less than 25% of the ultimate realized gain, pointing to the reliability and conservatism of our approach. We provide full details of the fair value evolution in the investor presentation made available on our website
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