Mike Statten post2 Oct 2018 16:08
See Advrn post below from Hope67 today
A recap of something I posted earlier
Just thought I would share a fair view with you with permission from Mike Statten the 11% holder here you may or may not find it useful. But to be honest I don't understand the concept fully myself so this may help explain it a little better.
Regardless of some peoples view on certain board members, Sahney is a debt and distressed background specialist , yes stratmin was a disaster but he cannot shoulder all of the blame. the rest of the board in my view is very strong - Dennan is the CFO of Coro and hand picked by parsons for that role he is also an actuarial background and is also a markets man, Hillier is a forensic accountant and actuarial specialist and Swick is the main man in this space, I met with him some time ago and he discussed his previous businesses and the value they were sold for, he sees the value here as multiples of the 10mln he took out of that deal, he was keen to buy stock when able but one assumes he is unable at present.
The business itself is huge In the US, people are over insured and these policies are at first flush seen morbidly as I did, but the resale of these policies is a specific choice the policy holder makes, whilst it is a mature market it is actually a relatively uneducated market and many don’t realise there is a secondary market available to them. The pricing and value of this is where the actuarials earn their crust and look at the price to buy these, ALGW is looking to buy blocks of these policies perhaps under the form of a levered position, such that they get performance and management fee on the larger position.
They are partnered with EY who has helped to create the hybrid product, they have taken on Devonshire Warwick who has introduced numerous alternative investment/asset managers as well as funds and family offices - the ticket size to these guys is a mere 10mln - so a standard deal of just one of these makes 200-300k a year - then consider one of the hybrid deals which I believe are 150mln tickets you can see how the revenue (on very low overheads) is supercharged and hence why this will be a minimum of 5-6p in due course, I feel this is the starting point. As more will follow once the first is over the line.
The value here is the cost internally to a FO or HF etc on a 10mln investment far outweighs the benefit of just using a Specialist such as ALGW - outsourced expertise at reasonably low cost relative to size of investment. I am certain news is coming, I have long thought the type of investors they will be speaking to will also see the value in the equity story and the potential for equity returns far outweigh the returns on the asset class so whilst I don't believe that is the companies plans I expect we would see more institutional type support once deals land.
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