WTF !
Did they take Molot as hostage ???
Convex sold at £13m loss.
Lionfish sold having incurred huge losses on just its first 4 cases.
Very large balance sheet write offs of WIP on historic contingent legal work.
The former management led by Nicola Foulston should hang their heads in shame. Appalling.
Tough medicine taken by new management team but didnt have any choice.
Like others have said - there might now be a take private/MBO of the remaining business. Could explain why Mr Ian Rosenblatt is stepping down from the board so quickly.
Hi All,
Different time zone!
Just looking at this now. I took a small-ish position a few months ago at 90p. I do like the CEO.
I think these are just half year results so i suppose the second half is different. Please do correct my jet lagged mind !!, but isn’t all the revenue here unrealised (like management estimates) ? So no completed cases…Is that right?
Very interesting approach/analysis extrader. Much appreciated.
I always find it very difficult to understand Burford's results. But from my reading almost all of the profit increase is down to this:
"YPF-related assets generated $543 million of unrealized gains in FY23". That is of course on top of previous YPF unrealised gains of around $750m, if my memory serves.
Isnt that quite a brave mark up given the uncertainties in Argentina's ability to pay ? Red rag to the Muddy Waters bull ?
Very helpful LittleJimmy. Very grateful for these insights and data.
Me too please LittleJimmy - where do you get the Killick and PH data from please ?
Spot on Little Jimmy....well said
At a guess: possibly it’s their former brokers Peel Hunt clearing out their stock of Mano shares as it’s now transferred to Canaccord. Nothing unusual if it’s that.
Good but some (any!) numbers would have been helpful....hopefully they will update again.
Yes - much better news
I think the issue with Threeputt's comment below is that PLC's dont run existing loan facilities right up to the end of the term. It is almost always refinanced several months before the end of the term. And if RBGP's does run to only April 2024, it really should have been refinanced by now. If that is not possible, then one should go to an alternative. But that becomes a harder "sell" for the company, because the incumbent bank has already turned the opportunity down. One then gets into "alternative" lenders, who are just voracious sharks looking for 25%++
The one positive for them is the incumbent bank's security position: i havent looked at the numbers but they need to be sure that if they do pull the plug that they can get their money back. With a people based business that is a difficult proposition. The key will be whether the debtors cover the lending exposure and I would be looking for well over 100% cover. Maybe Memery Crystal can be sold back to management to raise funds ? Ditto the corporate finance business (I forget its name). Lionfish is just a big liability (and a terrible mistake by the former CEO). Then the Rosenblatt law firm will have some positive value as long as Ian Rosenblatt is involved (he is by far the key business winner there by all accounts). But - as ever in these insolvency situations, equity shareholders will be left with absolutely nothing.
This is looking terminal now....anyone heard anything ?...
Tommy - my understanding is that it is the same legal process on a small case v a bigger case. Economy of scale - roughly the same kind of work needed. Certainly the costs will be bigger but not linear. Same I believe on the initial payment: from what I have seen they pay more for a bigger case but nowhere near linear. Bit like the fees in the M&A market: you will always want to work on a £100m takeover rather than a £5m takeover because (broadly) its the same work for a much higher fee. I have heard that analogy in the Law. Makes sense to me.
But Streets, the same "cost of running the business" applies to a PE/VC operation.
Mano seem to be rapidly building the pipeline of cases, following the two year Covid hiatus. The business looks highly operationally geared (so overheads stay stable, rather than variable, as the gross profit increases) and they say they have added inhouse lawyers already to accommodate much higher current and forecast volume.
You are right to point to the smaller cases (a point they highlighted last week) - as the first wave of cases post Covid were the smaller zombie companies. Administrations of the bigger companies now coming through, where the margins likely to be higher.
Interesting point about Arrow but I dont know that story. If they were buying debt (rather than claims) that would be a far more competitive space than buying insolvency claims where Mano seem to be the very dominant player in their sector (eg only one voted Band 1 ever by the legal industry's Chamber Guide, that I know is well respected).
Good debate. Thanks.
With respect, I do not think the “trend” is the really key point here. What other company do you know that produces more than 100% return every year for 5 consecutive years? Ever ?
Even the very finest private equity investors deliver 25% on an annualised basis.
Theborn:
Agree on the HSBC - that has gone on far too long. I saw frustration there - the CFO should have obviously nailed this ages ago. Poor.
BBLs - you are not right on the timings. They only started with Barclays in January of this year. Clearly the pilot needed to run and show results before anyone else stepped forward. It obviously has as now (and tbf very quickly). They made the point that they didnt get all the cases in January, they have been drip fed over the months it seems. Barclays are expanding it and new bank on board. I have no doubt that the "politics" in this area are very complex as there are so many stakeholders: Govnt, Banks, British Business Bank, Insolvency Service and then the banks' customers (with all the regulation that surrounds that). Treacherous but the opportunity is big and it sounds like they are working at it as hard as we could hope.
I have read comments that the managment team are too quick to announce any bad news. So now things have turned in the favour who can blame them for a brighter tone. And lets face it (as many have said here) they were dealt a truly awful hand with a 2 year shut down of insolvencies during covid. It obviously takes time to build that back up. Business is never a flick of the switch. For me this is a medium term play but i can see the environment for them being positive for quite some time. DYOR as ever and GLA.
My summary:
1. Core business going like a train
2. Bigger Administration cases now picking up to pre-pandemic level
3. Fascinating BBL opportunity. Dont think any other company can unlock the value here and it is huge ! (£1.3 billion - £6.9 billion and growing everyday as others default). But will they get a fair run at it ? Government seems to want it to just be forgotten about ! But its the biggest (£50 Billion) bank robbery ever, and designed when Rishi Sunak was the Chancellor...
4. Cartel cases - going well. Will be a nice windfall when it comes, whatever the level.
5. Bank covenants being sorted but we need clarity on that once it is completed
6. Avg case completion size: they missed a trick (or maybe they'll do it at the year end): if you recalculate excl the BBLs it is not down 18% as they said in their Trading Update. It is almost exactly the same as last year. That is very important for my valuation (which is fundamentally number of cases x avg gross profit per case less overheads). That formula is simple but is works really well. Dont know why their broker makes it so complicated and with nonsense numbers (eg think they have Rev forecast for this year of £13-4m....Mano are already at £11m. Mad).
7. Cannacord yesterday repeated their statement that this could be one of best financial services sector recovery stocks on the market
With the carnage that is only just starting to hit the UK economy (which I think many commentators are materially underestimating quite how bad it will be), I think this company has got a very good flight path ahead for the next 3-5 years of very good growth. Their recent Trading Update covered quite a lot in a short space. So I am looking for reinforcement of those messages and the foundation of a solid platform to launch from here. Certainly not expecting any dividend. Completely the wrong time for that - their job is to get their full resources to work now.
100% agreed Da Master and Tommy15.