Member Info for Scoobydoo321

"After todays deal 275p
you can buy for 165p
Gap must close but wtfdik"
That's what I thought initially, but, Arix got to pay the corp tax on the cap gain - so need to account for the 19% on portion of fair value gain not previously accounted for.

One discomfort is the cash + cashburn (circa 5mn quid p.a.). Seems that they may need another fund raise come summer 2021. Last one - dilution was pretty severe...

It should be all there in the accounts - bottom right

https://www.sylvaniaplatinum.com/

Per Spencer Crooks, a former market maker on utube video on PIWorld - if i recall rightly - he says that they are could be high frequency traders or fund purchase

Artemis Fund Managers disposed some shares about 1 month ago - a possibly overhang still - around 1.5mn + shares from my recolln - not many shares but given the average shares traded - it's quite a bit

Unless the management are big time BS-ers, this is a serious statement of intent when you announce "...Those resolutions are expected to generate gross profit between A$30 million and A$47 million. "

The figures given are so far in excess of current and prior years, the management are either a/ mad, or b/ genuinely believe they have the ability to achieve this.

So far, the management have been very transparent. Therefore, me thinks it's more likely (b). They are not a fly by night start up. They have been around for sometime now. The management could have, alternatively, dialled it down big time by stating that the expected gross profits on cases would be 10%-20% above this years. But no. They went for the big one. Wallop! This clearly demonstrates that their balls must be substantiated with some conviction that they will perform.

So far, They have done everything that they have said that they will do. Their only disappointment was not being able to forecast C19's and its consequential impact on transition of courts to virtual hearings (in Australia).

I'm sure many investors missed this important paragraph out. I certainly did.

"Notwithstanding the obvious limitations associated with accurate forecasting as described above, we have decided to give shareholders some guidance as to future gross profits by providing a range in the forthcoming financial period. Gross profit is revenue derived from disputes investments net of the repayment of the capital investment itself. LCM expects the resolution of seven investments in the financial period ending 30 June 2021. Those resolutions are expected to generate gross profit between A$30 million and A$47 million. Certain investments are significant in size. As a consequence, LCM's gross profit for the period can move considerably simply on the basis of one single investment moving from one financial period to the next."

That gross profit range less operational expenses far exceeds current and prior year's PBT. Given that management have done all what they have said they would do to date, this inclusion of these gross profits reflects the management's confidence in their business model and expansion plans.

Overall, their moat is their first mover advantage in:
1. Deal origination for their corporate portfolios.; and,
2. Ability to structure assets under management.

We all know that litigation financing is lucrative. When you have an abundant supply of deals + dosh = success.

At these SP, bargain!

Investors like it simple and easy to read and quite frankly, can't be asked to decipher. Yeah they made less profit than 2019, but they met broker forecast. Their expenses increased. Yeah but that was due to expansion (infers they are extremely bullish on future prospects). A lot of new deal origination. yeah, but investors are saying, "show me the money". LIT say we have now AUM. Investors say, "where are the tangible benefits of this?" Overall, appears that FY21 is the start of the golden years.

For FY 20, On the face of it, LIT made less profit.
However, (from my quick reading) they made less profit because:
1. They spent $500k more on litigation expenses - which I presume was could be for the cases in trial which could not be heard coz of C19
2. $1mn+ Increased employee expenses - more than likely associated with expansion of offices in Singapore, London and relocationing of staff etc
3. nature of the litigation funding biz, it's lumpy, i.e. not smooth. When it comes, it pours.

If they had made a more than 2019, just by a little, together with all the good news flow, SP would be in 70's. Not to be.

FY 21 is going to be a big year for them. They have the cases deferred due to C19. They have the deal origination sorted with global law firms, the financial back up (funds), the office infrastructure and people in place, the existing cash cow in Australia, existing portfolio to realize cash from.

"neg fcf is the killer imv"

Agreed, it has the excuse of being a software co that is in the process of growing. ...

Friday's action has been so weird. My purchase showed up as a "sell". If this happened to me. I'm sure that this happened to many other PIs leading to investors thinking that this is a mad stampede out of this stock. There should be no reason why SP should fall.
https://www.proactiveinvestors.co.uk/LON:LIT/Litigation-Capital-Management-PLC/
Does Patrick appear to be lacking in confidence when he was asked "so the FY was a solid year was it"? Not at all.
He replies, "Absolutely, really pleased. " As an additional side thought. Also, really pleased that we worked successfully remotely (or words to that effect). This implies to me, that the business went superbly. No defence, no citing "resilience", challenging year etc.

As stated in the trading update 10th July, C19 does not appear to have had a material impact on biz.

No reason why SP should have fallen. IMHO, I think LIT are on the cusp of something huge with their Assets Under Management model and working with two global eminent law firms.

Same SP drop happened to IXI, CRL, BEG in recent times.

22nd Sept
Investor presentation at PIworld on Wed 23rd

Funny - just bought some shares and shown as a Sell
Weird!

Guys, fyi, if you may not have noticed, a seller on 14/9/20 sold £2mn worth of shares. Mmmm....... potential overhang to come

Hi Barchid

Great Qn - on FV caln
I rechecked and you are spot on. My bad. Thanks for spotting that. Per https://www.edisongroup.com/publication/successful-exit-of-the-native-antigen-company/27259/
They will book 1.9mn pounds (not sure whether all will hit H1) and not what i stated earlier of 4.8mn.

Combined with the additional 3mn quid for NVCT AUM - H1 is still looking pretty good.

Furthermore, 18p appears to be the resistance level. Also, Mercia, like FIPP, IPO, any good news w.r.t to investees, SP gets a jab.

Last RNS said "no later than 17th Sept 2020" for update to be announced. Surprised that the market is so quiet. Perhaps havent cotton on yet.

Given the recent excellent spate of positive news from MCL, I think this forthcoming update is going to show the company is back on its feet again.

Jack Brumby of Stockopedia, in respect of last trade update on 10th Aug, after review, said no reasons why Morse Code should not be soon at 100p.

I missed out on 1. DUKE (i.e. a royalty play) which had a recent 45% SP rise.
Also missed out on Metal Tiger (a play not so dissimilar to APF, although theirs is a metal royalty + investment holding company combo.
Hopefully, caught APF at its trough.

Whitehaven Coal is up. India's lockdown is lifted which means demand for coking coal.

At these prices, APF is not only an income play, there is plenty of cap gain (211p in Oct 2019) , particularly with economies opening up. I was rather perplexed to see all the mining companies SPs (except Rio of course) going north and APF was standing still. Today, I think some investors saw the huge potential of APF at these prices.

Let's hope APF continues with these thumping divies 7% yield. Nice!

I think the recent fall in SP has been reflected across board in all sectors. Merc was also affected. What I am surprised about is that I think investors have forgotten:

1. MERC sold off Native Antigen for £4.8mn in July 2020 - this trade sale will be reflected in H1 (i.e. interims 30/9/20) (presumably the original cost of investments are not large so, I'd guess that they stand to gain £4mn+ in net profit from this transaction alone).

2. AUM due to acquisition of Northern VCTs will add additional rev of £3mn to H1 (and another £3mn to H2) Regardless of lockdown or not, that 2% fees p.a. still applies. Nice.

3. Hopefully all the bad news, i.e. provisioning / write offs have taken place in YE 31/3/20 accounts.
As a chartered accountant, if I were them, I would probably have done given that the SP was already down in the dumps and to use the current situation to chuck all the bad news out all in 1 go.

4. With re-opening of the economy, investee companies on the balance sheet will benefit again and going forwards, all investees that have been provided for previously, could have their provisions written back to the P and L (thereby raising profits), once economy begins to have traction (from 12 months time?) . Merc, at these prices, is the kind of company that you want to hold and buy more at these prices, given that the economy is about to open up again.

5. Any potential good news flow w.r.t investee companies, SP could rise 5% for e.g.

Merc strikes me to be significantly underrated. Yes, what they did last autumn for PIs was not pleasant and I'm sure that's left a bitter taste in PI's mouth. In saying that, management also have a lot of skin in the game so they too, were diluted in the process.

Primarily based on 1,2,3 above, I'm going to buy more shares.

Creighton, CRL had the similar delay - results came out recently - no issues whatsoever. Likely auditors with big backlog unable to carry out auditing duties.

I share your sentiment OLI, I hold AEP and I am dumbfounded as to why 1/2 yr report was brilliant and a possible return to the golden years of 2017-18 with high SP. Yet current SP is left stranded! Low volumes? AEP least of people's priorities? DK

1 CPO prices are very good and holding up - so bodes well for H2 for both MPE and AEP

2 El Nino - Im not an expert - but my take is - if there is El Nino weather, CPO increases, so producers are still good.
If no El Nino weather (assuming no wet weather - that's the hidden risk), increased production - so still good for producers

3 India re-opening up of economy is great news - i.e. restaurants etc usage of palm oil to increase again after lock down

4 Sterling strength? That was a few weeks ago until this whole Brexit nightmare returning again.

All in all, I find myself returning back to my analysis to see whether I have my investment case in AEP wrong. I'm currently taking a look at MPE given the huge mispricing by other investors.