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Forensic do you mean this?
“ the Company is pleased to report that the decision in PACCAR has had no adverse impact”
Obviously that’s positive, but the cynic in me wonders whether if a case or two has just been reopened, what the comment really means is “no adverse impact… yet”.
Would they be obliged to disclose if a case had been reopened?
@Da_Master - I don't really understand your question about creditors? If no-one made any attempt to return money to creditors, then why would creditors even bother pursuing the case? The creditors are the ones providing the business - presumably there must be some competitive element where the IP / funder combo that can return the most money to creditors gets the most business.
Your comment feels like buying shares in a burger chain that puts poison in it's burgers to lower costs, and asking "but why should I give a hoot about the customers" - because if you kill off all the customers, you don't have a business any more!
@Fomo FWIW on their website they say "We give a minimum of 50% of net proceeds to the Estate after costs. This rises on a ratchet basis up to 90%. If the claim fails, we bear 100% of our own and any adverse costs.". So I think Forensic is right on that one (unless they're just lying...)
I'm sure it's true that going with Mano returns less money than going a longer route (including to court), but of course there are loads of other benefits
- no costs at all, even if the case goes to trial and you lose (no ATE)
- (small) initial up-front payment (which might be welcome if you need the cash)
- quick returns due to early settlement - need to take into account a) the time value of money, b) the value of the human stress avoided with a drawn-out court case, c) the reduced risk due to Mano's track record
I'm not saying it's a slam-dunk, and I agree that there will be cases / situations where it makes sense for a creditor to go a different route, but Mano seems like a valid option serving a meaningful market niche (although yes, Cooklin. saying that they want their model to take over "the entire pie" does seem far-fetched, for these reasons).
Limited updates:
- cash collection has continued well, even since the TU
- made a point that there are a ton of NDAs around the BBL stuff; hinted heavily that there's a lot going on that he can't discuss.
- BBL claims are small, but very low cost - no external legal feel
- Cartel cases as a whole are progressing nicely; MANO's cases are still stayed
- asked about the brutal share price - mostly waffled about COVID, repeated how the economic climate is good for the company. Said that he holds 15% and won't be selling any time soon. AIM is doing badly. But ultimately couldn't say why - which is fair enough really.
- asked if they're worried about monopoly issues; TLDR: no
- asked about scaling and hiring - may be required if BBLs expand, but the nature of those claims mean it can be more junior (read: cheaper) hires
Also, turns out it's pronounced "Man-o-lay", not "Man-o-leet".
I’ve just rewatched the webcast where they discuss this, and they seem very confident that such actions would be unsuccessful. So maybe this is just someone having a punt? Or maybe some precedents have come up that make Manolete’s confident stance in the webcast more doubtful. Impossible to say without an update.
https://www.manolete-partners.com/news/view/webcast-manolete-s-md-mena-halton-talks-with-nti-s-neil-taylor-the-issues-and-solutions-with-paccar
I think "smoke and mirrors" is unfair. The business model is fairly simple: Mano buys a case for £X, does £Y worth of work on the case, and settles the case for £Z(X + Y). The multiple Z is typically 2.5; the typical time taken is 2 years, so the ROI is ~125% - i.e. very good. The limiting factor is the money they have to invest in cases; the fact that income dried up over Covid was bad not because it affected the numbers for those years (although of course it did), but because it had the potential to shift the growth curve backwards by several years. The borrowing from HSBC and the lack of dividend are both plugging this cash gap which they need to invest in new cases and drive the growth train.
If this share isn't for you, I totally get it. It has performed badly for the last few years; there are risks involved (as evidenced that despite the supposedly strong ROI they have yet to really grow); the accounting model is weird; valuations are hard. But in my opinion, the business model is real, the returns are real, and _most of_ the reasons for the poor performance of the last few years are now behind us. (I say most, because it remains to be seen how the interest rates will affect things; apart from anything else investors moving to safer cash is likely to affect the price; that's yet another factor to keep an eye on here!)
Re "impotence". I take your point here, but insolvency litigation is a large market of which Mano has a small portion (in particular, they have a small portion of the CFA portion of the market, which they are trying to tempt to their funded approach). There is plenty of room for them to grow into, so their inability to create a market for their product out of thin air isn't a big concern IMO.
Also, they do have a lever to pull, which is to be less selective in the cases they invest in. They currently proceed with about a third of enquires made of them; they could dial this up higher - this would be equivalent to a producer of a tangible "widget" cutting prices - lower margins, higher volume. Better business model? Not my call to make; the point is that they do have that option.
"1 to 2 shares every day" - I'm no expert on the nitty gritty of the markets, but I imagine this could be people buying/selling into funds that hold a small amount of Mano, where a small purchase/sale of the fund triggers a teeny purchase/sale of Mano? Maybe it's some kid playing with a toy investing account? As I say, selling one or two shares a day in an attempt to inflate the price is empirically not working, and seems like a pretty weak strategy to run that scam, so I'm not too concerned.
Interest rates / discount rates / NPV - yeah I acknowledge that this is the tricky bit. Mano's accounting model is unusual (and I completely understand if people want to avoid it for that reason; I've got my head around it and made my peace with it), which has made traditional valuation systems hard to apply. I think Mano has also been heavily penalized for not growing at the rate that it initially promised, which I believe is mainly due to Covid and the government completely shutting down their business. While rising interest rates affect the NPV calculation, a) this doesn't capture investor sentiment (which I agree has not been a friend of Mano, but that can change), b) who knows what the rates will be a year from now, and c) higher rates are likely to expose more cases of fraud, and be good for Mano's business. Figuring out the overall affect of higher rates is not trivial here.
I should say, an alternative - and IMO more likely - sinister explanation for the recent price movement is that someone knows something we don’t about the upcoming TU and is getting out while they can. I’m surprised that the TU hasn’t been released yet - it’s seems that in most previous years it has come out by now - and that delay combined with the price movement does have me concerned. But then again AIM as a whole is performing badly as PIs move their money into safer cash accounts, and possibly took a hit when Sunak hinted at the removal of IHT. And Mano’s price is levered due to the small free float. So who knows.
If it was me, and I was considering getting in, I’d at least wait until after this update. If it’s good news then you can get in to a promising counctercyclical business at a good price; if it’s bad then you dodged a bullet.
I broadly agree with Hardboy, although at this point I’d settle for less than a 3-4x gain!
In particular, I don’t think there’s anything sinister about the price movements and the sales. If this was 2 actors attempting to prop the price up I think they would have done a better job of it! The much more likely solution is that someone with a large position wants out, there aren’t many buyers, so they are selling it in chunks that the market can (sort of) absorb. To state the obvious: neither a large holder wanting out nor the lack of buyers is good news, so I’m not being rose-tinted here - I just think genuinely poor performance is more likely than fraud in this case.
I’ve written a few times about why this share has failed to be countercyclical as many would expect. The short answer is that it has been buffetted by bad news (the government literally shutting down its entire business during covid being the obvious one) and as hardboy says there is a significant lag between malfeasance happening and Mano reporting a profit.
For me it’s all about this next update. The previous update seemed to signal the turnaround that we’ve been waiting for, with everything pointing in the right direction. The next update will confirm whether this is indeed the case. For me it’s been gut-wrenching to see this share lose 25% of its value in the month running up to what I hope and expect to be a positive update.
Wow there's a lot here, trying to take it all in!
Re potentially busting HSBC covenants - nobody is denying that they had a terrible year, for reasons mostly outside of their control. Doesn't the fact that they _didn't_ bust those covenants mean they played their cards well?
Why is the 2023 report "a disgrace"?
What is the issue with having Lords as non execs?
The zero-cost options vest over 3 years and are awarded pro-rated based on performance. Doesn't seem too terrible?
"The insolvency market is booming so their share price is up" this clearly isn't true, although I wish it was!
Sorry Acearp, I'm not trying to deny anything you're saying, it's just that it's a long post and it's a little unclear to me which parts should be giant red flags vs just not ideal. I'd really appreciate some clarification! Thanks :-)