# OBL - Omni Bridgeway



## ta2693 (11 September 2008)

Here is the star in recession. I hope I have luck this time.

IMF (Australia) Ltd (formerly Insolvency Management Fund Limited) is a provider of funding and litigation support services to insolvency and legal practitioners.

the chart looks good. the business has at least 77c net asset value. If we are in 
recession, the future of this is good. if we are not in recession 77c net asset backup is the safe line.


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## michael_selway (27 September 2008)

*Re: IMF - IMF (Australia)*



ta2693 said:


> Here is the star in recession. I hope I have luck this time.
> 
> IMF (Australia) Ltd (formerly Insolvency Management Fund Limited) is a provider of funding and litigation support services to insolvency and legal practitioners.
> 
> ...




Hi looks pretty good

*Earnings and Dividends Forecast (cents per share) 
2008 2009 2010 2011 
EPS 15.0 18.6 17.9 20.2 
DPS 5.0 11.0 13.0 17.1 *



> Date: 15/9/2008
> Author: Anthony Klan
> Source: The Australian --- Page: 27
> The Australian Securities & Investments Commission (ASIC) has drawn renewedcriticism from consumer advocate Denise Brailey. She had in the past beeninstrumental in alerting the watchdog and other agencies as well as investors tothe risky practices of several property finance providers, and was the mainwhistleblower on the mortgage brokers scandal in Western Australia. Braileyswitched from her career in property to her advocate function with the RealEstate Consumer Association, and in that role also often levelled attacks atASIC for perceived inadequacies. In mid-2008 she applied for a position withASIC as a $A70,000-per-annum investigator, but neither of her two referees werecontacted by the employer. These were executive director of litigation fundinggroup IMF (Australia), Hugh McLernon, and Perth-based firm SolomonLawyers's partner, Doug Solomon
> ...




thx

MS


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## RodH (14 January 2009)

*Re: IMF - IMF (Australia)*

IMF at new highs, at the moment, good time for them to be doing business me thinks. anyone holding this stock?


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## edogg75 (18 February 2009)

*IMF - IMF (Australia) Ltd*

Cliffnotes: _This company figures to benefit from the credit crisis.
_
IMF is a provider of funding for legal claims and other related services where the claim size is over $2m. In the last 3 years, group claims have more than doubled, with the portfolio of claims now being worth $928m.

IMF has a strong track record with case selection. In the past 6 years they have only lost 4 out of 127 cases. Management is very risk averse and only seeks the strongest cases with the highest chance of success and in this environment there is plenty to choose from.

The current credit crisis has provided an environment where more lawsuits are able to be made by groups such as shareholders. IMF has grown rapidly in the last year with a successful case versus Aristocrat putting them on another level. Now they have plenty of cash in the vaults, making it possible for them to take on bigger and potentially more rewarding cases.

IMF is now sitting on a large portfolio of cases with maximum claims amounting to roughly $1.05bn. More than half of these will likely be finalised over the next 18 months. 

Current market cap is $117,970,532, and it pays a 5% dividend. 

I hold. DYOR.


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## JTLP (6 March 2009)

*Re: IMF - IMF (Australia)*

IMF looks the goods and so does the 12 month chart (someone with chart posting sk3llz please post it...I can never post for some reason  )

Seems to be pretty safe bet as someone noted...litigation cases with lots of decisions to come in next 18 months...NTA of 77 cents per share...dealt with some pretty big cases it appears (OZL, MFS to name a few)...

Up near that 1 dollar mark and been trending there for a while (3 months)...

5% yield...mmm...maybe for the long term...

Can we see any breaks to the up or downside from here?


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## TONEDEF (10 March 2009)

*Re: IMF - IMF (Australia)*

Had them back in November at 78c- still hold at $1
Shot to around $1.00 and stay fairly stable- 98c- 105c
Spike will come with every announcement re case wins and results which always look good
Price tends not to drop after div announcement
Just won Opes Prime  case against ANZ/MLynch
Very profitable company- lots of cases on the books and good win ratio
I think next results will see a big spike- many cases due to settle June


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## nomore4s (10 March 2009)

*Re: IMF - IMF (Australia)*

I have been looking at this company for my long term portfolio.

Chart looking very strong - At 52 week highs
No debt
5% d/e
Solid company and business to be in right now.

Am watching with interest.


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## Nicks (19 January 2010)

*Re: IMF - IMF (Australia)*

IMF share price just got hammered, down about 6 % or so. Any ideas why? I see no news. Was watching these to pick some up.


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## skc (19 January 2010)

*Re: IMF - IMF (Australia)*



Nicks said:


> IMF share price just got hammered, down about 6 % or so. Any ideas why? I see no news. Was watching these to pick some up.




Clearly something going on. Now down 16% on very high volume.

Many of their cases are in the public domain so if you don't know why, chances are you shouldn't be buying...


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## Nicks (19 January 2010)

*Re: IMF - IMF (Australia)*

Gotta love market disclosure. Im starting to get really annoyed with the efficiency of the market. 

I had a trade of 1000 shares executed at 1.805. Wanted to dip my toe in the water on this one and there was no news out, adverse or otherwise. But something is definitely going on.

IMF might be funding their own litigation agreement hehe.


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## freddy2 (19 January 2010)

*Re: IMF - IMF (Australia)*



Nicks said:


> Gotta love market disclosure. Im starting to get really annoyed with the efficiency of the market.
> 
> I had a trade of 1000 shares executed at 1.805. Wanted to dip my toe in the water on this one and there was no news out, adverse or otherwise. But something is definitely going on.
> 
> IMF might be funding their own litigation agreement hehe.




Look at the positives, you got a cheap lesson on the option value of limit orders and adverse selection.


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## glendaw101 (19 January 2010)

*Re: IMF - IMF (Australia)*



skc said:


> Clearly something going on. Now down 16% on very high volume.
> 
> Many of their cases are in the public domain so if you don't know why, chances are you shouldn't be buying...




LAWYERS and company directors have welcomed the Federal Government's move to reverse a High Court ruling that shareholders ranked equally with lenders in seeking compensation after corporate collapses. 

The Corporations Act is to be be amended to reverse the effect of the court decision in Sons of Gwalia v Margaretic which determined that, in a corporate winding up, certain compensation claims by shareholders were not subordinated below the claims of other creditors.

Corporate Law Minister Chris Bowen said today the ruling undermined the distinction between debt and equity, and its benefits were outweighed by the negative impact on a company's access to debt financing.

"The Government also remains concerned that the Sons of Gwalia decision has the potential to further increase uncertainty and costs of associated with external administration," he said.

"The decision has also been taken in light of the decision's potential negative impact on business rescue procedures."


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## Bull(ish) (19 January 2010)

*Re: IMF - IMF (Australia)*



Nicks said:


> Gotta love market disclosure. Im starting to get really annoyed with the efficiency of the market. .




Chris Bowen, Corporate Law Minister, announced the proposed legislation this morning on ABC radio, and the market initially reacted to that.  I guess this is a gentle reminder to us all that not everything gets revealed for the first time via ASX announcement. 

As an IMF holder I know that wouldn't make you feel any better Nick, but IMHO IMF is essentially a litigation funder, and while in the longterm it may mean the types of matters IMF fund may change, there will always be potential litigants with strong cases and empty pockets... Short term, it is unlikely that this case will retrospectively affect current IMF matters, as noted in the (eventual) ASX ANN as well as in various news articles this afternoon.


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## condog (20 January 2010)

*Re: IMF - IMF (Australia)*



Bull(ish) said:


> Chris Bowen, Corporate Law Minister, announced the proposed legislation this morning on ABC radio, and the market initially reacted to that.  I guess this is a gentle reminder to us all that not everything gets revealed for the first time via ASX announcement.
> 
> As an IMF holder I know that wouldn't make you feel any better Nick, but IMHO IMF is essentially a litigation funder, and while in the longterm it may mean the types of matters IMF fund may change, there will always be potential litigants with strong cases and empty pockets... Short term, it is unlikely that this case will retrospectively affect current IMF matters, as noted in the (eventual) ASX ANN as well as in various news articles this afternoon.




Agreed - asa holder of IMF, IMO this will not drmatically affect the profit outlook for IMF, the govt cannot change the law retrospectively to make IMF lose the case...so no probs....  all cases are open to appeal, but this one seems to be done and dusted...

They have plenty in the pipeline, a bit flat for 2010 comapred to goal of doubling income, but strong leads lining up for 2011...

In response to Nicks - yeh almost every week we  see trading action prior to an anouncment on various stock....uncanny coincidence.....it would seem...


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## skc (20 January 2010)

*Re: IMF - IMF (Australia)*



Bull(ish) said:


> As an IMF holder I know that wouldn't make you feel any better Nick, but *IMHO IMF is essentially a litigation funder, and while in the longterm it may mean the types of matters IMF fund may change, there will always be potential litigants with strong cases and empty pockets... *Short term, it is unlikely that this case will retrospectively affect current IMF matters, as noted in the (eventual) ASX ANN as well as in various news articles this afternoon.






condog said:


> Agreed - asa holder of IMF, *IMO this will not drmatically affect the profit outlook for IMF, *the govt cannot change the law retrospectively to make IMF lose the case...so no probs....  all cases are open to appeal, but this one seems to be done and dusted...
> 
> They have plenty in the pipeline, a bit flat for 2010 comapred to goal of doubling income, but strong leads lining up for 2011...




Yes IMF is litigation funder, but they get paid only when they win the case. Look across their case portfolio and they currently have heaps of cases related to disgruntle shareholders of collapsed companies against company directors etc. Given the ruling on Sons of G, the possibility of a positive outcome on these cases have significantly reduced imo. So at the minimum, the risk of success (and hence revenue / profit to IMF) has increased, so a mark down by the market is warranted. 

Now whether the mark down has been overdone or not, that's another matter. My guess is no one really knows how to intelligently interpret the information yet and so we will see volatility short term stemming from this uncertainty.


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## condog (20 January 2010)

*Re: IMF - IMF (Australia)*



skc said:


> Yes IMF is litigation funder, but they get paid only when they win the case. Look across their case portfolio and they currently have heaps of cases related to disgruntle shareholders of collapsed companies against company directors etc. Given the ruling on Sons of G, the possibility of a positive outcome on these cases have significantly reduced imo. So at the minimum, the risk of success (and hence revenue / profit to IMF) has increased, so a mark down by the market is warranted.
> 
> Now whether the mark down has been overdone or not, that's another matter. My guess is no one really knows how to intelligently interpret the information yet and so we will see volatility short term stemming from this uncertainty.




Im sure if it materially affects IMF they will produce an announcment today...
Unitl then im not too concerned....

They have plenty of other good growth and litigation opportunities....If i was trading it id be more alert to proceedings, but ive got that one for a while, so happy to let it ride this one out, and confident its not to big an issue....


When i invested in IMF I knew govt regulation / legislation and appeals / unfavourable decisions would inevitably cause over reactions and volatility...

If your worried call IMF this morning and tell them you want an asx announcment about whether it affects them materially or not and what there exposure is, if it does...

As you yourself said in previous post - there are things you must know about your companies....and the fact IMF will be a bumpy, but likely bumpy upwards road is innevitable in the litigation game...

Fact is you dont see too many law firms struggling...in the long term...


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## skc (20 January 2010)

*Re: IMF - IMF (Australia)*

Dump your IMF shares NOW!

I just realised that the MD of IMF is Hugh McLemon.

Huge mac-lemon people!



condog said:


> Im sure if it materially affects IMF they will produce an announcment today...




It is not material until the details are announced.

There is a radio interview with Huge Lemon this morning but sorry don't have a link. Basically says that decision unlikely to be retrospective (in which case it is not material), but if retrospective then it depends on the details. What he didn't say was if the details are bad then the prospects of their 3 current shareholder cases are also very bad.


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## condog (20 January 2010)

*Re: IMF - IMF (Australia)*



skc said:


> Dump your IMF shares NOW!
> 
> I just realised that the MD of IMF is Hugh McLemon.
> 
> ...




Whooooooooooooo back, why? give some evidence......

This is a massive and reckless statement unless you give details to back it up.....


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## skc (20 January 2010)

*Re: IMF - IMF (Australia)*



condog said:


> Whooooooooooooo back, why? give some evidence......
> 
> This is a massive and reckless statement unless you give details to back it up.....




Sorry that was a joke in reference to the MD's name. Huge Lemon. Get it?

Other than that it was just sharing the audio interview which unfortunately I have no link for.


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## condog (20 January 2010)

*Re: IMF - IMF (Australia)*



skc said:


> Sorry that was a joke in reference to the MD's name. Huge Lemon. Get it?
> 
> Other than that it was just sharing the audio interview which unfortunately I have no link for.




Thank god for that,, be careful though you sent me into 10 minutes quick research of lost prime opening trade...

Im a bit peeved with that... but thanks for quick clarrification.... I know it was probably an accident, so all sweet..


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## JTLP (19 March 2010)

*Re: IMF - IMF (Australia)*

IMF due to pay out a 5 cent interim divi on the 24th of March. This has been trending down since mid Jan and the recent half yearly accounts didn't look too flash for 2010.

So what's the go? Did the government decision affect them that much? They seem to have a pretty chocka book for 2011 and are aiming at over $2B in litigations. Pretty decent yield if they pay out the Final divi like last year at 10 cents (over 10% grossed up!). Any ideas out there?


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## So_Cynical (23 September 2010)

*Re: IMF - IMF (Australia)*

I brought some IMF today at $1.345 ive been watching for a long time and after much uming and arhing, and a couple of failed attempts to low ball other stocks i finally settled on IMF.

My reasons for including IMF in my long term portfolio are more about what it isn't than what it is, and how it fills a gap in my 18 stock portfolio, if that makes any sense?...ill list some of the things i like about IMF.


Unaffected by currency fluctuations.
Unaffected by consumer sentiment.
Unaffected by Market sentiment. (except of course in the extreme)
Unlikely to be affected by changes in legislation.
Unlikely to be affected by changes in technology.
No debt.
43 mill cash (26% of market cap)
Super simple structure/overheads.
Market leader/great record of success.

IMF is a simple business dealing with complex issues and having great success, and they have proven in the past that when successful they are more than happy to pass that on to shareholders via dividends, now its the nature of there business that there revenue flow will be intermittent and i think anyone investing with IMF for the long term needs to except that. 

Personally i think the ups and downs in revenue and thus dividends will offer many in and out/buy and build opportunity's..and that suits me just fine, 2 year chart below showing lots of (post GFC) support at around this level.
~


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## JTLP (26 September 2010)

*Re: IMF - IMF (Australia)*



So_Cynical said:


> I brought some IMF today at $1.345 ive been watching for a long time and after much uming and arhing, and a couple of failed attempts to low ball other stocks i finally settled on IMF.
> 
> My reasons for including IMF in my long term portfolio are more about what it isn't than what it is, and how it fills a gap in my 18 stock portfolio, if that makes any sense?...ill list some of the things i like about IMF.
> 
> ...




Must have read my mind...I too have been looking at IMF.

They look to fluctuate between the low 1.30's to 1.50's - so as you said (using your strategy) an easy buy and build strategy for ~10% gains.

They have a pretty sizeable divvie as well if it stays consistent...and with some pretty big cases on hand (if successful) should be a nice year.


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## So_Cynical (20 October 2010)

*Re: IMF - IMF (Australia)*



So_Cynical said:


> I brought some IMF today at $1.345




I took 85% of my money out of IMF today at $1.49 a 10% profit in 4 weeks is acceptable due to my new position sizing policy...i decided 2 months ago to increase my position size by 40% when entering trades so i could take advantage of smaller % SP moves, and its paid off with IMF, unfortunately hasn't gone as well with BPT 

I like the idea of investing with lawyers and may well add another legal stock to my portfolio...i look forward to buying more IMF the next time it dips below $1.36


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## So_Cynical (28 October 2010)

*Re: IMF - IMF (Australia)*



So_Cynical said:


> i look forward to buying more IMF the next time it dips below $1.36




Or when IMF decide to offer discounted shares through a capitol raising of some sort, personally i like rights issues  i would reckon the issue price would have to be around 1.32 > 1.37 :dunno:



			
				Business spectator said:
			
		

> IMF (Australia) Ltd requested a trading halt on October 28, 2010 pending an announcement by the company about a capital raising. Trading will resume on Monday, November 1, or on an earlier announcement.




http://www.businessspectator.com.au/bs.nsf/Article/IMF-in-trading-halt-AMV8G!OpenDocument&Click=


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## JTLP (28 October 2010)

*Re: IMF - IMF (Australia)*



So_Cynical said:


> Or when IMF decide to offer discounted shares through a capitol raising of some sort, personally i like rights issues  i would reckon the issue price would have to be around 1.32 > 1.37 :dunno:
> 
> 
> 
> http://www.businessspectator.com.au/bs.nsf/Article/IMF-in-trading-halt-AMV8G!OpenDocument&Click=




That's odd. They were doing share buybacks and paying out quite a high divvie...why raise capital? Unless they're not winning cases and getting no fees?


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## So_Cynical (29 October 2010)

*Re: IMF - IMF (Australia)*

IMF raising about 40 mill to fund the growth of there case portfolio, via a non-renounceable 1 for 10 rights issue of convertible (ASX listed/quoted) notes at $1.65 per note, the notes are good for 4 years and pay 10.25% :nuts: with a record date of 10th November there's still some time for non IMF holders to buy in if 10.25% floats ya boat....prospectus link below.

http://www.imf.com.au/ASPX/AUSNZ/DownloadFile.aspx?file=IMF_8843_Prospectus_v12w.pdf


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## So_Cynical (14 December 2010)

*Re: IMF - IMF (Australia)*

The IMFG convertible notes hit the market today and traded at about 5 to 6% higher than the issue price...im keen to add to my small parcel and i live in hope of buying in at just under the issue price as soon as there is some panic selling.  in this market i may not have to wait long.


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## So_Cynical (22 February 2011)

*Re: IMF - IMF (Australia)*

IMF half year report out today...on the back of some recent settlements in favour of IMF and there clients....have a look at these numbers.

Half on corresponding half.


Total income from continuing operations up 76%
Net profit attributable to members up 89%
Diluted EPS up over 90%
Interim dividend up 100%
Cash and equivalents 69 mill
Total liability's (less convertible notes) 21 mill
Interim dividend 10 cents per share fully franked 

I'm in love :1luvu: my buy in price $1.345 gross return of what 9.7% or so....and yet another significant bottom brought.

http://www.imf.com.au/announcements/Half Year Report and Accounts - 31 Dec 10 - 22 Feb 11.pdf


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## So_Cynical (16 April 2011)

*Re: IMF - IMF (Australia)*

I brought a few more IMFG today ($1.795)...my whole IMFG position now yielding about 9.6% PA
Happy to hold and get the quarterly divis for the foreseeable future.


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## So_Cynical (1 December 2011)

*Re: IMF - IMF (Australia)*



So_Cynical said:


> (23rd-September-2010) *I brought some IMF today at $1.345* ive been watching for a long time and after much uming and arhing, and a couple of failed attempts to low ball other stocks i finally settled on IMF.






So_Cynical said:


> (20th-October-2010) I took 85% of my *money out of IMF today at $1.49* a 10% profit in 4 weeks is acceptable due to my new position sizing policy...i decided 2 months ago to increase my position size by 40% when entering trades so i could take advantage of smaller % SP moves, and its paid off with IMF, unfortunately hasn't gone as well with BPT
> 
> I like the idea of investing with lawyers and may well add another legal stock to my portfolio...*i look forward to buying more IMF the next time it dips below $1.36*




And as it turns out, true to my word (above) i brought some IMF for my super fund today at 1.35...buying for exactly the same reasons as last time, except this time im buying as a successful long term IMF holder....and with the knowledge that IMF has already delivered on the potential of 14 months ago, and is now a substantially better company/business.
~


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## robusta (23 December 2011)

*Re: IMF - IMF (Australia)*



So_Cynical said:


> My reasons for including IMF in my long term portfolio are more about what it isn't than what it is, and how it fills a gap in my 18 stock portfolio, if that makes any sense?...ill list some of the things i like about IMF.
> 
> 
> Unaffected by currency fluctuations.
> ...




I like the same things about IMF, I am looking to get in below $1.30 if possible.

Maybe a case looking weak may be the opportunity I am looking for.

http://www.theaustralian.com.au/bus...s-action-on-fees/story-e6frg9kx-1226214539468


The recent expansion into the US should provide growth.

http://news.gnom.es/pr/imf-australia-launches-bentham-capital-in-u-s

Not sure if IMF can hold spot in ASX300 due to lack of liquidity, my opportunity may come when/if the fund managers have to sell.


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## So_Cynical (23 December 2011)

*Re: IMF - IMF (Australia)*



robusta said:


> I like the same things about IMF, I am looking to get in below $1.30 if possible.
> 
> Maybe a case looking weak may be the opportunity I am looking for.
> 
> ...




Sounds like a plan...im hopeful of having another opportunity for my personal portfolio too...i was surprised to see IMF in the ASX300 it really doesn't belong there, the MC and liquidity just isn't there.


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## Ves (23 December 2011)

*Re: IMF - IMF (Australia)*

I looked at this a while back and whilst the basic ratios all looked good, and the company itself has had solid profit growth for the past few years, I had too many reservations. I liked the idea that they wouldn't take on a case unless it made them $3 for every dollar that they spend on it.

The thing that turned me off whilst looking at its fundamentals was the fact that I cannot gaurantee how many cases they will win. They obviously cannot either. They can mitigate the risk by being very selective, but there is still judgment risk.

Look at the cash flow, for instance, you can see that profit is determined by how much of their case expenses they capitalise vs how many they put to P & L. Will they win the cases that they have capitalised? How do we know? It seems somehow easily to maniplulate profit in the near-term in the hope that case results are successful. 

They also seem to be increasing their borrowing / debt levels (for expansion, I take it). The US market is massive by the way, big risk, big reward play. Interesting to see how they go. By their own words they have sucked all possible growth out of the Australian market. So this has to work for profit growth to continue.

They've only lost six (off the top of my head, sorry if not exact) in a decade, but what happens if this streak turns bad? It's all too hard to factor this in from a valuation perspective. It is a business heavily reliant on key personnel and the human factor (arguable for most businesses of course, but I think it is even more relevant in a company like this).

Low capital intensity is a big tick, but earnings have the potential to be very lumpy and hard to predict going forward. The CEO mentioned something about the "lack of gaurantee on contracts streaming to the company" in previous reports. This is a little worrying; no real problems thus far... but the future isn't always governed by the past.I think that this stock is a lot riskier than it seems on the surface.


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## robusta (20 February 2012)

*Re: IMF - IMF (Australia)*

Acorn capital seem to be selling down holding - maybe the price will be right for me soon to pick up some IMF.


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## robusta (9 May 2012)

*Re: IMF - IMF (Australia)*

Had my chance but hung out for a better price, one day........


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## So_Cynical (9 May 2012)

*Re: IMF - IMF (Australia)*

IMF had a good day today as news came thru that the Centro case is close to a conclusion with IMF to get a major share of the 150 million dollar settlement.  with my other legal stock SGH (Slater & Gordon) sharing in the other 50 million of the settlement.

Lets hope the SP gets to 1.51 tomorrow so i can complete my first super trade. 

http://www.pmflegal.com/blog/index....australian-investors-say-shareholder-lawyers/


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## Nutmeg (21 May 2012)

*Re: IMF - IMF (Australia)*



Ves said:


> The thing that turned me off whilst looking at its fundamentals was the fact that I cannot gaurantee how many cases they will win. They obviously cannot either. *They can mitigate the risk by being very selective, but there is still judgment risk*.




The statement in bold is only partly true because the bulk of the cases that IMF fund do not go to trial.  They settle.  And they settle because the likelihood of which side of the dispute is going to win is usually fairly clear well before the commencement of the trial.  I say this as a litigation lawyer myself, usually on the opposite side of the claims funded by IMF.  For a corporate defendant, the prospect of a contested trial and a finding of liability will often compel settlement even where the claim is defensible.  Thus, a plaintiff's claim may have only a 40% chance of success but that is often enough to compel a settlement on terms that give IMF a substantial return on its investment.  This is because, ultimately, corporate defendants always stand to lose a lot more in a public trial in terms of costs and reputational damage than do individual plaintiffs.    



Ves said:


> Low capital intensity is a big tick, but earnings have the potential to be very lumpy and hard to predict going forward. The CEO mentioned something about the "lack of gaurantee on contracts streaming to the company" in previous reports. This is a little worrying; no real problems thus far... but the future isn't always governed by the past.I think that this stock is a lot riskier than it seems on the surface.




If the risk that you have in mind is lumpy earnings, then I agree that the stock has earnings risk.  However, from what I have read of the IMF team, they are very prudent managers of IMF's working capital.  Also, the nature of the business is incredibly scaleable and flexible as IMF does not have teams of lawyers and barristers standing around that need to be paid even when there are few claims worthy of funding.  They are all outsourced.  Thus, IMF can easily scale up to multimillion dollar claims in a way that is perfectly calibrated to the value of the claim.  

Personally, I am interested in learning about the state of the US litigation funding market.  The US is the most litigious nation in the world and yet I understand that litigation funding in the US not as mature as it is in Australia.   I think that IMF's experience will give it a real competitive advantage here. 

One last point: on the question of growth, the presence and availability of litigation funding must, in my view, bring forth an increase in litigation since a lot of claims that formerly were viable were not litigated due to lack of funding.


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## Ves (21 May 2012)

*Re: IMF - IMF (Australia)*

Nutmeg, thanks for clarifying those points. Good information.

I try not to buy into businesses with either lumpy cash flow or earnings.  They are notoriously hard to value, especially if they seem to follow no particular earnings cycle. As a whole it is definitely outside of my circle of competence  (as your reply shows).

The stock interests me though in the sense of its story (rather than as an investment), I follow it on and off, mainly out of interest to see how they go with their expansion. 

I know a lot of people bought this as a high-yielding stock, but it isn't. Some times it will pay a good dividend, other times it will pay none (ie. last half).


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## So_Cynical (21 May 2012)

*Re: IMF - IMF (Australia)*



Ves said:


> I try not to buy into businesses with either lumpy cash flow or earnings.  They are notoriously hard to value, especially if they seem to follow no particular earnings cycle.
> 
> I know a lot of people bought this as a high-yielding stock, but it isn't. Some times it will pay a good dividend, other times it will pay none (ie. last half).




But it is a high yield stock..IMF has been paying divs for 5 years and has returned about 49 CPS gross over those 5 years...using the current SP of 1.38 that's an annual return of around 7.1% ~ the founders got their shares for 20 cents each, so a 240% + ROC for them.

Lots of good stocks have lumpy earning..small miners, the service company's infact any company dealing with contracted jobs...lumpy = opportunity.


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## Nutmeg (21 May 2012)

*Re: IMF - IMF (Australia)*



Ves said:


> I try not to buy into businesses with either lumpy cash flow or earnings.  They are notoriously hard to value, especially if they seem to follow no particular earnings cycle.




I share your reservations and for the same reasons. I'd like to see IMF operate on a scale that gave it many more streams of settlement/judgment earnings than it has at present.


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## McLovin (22 May 2012)

*Re: IMF - IMF (Australia)*



			
				Nutmeg said:
			
		

> The statement in bold is only partly true because the bulk of the cases that IMF fund do not go to trial. They settle. And they settle because the likelihood of which side of the dispute is going to win is usually fairly clear well before the commencement of the trial. I say this as a litigation lawyer myself, usually on the opposite side of the claims funded by IMF. For a corporate defendant, the prospect of a contested trial and a finding of liability will often compel settlement even where the claim is defensible. Thus, a plaintiff's claim may have only a 40% chance of success but that is often enough to compel a settlement on terms that give IMF a substantial return on its investment. This is because, ultimately, corporate defendants always stand to lose a lot more in a public trial in terms of costs and reputational damage than do individual plaintiffs.




This is why I got into the stock. I was chatting about this with a lawyer friend of mine. He laid it out very simply, in almost every case a decent lawyer knows his chances of winning going into it. The other side does too and that's why they never go to trial because they already know what the outcome will be. Lawyers are some of the most risk averse people I know (if you've ever read a legal opinion, you'll know what I mean!). There's a misconception about the legal profession largely led by Hollywood stereotypes. The nice thing about IMF over SGH is that they don't need lots of expensive lawyers on their payroll.


----------



## Nutmeg (22 May 2012)

*Re: IMF - IMF (Australia)*



McLovin said:


> This is why I got into the stock. I was chatting about this with a lawyer friend of mine. He laid it out very simply, in almost every case a decent lawyer knows his chances of winning going into it. The other side does too and that's why they never go to trial because they already know what the outcome will be. Lawyers are some of the most risk averse people I know (if you've ever read a legal opinion, you'll know what I mean!). There's a misconception about the legal profession largely led by Hollywood stereotypes. The nice thing about IMF over SGH is that they don't need lots of expensive lawyers on their payroll.




I have just been listening to an interview given by Ralph Sutton, the guy heading up Bentham Capital, IMF's US subsidiary. Sutton gave a very informative overview of the US litigation funding market. If anyone is interested in gauging IMF's future prospects, you will find Sutton's overview worthwhile listening to:

http://www.brrmedia.com/event/89940/ralph-sutton-director-of-bentham-capital-llc

After listening to Sutton, it is hard to resist the conclusion that, at current prices, IMF is considerably undervalued with enormous upside and minimal downside. I say that because at around $1.35 per share IMF is trading over a forward P/E of 5. At that level, IMF's US adventure has not been factored in at all and yet the prospect for the US adventure to take off in a big way must be considered very high. This is because:


the sheer size of the US litigation market is huge;


yet relative to Australia, litigation funding is quite undeveloped in the US;

while there are a couple of competitors in the US, there are not established players;
 

settlement payouts in the US tend to be bigger (although so are the litigation costs);


the US is the centre for patent infringement litigation which typically involves claims for enormous sums of money due to the mass production of computer hardware and downloadable software;


the US is extremely litigious; and


the legality in the US (unlike in Australia) of contingency fees, i.e. lawyers/funders taking a cut of settlements/judgment sums.

What is attractive about the US adventure is that the enormous potential that it offers can be leveraged of a tiny capex base.  I don't expect that IMF's US business will result in the earnings being any less lumpy: they'll just be greater lumps.  But you're right about lawyers knowing at a very early stage whether they are likely to succeed in the prosecution or defence of a claim.  If a claim proceeds to trial, it is undoubtedly because settlement negotiations have broken down, and they have broken down because one side or the other thinks that it can do better at trial.  The Uniloc litigation was an interesting example of this.  Uniloc ultimately won with a massive award of damages at $US388 million.  Microsoft appealed the decision and the award.  It succeeded on the latter but settled with Uniloc before the quantum was redetermined.  The problem appears to have been that at the trial the damages award was made by the jury after it was shown a pie chart by Uniloc's lawyers with $19 billion in revenue from the Windows XP operating system and some versions of Word (both of which were alleged to have infringed Uniloc's patent).  Uniloc sought 2.9% of that total or about $564 million. 

The Appeals Court ruled that the use of the $19 billion figure in front of the jury was improper as it was based upon a “rule of thumb” that 25 percent of a product’s value goes to the patent owner.  However, I find it noteworthy that the Appeals Court did not disagree that the $US388 million award was in error but only that it was not apparent that the jury's award of a reasonable royalty base was tied to "_the facts of the case at issue_".  I take it from that, therefore, that the sum at which Microsoft ultimately settled was probably only modestly better than the original award of $US388 million, since there was no guarantee that the original sum would not be re-confirmed or be assessed even higher.


----------



## Ves (22 May 2012)

*Re: IMF - IMF (Australia)*



Nutmeg said:


> After listening to Sutton, it is hard to resist the conclusion that, at current prices, IMF is considerably undervalued with enormous upside and minimal downside. I say that because at around $1.35 per share IMF is trading over a forward P/E of 5. At that level, IMF's US adventure has not been factored in at all and yet the prospect for the US adventure to take off in a big way must be considered very high. This is because:



 I don't think you can look at this stock in terms of price-earnings ratios because there is no _reliable earnings stream._   The only thing that you know for sure is their current case portfolio.   Would it be possible to do some rough calculations as to how much they expect to receive from future settlements and discount them back to work out an NPV? You can't tell the exact timing, settlement proceeds, expenditure or success rate, but it might help as a guide. I would also suggest adjusting for whatever working capital is required.

When looking at businesses like this I try to separate _profitability_ and _cash flow_.  Profitable businesses can still have a _liquidity event_.


----------



## Nutmeg (22 May 2012)

*Re: IMF - IMF (Australia)*



Ves said:


> I don't think you can look at this stock in terms of price-earnings ratios because there is no _reliable earnings stream._   The only thing that you know for sure is their current case portfolio.   Would it be possible to do some rough calculations as to how much they expect to receive from future settlements and discount them back to work out an NPV? You can't tell the exact timing, settlement proceeds, expenditure or success rate, but it might help as a guide. I would also suggest adjusting for whatever working capital is required.
> 
> When looking at businesses like this I try to separate _profitability_ and _cash flow_.  Profitable businesses can still have a _liquidity event_.




Agree in the main.  I find it very hard to arrive at any medium term valuation of IMF.  It appears to keep a very conservative balance sheet - conscious, no doubt, of the risk of a liquidity event.  With the entry into the US and the size of that market, I suspect that it will begin to build up a case book to a point where it gradually has a sufficient number of cases settling over the course of the year and bringing in a stream of income but choppy income. 

I think the valuation method that you put forward above would be an improvement but still subject to considerable limitations.


----------



## Ves (22 May 2012)

*Re: IMF - IMF (Australia)*

I agree with most of what you have said.  Definitely limitations with the valuation model I suggested, but I do not see any other way you could attempt it without inviting even more potential inaccuracy and speculation!


----------



## odds-on (22 May 2012)

*Re: IMF - IMF (Australia)*



Ves said:


> I agree with most of what you have said.  Definitely limitations with the valuation model I suggested, but I do not see any other way you could attempt it without inviting even more potential inaccuracy and speculation!




I once spent a bit of time trying to put a value on IMF, found the easiest way was to average out the dividends over the last 5 years then use a DDM. Discount rate 7.5% and dividend growth rate of 2%. IMF is about 30-40% undervalued - the question is does one have enough confidence in the business model and management over the medium term? I sort of do....never enough to allocate a large amount to it.

I have owned IMF and will again subject to a further drop in price.


----------



## McLovin (22 May 2012)

*Re: IMF - IMF (Australia)*

A couple of points to remember and which I based a valuation on.

1. They maintain $70m in cash.

2. The case portfolio they disclose _is not_ their total case portfolio it's only the cases where they have good reason to believe they will receive a payment. For instance the bank fees case is not included in their case portfolio, yet.

3. They generally receive between 25-40% of the payout. When you consider they have $1,600m portfolio with settlement time frames out to 2014, that's a fair chunk of change even after their own costs and discounting those payments. 

I haven't attempted DCF or PE valuations because, as Vespuria said, I don't see how you can do it. What I do know is given their track record and the size of their disclosed portfolio, and the relative strength of their balance sheet I think this is a great company.

If you want an option on it, then you might want to look at IMFG. They're convertible notes (1-1) with a coupon of 10.25% FV $1.65 expiring Dec 2014. Redeemable at $1.65 at expiry, which gives you some downside protection.


----------



## Nutmeg (22 May 2012)

*Re: IMF - IMF (Australia)*



odds-on said:


> I once spent a bit of time trying to put a value on IMF, found the easiest way was to average out the dividends over the last 5 years then use a DDM. Discount rate 7.5% and dividend growth rate of 2%. IMF is about 30-40% undervalued - the question is does one have enough confidence in the business model and management over the medium term? I sort of do....never enough to allocate a large amount to it.
> 
> I have owned IMF and will again subject to a further drop in price.




IMF's management and business model are pretty solid in my view.


----------



## JTLP (22 May 2012)

*Re: IMF - IMF (Australia)*

I've always considered holding this - but it seems to have pretty big swings. Seems the $1.30 range is the lower end though...is it rangebound?

I read the investor presentation from February (anybody know if anything is available later?) and it seemed comparing HY2012 to HY2011:
- Gross Income, Net Income, NPAT, DPS and EPS all down
- Asset backing and case investment up

Can someone explain to me if case investment is up why the value of Investment Portfolio is flat? Am I to be reading it that the size of cases has changed?

This is very hard to value and thanks McLovin for pointing out that they don't include ALL cases as per their policy.


----------



## odds-on (22 May 2012)

*Re: IMF - IMF (Australia)*



Nutmeg said:


> IMF's management and business model are pretty solid in my view.




I have a new portfolio rule - if the deal is not slapping me in the face i will not buy. The price is right but i am just not confident enough over the medium term this means the IMF deal is not slapping me in the face, so no buying yet. There is also a concern that IMF will never trade at value, always a bridesmaid and never the bride.

Just my


----------



## skc (22 May 2012)

*Re: IMF - IMF (Australia)*



odds-on said:


> I once spent a bit of time trying to put a value on IMF, found the easiest way was to average out the dividends over the last 5 years then use a DDM. Discount rate 7.5% and dividend growth rate of 2%. IMF is about 30-40% undervalued - the question is does one have enough confidence in the business model and management over the medium term? I sort of do....never enough to allocate a large amount to it.
> 
> I have owned IMF and will again subject to a further drop in price.




7.5% is quite low, considering you can get that in some of the big4 hybrids? For IMF use no less than 12%, may be even 15%...


----------



## odds-on (23 May 2012)

*Re: IMF - IMF (Australia)*



skc said:


> 7.5% is quite low, considering you can get that in some of the big4 hybrids? For IMF use no less than 12%, may be even 15%...




Skc,

When I value a business I attempt to obtain a medium term valuation peg for the business to assist my thinking process. I use the medium term (future 5 years) as my focus, therefore my discount rate for a Dividend Discount Model is the 5 year term deposit rate + 2% equity risk. An assessment of earnings risk, valuation risk and financial risk is made to come up with % confidence. I then compare the discount to my medium term valuation peg to my % confidence. A large discount and high % confidence is a good deal.  I think it is difficult to value IMF using PE or DCF, I therefore just use the dividend history as a guide to create a DDM to obtain a medium term valuation peg. I agree with many of the posters that IMF will be earning cash in the coming years, it is just lumpy and not visible.

An interesting exercise would be to obtain the dividend history from IMF, do some quick calculations using historical term deposits rates and then compare past valuations against share price over the recent years. I am confident that IMF spends most of its time trading at a discount to value due to the lack of earning visibility, as we all know the market does not like uncertainty – this is a key risk, my piggy bank is only going increase from dividends and capital growth during my desired investment timeframe. 

If I was to use a valuation model for IMF, I would treat it as an LIC, focus on the difference in discount to a medium term valuation peg. Exploit the extremes and have an adequate investment timeframe.


----------



## Nutmeg (23 May 2012)

*Re: IMF - IMF (Australia)*



odds-on said:


> If I was to use a valuation model for IMF, *I would treat it as an LIC*, focus on the difference in discount to a medium term valuation peg. Exploit the extremes and have an adequate investment timeframe.




IMF is ultimately a totally unique business - it has no peers offering comparison.  But you're right that an LIC is probably the closest for comparative purposes that we will be able to find.


----------



## Nutmeg (23 May 2012)

*Re: IMF - IMF (Australia)*

The following article provides a broad investment case for IMF:

http://www.fool.com.au/2012/02/investing/imf-australia-limited-making-a-case/


----------



## odds-on (25 May 2012)

*Re: IMF - IMF (Australia)*

I did some research last night and have to admit the DDM is the wrong valuation tool. IMF have only being paying dividends since 2007, there is not sufficient dividend history to make a valuation. I am in agreement with the posters about the future work and potential for growth but I am unable to obtain a basic medium term valuation peg. I am going to file IMF in the "too difficult" basket.


----------



## skc (25 May 2012)

*Re: IMF - IMF (Australia)*



odds-on said:


> I did some research last night and have to admit the DDM is the wrong valuation tool. IMF have only being paying dividends since 2007, there is not sufficient dividend history to make a valuation. I am in agreement with the posters about the future work and potential for growth but I am unable to obtain a basic medium term valuation peg. I am going to file IMF in the "too difficult" basket.




Lol. That's the exact same basket I have it in. I think those who get it right will enjoy pretty good returns. But I struggle to understand The Good Wife on TV so I have no chance in understanding a lawyer business.


----------



## odds-on (25 May 2012)

*Re: IMF - IMF (Australia)*



skc said:


> Lol. That's the exact same basket I have it in. I think those who get it right will enjoy pretty good returns. But I struggle to understand The Good Wife on TV so I have no chance in understanding a lawyer business.




I am not the sharpest tool in the shed so the “too difficult” basket is actually a large skip outside the house.


----------



## skc (25 May 2012)

*Re: IMF - IMF (Australia)*



odds-on said:


> I am not the sharpest tool in the shed so the “too difficult” basket is actually a large skip outside the house.




It takes a wise man to make an honest assessment of himself.


----------



## Nutmeg (25 May 2012)

*Re: IMF - IMF (Australia)*



skc said:


> Lol. That's the exact same basket I have it in




I wish there were more stocks in that basket.  It would mean that there would be more buying opportunities.  

People used to say that they didn't understand MMS' business either.  I didn't understand it initially but I understood its financials and that was all that mattered until I was able to come to grips with its business.


----------



## McLovin (25 May 2012)

*Re: IMF - IMF (Australia)*



odds-on said:


> I did some research last night and have to admit the DDM is the wrong valuation tool. IMF have only being paying dividends since 2007, there is not sufficient dividend history to make a valuation. I am in agreement with the posters about the future work and potential for growth but I am unable to obtain a basic medium term valuation peg. I am going to file IMF in the "too difficult" basket.




Have you had a look at the convertible notes? You are buying a bond with an option to convert at 1:1, or redeem for $1.65/note. YTM at the moment is about ~7.5%.

Might be an easier way to play it if you think valuing the business is too hard but you still want exposure.


----------



## McLovin (29 May 2012)

*Re: IMF - IMF (Australia)*

I'll bet they're checking how deep Deloitte's pockets are to see if they can get some money back for Hastie shareholders.


----------



## pwnitat0r (19 July 2012)

*Re: IMF - IMF (Australia)*

Hi guys, interesting discussion going on here. Good to have insights from nutmeg, I admit I couldn't understand IMF before without the help of a lawyer. What nutmeg said about settling was also emphasised to me by another lawyer as well. He said by going to trial and having a verdict handed down, it makes it easy for every dick and harry to line up with a lawsuit if they win because a precedent has been set, and also exposes the company to further payout risks. By settling, there is no admission of guilt either and IMF keep an advantage over any competitors in the market by not allowing them to become predators and line up for easy pay days after a winning verdict.

Profits are lumpy, true. Something I struggled to get my head around as well. But, the book value should provide some security (cash - debt + intangibles). I bought early in the year when they had a book value of ~$0.70c backing up every share. I bought at $1.35, so a book ratio of 1.9 or so and not exactly conservative I guess.

But, what helped me to buy was that the investment in cases had been accelerated, it went from $30-40 million  to an all time high of $60 million at the time I bought, so I expected an increase in profits over the next 2-3 years. With the settlement of Centro, I'm sure the amount of money invested has changed, but we should see a profit of $40m+ this year, or EPS of ~30c? I am pretty sure we'll see a record profit, at least. Hope the directors don't pay themselves too much in bonuses, as they are entitled to 25% of gross profits which is ridiculous. But, given most of them have shares in the company they would only be shooting themselves in the foot long-term if they take too much away from shareholders and surely it's in their best interests to see the share price rise long-term.

My expected book value has been updated to $1, or 90c after the dividend, but I still have effectively $1 of cash in my pocket for every $1.35 invested IMO. I think IMF are cheaper now than what they were earlier in the year because they have more cash backing it up and book value is now 1.5 if you include the dividend, seeing as they are still trading CD. I consider the intangibles to be effectively cash as they could be sold $1 for ever $1 invested. IMF have historically earned ~100% net profit on the cash invested in cases.

Using 100% profit on invested money, when I bought IMF they had a book value of ~$85 million (market cap of ~$170 million) and from the money invested in cases I assumed another $60 million in net profit over the next 2-3 years, which I expected to  be retained as profit or paid out in dividends to give me close to a "book value" of my purchase price through either cash retained or paid out in dividends.

For me, I bought and $1.35 and I see myself sitting on $1 cash for every share held now.. so the future income stream and dividends come for 35c/share. Even if you take their average profit over the last 3 years of $17.5 million (or ~14cps), given the odd dividend of 5 or 10c, that is great value if they were to consistently maintain that, but I expect a higher average profit over the next 2-3 years although I make no predictions beyond those 2-3 years.

I realise I may be too "forward-looking" and not conservative enough, but I come from a gambling background and I make money by looking forward to see what is likely to happen, not what  has happened in the past.

My 2c anyway, good luck to everyone!


----------



## pwnitat0r (19 July 2012)

*Re: IMF - IMF (Australia)*



McLovin said:


> Have you had a look at the convertible notes? You are buying a bond with an option to convert at 1:1, or redeem for $1.65/note. YTM at the moment is about ~7.5%.
> 
> Might be an easier way to play it if you think valuing the business is too hard but you still want exposure.




I bought the notes (back in May when you posted this) for more exposure on the chance the shares spike after they release guidance for full year net profit, or release their full year net profit which I expect to be $40 million+.

I don't see any downside risk, but I do see the potential of an upside spike when full year profit is released. Who knows how the market will value ~$40 million profit with the shares a PE ratio of 5. $2 isn't too far fetched IMO.

Not sure about buying the notes now though, there is only 2 payments remaining and currently trading for ~$1.74, so you'll be losing money assuming they repay the full value of $1.65 back in December (which they plan to do) without a spike in the share price above $1.65.


----------



## McLovin (21 July 2012)

*Re: IMF - IMF (Australia)*



pwnitat0r said:


> I bought the notes (back in May when you posted this) for more exposure on the chance the shares spike after they release guidance for full year net profit, or release their full year net profit which I expect to be $40 million+.
> 
> I don't see any downside risk, but I do see the potential of an upside spike when full year profit is released. Who knows how the market will value ~$40 million profit with the shares a PE ratio of 5. $2 isn't too far fetched IMO.
> 
> Not sure about buying the notes now though, there is only 2 payments remaining and currently trading for ~$1.74, so you'll be losing money assuming they repay the full value of $1.65 back in December (which they plan to do) without a spike in the share price above $1.65.




The notes expire in December _2014_, so there is still 10 payments to be made. YTM was ~8% when I bought, not sure what it is now.

There's always downside risk, namely that IMF can't pay back the debt, but this is pretty limited, IMO.


----------



## pwnitat0r (21 July 2012)

*Re: IMF - IMF (Australia)*

Hi McLovin,

They have the option to pay them back in December 2012 and they indicated in one of the investor presentations this was going to be the most likely option. Anyone buying at the current price of ~$1.74 now will most likely lose money unless the share price spikes up before then and they convert to an ordinary share.


----------



## herzy (21 July 2012)

*Re: IMF - IMF (Australia)*



pwnitat0r said:


> Hi McLovin,
> 
> They have the option to pay them back in December 2012 *and they indicated in one of the investor presentations this was going to be the most likely option*. Anyone buying at the current price of ~$1.74 now will most likely lose money unless the share price spikes up before then and they convert to an ordinary share.




I read this too...


----------



## McLovin (21 July 2012)

*Re: IMF - IMF (Australia)*



pwnitat0r said:


> Hi McLovin,
> 
> They have the option to pay them back in December 2012 and they indicated in one of the investor presentations this was going to be the most likely option. Anyone buying at the current price of ~$1.74 now will most likely lose money unless the share price spikes up before then and they convert to an ordinary share.




Have you included the early redemption penalty in your calculation? The redemption amount should be ~$1.72 with the penalty payment (2%/annum compounded quarterly)


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## pwnitat0r (22 July 2012)

*Re: IMF - IMF (Australia)*

No, I didn't... thanks for reminding me!


----------



## Tannin (23 July 2012)

*Re: IMF - IMF (Australia)*

The dividend announcement on 29th June certainly seems to have livened this stock up. It had risen close to 20c between then and the small slip back today. I bought some in mid June and now I'm looking at the current price and wishing I'd got quite a lot more.  Still, you can't complain when your stocks go up, can you.


----------



## Mammom (2 August 2012)

*Re: IMF - IMF (Australia)*



pwnitat0r said:


> I think IMF are cheaper now than what they were earlier in the year because they have more cash backing it up and book value is now 1.5 if you include the dividend, seeing as they are still trading CD.




I agree that IMF are still pretty cheap. I was watching the stock price for a long while before buying in at $1.29. The things I love about this stock are that it: 


is extremely capex-light - it only requires an astute lawyer with a cheque book and maybe an accountant;
is invulnerable to "_market cycles_" - indeed, if anything, it does better in downturns than upturns;
has recently entered the US where the scale of litigation is enormous and yet the funds that IMF needs to set up operations there are trivial.

It is the US adventure that I will be keeping a close eye on in the next year or two.


----------



## herzy (2 August 2012)

*Re: IMF - IMF (Australia)*

Sorry what does 'trading CD' mean?


----------



## So_Cynical (2 August 2012)

*Re: IMF - IMF (Australia)*



herzy said:


> Sorry what does 'trading CD' mean?




CD = cum dividend

So if you buy the stock you get the coming dividend.

http://www.asx.com.au/research/status_notes.htm#CD


----------



## herzy (5 August 2012)

*Re: IMF - IMF (Australia)*

haha of course. thanks SC


----------



## herzy (25 August 2012)

*Re: IMF - IMF (Australia)*

Some lovely results! Had a big run up into XD too. 

My valuation of the company is as follows:

Assets less convertible shares liability = 95 mill
$$ invested = 66 mill
Track record on $$ invest is earning 3 $ for every one $ invested, so expected earnings on the 66 mill = 198 mill.

This to my mind gives a value of ~ 300 mill, or a price per share of $2.15 - not accounting for growth or dividends.
However, growth should compound as the balance sheet gets bigger (can afford to take on more and more cases), as well as moving into the US. 

Given lumpiness of earnings, however, I expect the value of IMF to always remain a little lower. Still, I'm happy to hold for the foreseeable future. I'd be interested in other people's thoughts!


----------



## So_Cynical (25 August 2012)

*Re: IMF - IMF (Australia)*



herzy said:


> Some lovely results! Had a big run up into XD too.
> 
> My valuation of the company is as follows:
> 
> ...




I'm holding part free carried positions in both my Super and personal portfolios @ around the $1.35 level...happy to hold and build my position with (LEACA) and collect dividends and credits along the way...i love the business and the instant diversity it brings to a portfolio.


----------



## herzy (26 August 2012)

*Re: IMF - IMF (Australia)*



So_Cynical said:


> I'm holding part free carried positions in both my Super and personal portfolios @ around the $1.35 level...happy to hold and build my position with (LEACA) and collect dividends and credits along the way...i love the business and the instant diversity it brings to a portfolio.




After averaging down in the last dip I'm at 1.32 and also happy to hold for the foreseeable future - huge yield and low p/e (still way below my valuation of NTA) makes a good argument - it also seems recession proof and non-cyclical. What was LEACA?


----------



## poverty (26 August 2012)

*Re: IMF - IMF (Australia)*

Why did the SP drop so hard when it went ex-div?  Buying opportunity?  I'll keep watching for now.


----------



## herzy (26 August 2012)

*Re: IMF - IMF (Australia)*



poverty said:


> Why did the SP drop so hard when it went ex-div?  Buying opportunity?  I'll keep watching for now.




I would say buying opportunity. It had a huge run up leading to the ex-div as well, I think people were hoping for good results, good divvy and then a quick profit. Anybody who bought about 6 weeks ago (from memory) would still be in front if they sold today. 

You're also not including franking credits (i assume) which adds a few cents. All that said, I was surprised by the big drop as well. 

In any case it's still on a p/e of less than 10, and (imo) fairly undervalued with good potential for high divvy yield in future. Just my thoughts.


----------



## So_Cynical (26 August 2012)

*Re: IMF - IMF (Australia)*



herzy said:


> After averaging down in the last dip I'm at 1.32 and also happy to hold for the foreseeable future - huge yield and low p/e (still way below my valuation of NTA) makes a good argument - it also seems recession proof and non-cyclical. *What was LEACA?*




LEACA = *L*ow *E*ntry *A*nd *C*ost *A*veraging

Its an Acronym that describes what i do.


----------



## herzy (26 August 2012)

*Re: IMF - IMF (Australia)*

Without getting too personal (and keeping in mind the topic of the thread), would you consider outlining your LEACA strategy using IMF as an example? E.g. selling 1/3 of your holdings above 1.50, buying 1/3 back in at 1.40...

Your LEACA strategy sounds interesting, and like something that I've been looking into - yet to do it successfully though (still waiting for some of my holdings to drop in sp - there are worse problems I suppose).


----------



## Tannin (28 August 2012)

*Re: IMF - IMF (Australia)*

The price dropped briefly when they went ex-dividend (to 1.44 as I recall) but rapidly went up again before I had a chance to increase my stake. 

The price dropped again today, for no apparent reason, closing at $1.43 and mostly trading around $1.44 to $1.46. This puts IMF on a trailing p/e of 4.8 and a fully franked trailing yield of 7%, grossing up to 10% with franking. I took the opportunity to buy some more. I see IMF as a core holding. I might (or might not) sell off a half or a third if they put on 20 or 30c over the coming months, but my present intention is simply to hold until further notice.


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## McLovin (28 August 2012)

*Re: IMF - IMF (Australia)*



pwnitat0r said:


> I bought the notes (back in May when you posted this) for more exposure on the chance the shares spike after they release guidance for full year net profit, or release their full year net profit which I expect to be $40 million+.
> 
> I don't see any downside risk, but I do see the potential of an upside spike when full year profit is released. Who knows how the market will value ~$40 million profit with the shares a PE ratio of 5. $2 isn't too far fetched IMO.
> 
> Not sure about buying the notes now though, there is only 2 payments remaining and currently trading for ~$1.74, so you'll be losing money assuming they repay the full value of $1.65 back in December (which they plan to do) without a spike in the share price above $1.65.




Just to update on the notes. In the presentation they have stated that they haven't made a decision on whether or not to redeem the notes in December. It sounded like they were leaning more toward not redeeming early.


----------



## JTLP (28 August 2012)

*Re: IMF - IMF (Australia)*

Can somebody help me out with the IMFG notes?

I've read somewhere that they most likely will need the money and won't be bought out in Dec - does anyone know how many payments are left on them and what they are paying?

Thanks!


----------



## McLovin (29 August 2012)

*Re: IMF - IMF (Australia)*



JTLP said:


> Can somebody help me out with the IMFG notes?
> 
> I've read somewhere that they most likely will need the money and won't be bought out in Dec - does anyone know how many payments are left on them and what they are paying?
> 
> Thanks!




Face value is $1.65 coupon is 10%, early redemption is by Dec 31 this year. You'd have to listen to the presentation to form your own opinion of whether or not you think they are redeeming or not. If they go for early redemption then they have two payments left, plus the face value + the penalty payment (2%/year remaining compounding quarterly) otherwise they must be redemed (these are debt securities not hybrids) by 31 Dec 2014.


----------



## galumay (31 December 2012)

*Re: IMF - IMF (Australia)*

Has anyone done an IV calc on this stock, I have rechecked my numbers a couple of times and for some reason I am getting an IV of around $5.50!! Clearly not right and I cant see where I have gone wrong, I have fiddled around with the convertible notes and dividend accounting but whatever I try makes the numbers bigger rather than smaller! Either its the bargain of the century - or I have made a fundamental error. (almost certain!)


----------



## herzy (2 January 2013)

*Re: IMF - IMF (Australia)*



galumay said:


> Has anyone done an IV calc on this stock, I have rechecked my numbers a couple of times and for some reason I am getting an IV of around $5.50!! Clearly not right and I cant see where I have gone wrong, I have fiddled around with the convertible notes and dividend accounting but whatever I try makes the numbers bigger rather than smaller! Either its the bargain of the century - or I have made a fundamental error. (almost certain!)




Can't help specifically but I am also of the view that it is majorly undervalued if that helps. Very low p/e, lumpy but consistent earnings (which IMO will increase), potential for US expansion, high dividend... Happily holding.


----------



## McLovin (2 January 2013)

*Re: IMF - IMF (Australia)*



galumay said:


> Has anyone done an IV calc on this stock, I have rechecked my numbers a couple of times and for some reason I am getting an IV of around $5.50!! Clearly not right and I cant see where I have gone wrong, I have fiddled around with the convertible notes and dividend accounting but whatever I try makes the numbers bigger rather than smaller! Either its the bargain of the century - or I have made a fundamental error. (almost certain!)




How are you valuing it? When I bought it early last year I got a value around $2, with margin of safety. I mainly used the value of their existing portfolio and made some guesstimations as to how much cash would flow from them + the cash on the balance sheet. I didn't include anything from their US expansion because, well, it hasn't done anything yet.


----------



## systematic (2 January 2013)

*Re: IMF - IMF (Australia)*

No IV, but I have it rated well on value (top 15%).
Showing some near term momentum, too.


----------



## herzy (3 January 2013)

*Re: IMF - IMF (Australia)*

What's going on today?? Up between 4 and 7%. At one point there were 4 sellers left! Should be an interesting ride (up)!


----------



## galumay (3 January 2013)

*Re: IMF - IMF (Australia)*



McLovin said:


> How are you valuing it? When I bought it early last year I got a value around $2, with margin of safety. I mainly used the value of their existing portfolio and made some guesstimations as to how much cash would flow from them + the cash on the balance sheet. I didn't include anything from their US expansion because, well, it hasn't done anything yet.




I basically use the Montgomery formula and tables for calculating IV, I didnt include anything from the US stuff either, really based on current data rather than projected.


----------



## McLovin (3 January 2013)

*Re: IMF - IMF (Australia)*



galumay said:


> I basically use the Montgomery formula and tables for calculating IV, I didnt include anything from the US stuff either, really based on current data rather than projected.




So what numbers did you plug in? Montgomery's formula is pretty flawed but I would imagine it's almost impossible with a lumpy earner like IMF to calculate IV based on his forumla. 

IMF do provide quarterly case updates with expected case wins by year and by value, which makes it a pretty good candidate for a bit of DCF.


----------



## Country Lad (4 January 2013)

*Re: IMF - IMF (Australia)*

You will be hard pressed to come up with a valuation of this one which relates to the share price.  Mind you, I am of the same view with all shares but that is a different story.

IMF is valued by the market at any time by the cases they are funding and the probability of a successful outcome.  That can cause quite a fluctuation.  Currently the market likes the chances of the initiative in the Netherlands against ABN AMRO Bank N.V,  now The Royal Bank of Scotland N.V.

The price has been rising nicely since that announcement and the recent increase was to some extent predictable.

Cheers
Country Lad


----------



## galumay (4 January 2013)

*Re: IMF - IMF (Australia)*



McLovin said:


> So what numbers did you plug in? Montgomery's formula is pretty flawed but I would imagine it's almost impossible with a lumpy earner like IMF to calculate IV based on his forumla.
> 
> IMF do provide quarterly case updates with expected case wins by year and by value, which makes it a pretty good candidate for a bit of DCF.




I plug in NPAT, Dividends, # of Shares and Equity for the 11/12 year, I have a RR of 12% by default. My workbook refers to Montgomery's tables for the calculation.

While I accept there are issues with his formula, that is true for any calculation of IV and at least it gives me a reference point for value. Its pretty hard to find stocks in the current market that give results using this method that indicate prices below value - so when one flags up with such a difference it piques my interest!

I am only in the research phase of my investment journey and I have settled on a FA approach as opposed to a TA approach hence the work I have done in creating a workbook to allow me to calculate and save IV numbers.

I am not looking for absolute numbers, I see it as more providing an initial guide for stocks to investigate further for potential investment when I am confident enough to start serious investing.

Thanks for the feedback!


----------



## McLovin (4 January 2013)

*Re: IMF - IMF (Australia)*



galumay said:


> I plug in NPAT, Dividends, # of Shares and Equity for the 11/12 year, I have a RR of 12% by default. My workbook refers to Montgomery's tables for the calculation.
> 
> While I accept there are issues with his formula, that is true for any calculation of IV and at least it gives me a reference point for value. Its pretty hard to find stocks in the current market that give results using this method that indicate prices below value - so when one flags up with such a difference it piques my interest!




His forumla makes assumption about compounding retained earnings which may or may not be true. The rub with IMF and where you will fall down everytime using that forumla is that their earnings are lumpy and so are their dividends (their franking account is empty until tax is paid, which happens after they receive their fee). What happens if you use prior year NPAT instead? As you've seen, the reference point for value is way off. Unfortunately, if you use his method you may end up with more GIGO errors than real undervalued companies. 

Plenty of people don't like IMF because of the earnings lumpiness, so don't worry, it's not an easy one to value!


----------



## JTLP (26 February 2013)

*Re: IMF - IMF (Australia)*

Mixed feelings about the HY report today.

Not too concerned about falling NPAT etc - tis a lumpy earnings business and should be treated as such. However no dividend was a bit disappointing - they have quite a bit of cash so not sure why they didn't part with some?

Must be holding for the Wivenhoe dam case + others?

DNH but looking to in the future


----------



## McLovin (26 February 2013)

*Re: IMF - IMF (Australia)*



JTLP said:


> However no dividend was a bit disappointing - they have quite a bit of cash so not sure why they didn't part with some?




No franking credits available.


----------



## JTLP (27 February 2013)

*Re: IMF - IMF (Australia)*



McLovin said:


> No franking credits available.




Thanks for that - is it noted in their report? I didn't see!

Was pretty heavily traded down today to finish at $1.50. Still on the sidelines and waiting...


----------



## McLovin (28 February 2013)

*Re: IMF - IMF (Australia)*



JTLP said:


> Thanks for that - is it noted in their report? I didn't see!
> 
> Was pretty heavily traded down today to finish at $1.50. Still on the sidelines and waiting...




Not disclosed (at least I didn't see it in there).

They don't generally have franking credits until the pay tax, which doesn't occur until FY year end. There is some commentary about in last year's report.

Also note, they generally like to have between $55-$70m in cash on their balance sheet.


----------



## JTLP (28 February 2013)

*Re: IMF - IMF (Australia)*



McLovin said:


> Not disclosed (at least I didn't see it in there).
> 
> They don't generally have franking credits until the pay tax, which doesn't occur until FY year end. There is some commentary about in last year's report.
> 
> Also note, they generally like to have between $55-$70m in cash on their balance sheet.




Makes sense.

In other news shot straight back up today...you snooze you lose!


----------



## robusta (3 March 2013)

*Re: IMF - IMF (Australia)*



JTLP said:


> Not too concerned about falling NPAT etc - tis a lumpy earnings business and should be treated as such. However no dividend was a bit disappointing - they have quite a bit of cash so not sure why they didn't part with some?




Over the last five years IMF have earned a average ROE of a little over 27.8% if they can keep investing in new cases for this return I would be happy for them to cease paying dividends, as it stands distributing the franking credits when available is the next best thing.

Disclosure, established a position last week during the dip at $1.57 for my SMSF.


----------



## Toppy (14 October 2013)

*Re: IMF - IMF (Australia)*

Quiet here for a few months. Anybody watching these blokes?

Profit down in 2013 with not many big cases finishing. Consensus estimates for 2014 and 2015 are significantly higher such that the forward P/E is about 8. IMF's case portfolio increased from $1.2b to $1.6b this year and approximately half is expected to complete in 2014 and the other half in 2015. Very conservatively run joint with $70m cash (on a market cap of $220m).

Listening to the results call on BRR, management seem like savvy operators who give no BS.

No matter what method I use, my valuations end up well above the current price, but as other posters have noted valuing IMF is difficult because they sway between years of big case wins and years of low activity. I suspect if the Wivenhoe class action is announced and their portfolio jumps past $2b, IMF might be in for a upgrading, and of course a depression if the claim does not proceed.

Recent capital raising was apparently very oversubscribed. Share price barely moved, which is a good look. Money is being used to cancel the convertible notes and for general expansion. The movement into the US appears to be going well, another office on the west coast open, 6 cases funded to date. America is far and away the biggest litigation market in the world, so prospects could be bright.

Overall, an attractive business. Interested to hear from folks more clued-in to this industry than me.

_The above is simply my opinion_


----------



## herzy (15 October 2013)

*Re: IMF - IMF (Australia)*

You basically said it all - I love this company. It's easy to understand, and long-term very lucrative. As you said, good expansion potential, and plenty of cash. I even like it's lumpy earnings - gives good opportunities to top up (like now, in my opinion).


----------



## Toppy (13 November 2013)

*Re: IMF - IMF (Australia)*



Toppy said:


> Recent capital raising was apparently very oversubscribed. Share price barely moved, which is a good look.




I may have spoken too soon. Price down 11.4% in the last two months.

Anybody have a tip? You would think the Treasury action was good news (given these blokes never fund unless they are dead sure, hence the 3% loss rate from ~150 cases). Also the rumours of regulation would play into their hands (lowering competition by excluding smaller players for lack of capital and erecting a barrier to entry for new players). On the other hand, it seems convertible note holders want to get the shares and have been converting. One expects that, come December, the last of the three scenarios in the placement document would be upon us, i.e. 170m shares on issue and cash of $108m. But is this something that would spark a sell-off?

_The above is simply my opinion_


----------



## So_Cynical (13 November 2013)

*Re: IMF - IMF (Australia)*



Toppy said:


> I may have spoken too soon. Price down 11.4% in the last two months.
> 
> *Anybody have a tip?*




Buy the lows, IMF ranges beautifully, buy the lows - wait - cash in - repeat.


----------



## System (3 December 2013)

*Re: IMF - Bentham IMF*

On December 3rd, 2013, IMF (Australia) Limited changed its name to Bentham IMF Limited.


----------



## piggybank (10 December 2013)

*Re: IMF - Bentham IMF*


----------



## robusta (10 December 2013)

*Re: IMF - Bentham IMF*



piggybank said:


> View attachment 55767




Nice picture and please excuse my ignorance but what does it mean? The white horizontal line on the bottom is resistance? Does this mean the share price will either bounce off it or fall through it? If I had a positive view of this business should I try to make my entry point as close as possible to this bottom line.


----------



## piggybank (11 December 2013)

*Re: IMF - Bentham IMF*



robusta said:


> Nice picture and please excuse my ignorance but what does it mean? The white horizontal line on the bottom is resistance? Does this mean the share price will either bounce off it or fall through it? If I had a positive view of this business should I try to make my entry point as close as possible to this bottom line.




Hi Robusta,

Sorry but I won't give you advice on what you should do as I don't want to be sued by you should you put your house on it

But here is a link that explains it better than I could. Just google the query have.

http://www.swing-trade-stocks.com/support-and-resistance.html




Regards
PB


----------



## robusta (5 February 2014)

*Re: IMF - Bentham IMF*

Decision down today on the bank fee case against ANZ. I bought some more.

http://www.abc.net.au/news/2014-02-05/anz-bank-fees-class-action-maurice-blackburn/5238494


----------



## robusta (5 February 2014)

*Re: IMF - Bentham IMF*

Ok some more details out, IMF think about 25% of the $57 mil against ANZ

http://www.asx.com.au/asxpdf/20140205/pdf/42mk3m3l9sb6bb.pdf

Multiply this by the other banks, then the next thought is Telstra?


----------



## McLovin (5 February 2014)

*Re: IMF - Bentham IMF*

Try and make sense of this legalese...



> “The liability to pay the late payment fee was contingent upon a breach of contract and further or alternatively, was collateral (or accessory) to a primary stipulation (to make a payment by a particular date) in favour of ANZ,” the judge said.
> 
> “That collateral stipulation, upon failure of the primary stipulation, imposed upon the customer an additional detriment in the nature of a security for, and in terrorem of, the satisfaction of the primary stipulation which was extravagant, exorbitant and unconscionable.”


----------



## robusta (5 February 2014)

*Re: IMF - Bentham IMF*



McLovin said:


> Try and make sense of this legalese...




It's Mabo, it's the vibe of the thing. Denis Denuto


----------



## Valued (5 February 2014)

*Re: IMF - Bentham IMF*



McLovin said:


> Try and make sense of this legalese...




You have to read the whole judgment to put it into context (which I haven't done). What the judge is saying is that the customer is liable to pay the late payment fee only because they have breached the contract with ANZ bank. So the contract might have said "you pay us x dollars per month", the customer breached this buy not paying. Therefore, ANZ charged them a late payment fee. The judge is also saying the late payment fee may also be derived from ANZ's request that payment be made by a particular date e.g. not paying your bill on the 30th of each month may not necessarily be a breach of contract but since ANZ asks for this, they impose a penalty if you don't make this payment.

The judge goes on to say that to impose a requirement that a customer pay a penalty for not meeting ANZ's request that they pay by a certain date is far too much, so much so to make it unconscionable. It goes well beyond their costs of late payment. The judge is saying it's used by ANZ as a threat.


----------



## robusta (10 February 2014)

*Re: IMF - Bentham IMF*

Interim results out today;

http://www.asx.com.au/asxpdf/20140210/pdf/42mmmfntgrklv4.pdf

I wasn't expecting a dividend but if they have franking credits to distribute...

Here is a investor presentation.

http://www.asx.com.au/asxpdf/20140210/pdf/42mmnnj4dlh63j.pdf


----------



## So_Cynical (10 February 2014)

*Re: IMF - Bentham IMF*



robusta said:


> I wasn't expecting a dividend but if they have franking credits to distribute...




Nice  a FF 5c dividend, HY Operation profit up 63%, case portfolio up 29%, cash on hand up 22%, impressive.


----------



## robusta (10 February 2014)

*Re: IMF - Bentham IMF*



So_Cynical said:


> Nice  a FF 5c dividend, HY Operation profit up 63%, case portfolio up 29%, cash on hand up 22%, impressive.




Yep the nature of the business as you know mean returns will always be lumpy, however these guys seem to be making the 'lumps' bigger as time passes.


----------



## Toppy (11 February 2014)

*Re: IMF - Bentham IMF*

Rising NPAT is positive, no doubt. But the 6.7c EPS might mean IMF has work to do. Minnett and Baillieu estimate 17-20c EPS by 30 June (unclear if adjusted for the raising). So there need to be some wins in the coming months. IMF's estimated value of claims resolving this financial year dropped from 765m (per last June's case summary) to 545m (per last November's) to 440m (per the most recent release).

Thoughts?


----------



## robusta (11 February 2014)

*Re: IMF - Bentham IMF*



Toppy said:


> Rising NPAT is positive, no doubt. But the 6.7c EPS might mean IMF has work to do. Minnett and Baillieu estimate 17-20c EPS by 30 June (unclear if adjusted for the raising). So there need to be some wins in the coming months. IMF's estimated value of claims resolving this financial year dropped from 765m (per last June's case summary) to 545m (per last November's) to 440m (per the most recent release).
> 
> Thoughts?




Very very difficult to predict the short term earnings for this business, and IMF themselves don't even try. I would be very interested to hear any thoughts on this results presentation.

https://www.brrmedia.com/event/1202...an-director-of-operations-and-diane-jones-coo

A few random points of interest to me;

They are likely to announce a joint venture in the UK within a month. (possibly partly funded by debt)

The bank fees case could expand significantly (currently approx 9% of customers this could expand to 100% with IMF holding the cash for a "reasonable fee"

The banks are likely to appeal the verdict having no time limit, IMF may appeal the part 75% that they lost

Great Southern case is close to a result

The expansion plans mean IMF may have the option to duplicate results into different jurisdictions (Ratings agency case result in Australia now being explored in Europe)


----------



## So_Cynical (11 February 2014)

*Re: IMF - Bentham IMF*



Toppy said:


> Rising NPAT is positive, no doubt. But the 6.7c EPS might mean IMF has work to do. Minnett and Baillieu estimate 17-20c EPS by 30 June (unclear if adjusted for the raising). So there need to be some wins in the coming months. IMF's estimated value of claims resolving this financial year dropped from 765m (per last June's case summary) to 545m (per last November's) to 440m (per the most recent release).
> 
> *Thoughts?*




I think its a bit of a silly exercise to calculate an estimate of 17 to 20c EPS, The nature of this business to to bet on sure things, some of those sure things turn out to be losers and sometimes that can take 3 or 4 years to play out...if your a hard core value investor look away, this stock is not for you.


----------



## robusta (13 February 2014)

*Re: IMF - Bentham IMF*



So_Cynical said:


> I think its a bit of a silly exercise to calculate an estimate of 17 to 20c EPS, The nature of this business to to bet on sure things, some of those sure things turn out to be losers and sometimes that can take 3 or 4 years to play out...if your a hard core value investor look away, this stock is not for you.




Not sure if I agree with you SC I consider myself a value investor and I hold...

John Abernethy of Clime is also a value investor, I just discovered this article.

http://au.pfinance.yahoo.com/our-ex...381186/undervalued-stock-of-the-week-bentham/

You are right about the occasional losers, they just lost the BOQ case.

http://www.asx.com.au/asxpdf/20140213/pdf/42mpntp0gdc620.pdf

Interesting to discover they have insurance on some cases. Shame I wasn't sitting on my computer this morning I would have bought some more in the $1.50's


----------



## craft (13 February 2014)

*Re: IMF - Bentham IMF*



robusta said:


> I consider myself a value investor




What is the definition of a value investor anyway? Labels are so narrow and limiting that they seem futile to me.


I tend to end up with companies in my portfolio that are labelled all different things by different people - but they are all just in there because I think the underlying business was available at a price that justifies the risk according to my assumptions and plan.


----------



## ROE (13 February 2014)

*Re: IMF - Bentham IMF*



robusta said:


> Interesting to discover they have insurance on some cases. Shame I wasn't sitting on my computer this morning I would have bought some more in the $1.50's




Don't worry it will get there, these business has unreliable earning, you don't know what case you can win and how much you going to get pay ...that in my book is unreliable ....without reliable earning stock can't be value...

Right now the market price it at face values of what is in the book but if they can't deliver what is in the book, it will drift down...

And I am with craft, I mainly try to buy good business but if there are stock that justified risk/reward I will get in ....


----------



## robusta (13 February 2014)

*Re: IMF - Bentham IMF*



craft said:


> What is the definition of a value investor anyway? Labels are so narrow and limiting that they seem futile to me.
> 
> 
> I tend to end up with companies in my portfolio that are labelled all different things by different people - but they are all just in there because I think the underlying business was available at a price that justifies the risk according to my assumptions and plan.




You are right, probably more accurate to drop the word value and just say investor as opposed to speculator.



ROE said:


> Don't worry it will get there, these business has unreliable earning, you don't know what case you can win and how much you going to get pay ...that in my book is unreliable ....without reliable earning stock can't be value...
> 
> Right now the market price it at face values of what is in the book but if they can't deliver what is in the book, it will drift down...
> 
> And I am with craft, I mainly try to buy good business but if there are stock that justified risk/reward I will get in ....




I hope you are right ROE and the price does drift down, I think this is a powerful business model with a lot of upside to come as long as they stay disciplined and execute the plan well.


----------



## So_Cynical (13 February 2014)

*Re: IMF - Bentham IMF*



robusta said:


> Not sure if I agree with you SC I consider myself a value investor and I hold...
> 
> Interesting to discover they have insurance on some cases. Shame I wasn't sitting on my computer this morning I would have bought some more in the $1.50's




You may consider yourself a value investor but your certainly not hard core and that is why i used those words...i think pretty much every value investor would of had a look at IMF but the hard core that require hard numbers and certainty would be turned off.

---------

If i had some cash i would of been all over this today at $1.55 and under.


----------



## robusta (14 February 2014)

*Re: IMF - Bentham IMF*



So_Cynical said:


> You may consider yourself a value investor but your certainly not hard core and that is why i used those words...i think pretty much every value investor would of had a look at IMF but the hard core that require hard numbers and certainty would be turned off.
> 
> ---------
> 
> If i had some cash i would of been all over this today at $1.55 and under.




You are probably right there SC, it seems most of my portfolio is not traditional "value"

Good luck in your investments and keep on buying the dips.


----------



## robusta (27 February 2014)

*Re: IMF - Bentham IMF*

Downer EDI case settled today, around $10M profit should more than make up for the recent BOQ loss.

http://www.asx.com.au/asxpdf/20140227/pdf/42n1vbgxd3h48t.pdf


----------



## Toppy (28 February 2014)

*Re: IMF - Bentham IMF*

Also their first DRP launched today. What do we think?

IMF issued convertibles in late 2010 (most of which ended up being converted), then paid dividends of 15c and 10c in 2011 and 2012, then offered an institutional placement/share purchase plan in 2013, now looks set to pay out 10c again in 2014, but is allowing shareholders to take the dividend as new equity issued at a 3.5% discount.

Why not just retain all earnings and not have to deal with dilution, etc?


----------



## robusta (1 March 2014)

*Re: IMF - Bentham IMF*

I'm with you Toppy but us Aussies do love our dividends. My argument is if they can multiply every dollar x3 over a few years they should retain all earnings. 

On the flip side the market would value them a whole lot lower if there were no dividends being paid out and there is something to be said for distributing franking credits. 

There was a comment made on the latest conference call that they would not go down the convertible notes path again due to the dilution and they may need a larger war chest to fund the international expansion. 

I will participate in the DRP at these prices.


----------



## robusta (26 March 2014)

*Re: IMF - Bentham IMF*

The international expansion continues,

http://www.asx.com.au/asxpdf/20140326/pdf/42nmklywys2vcp.pdf

A joint venture and co-funding agreement. So some co-funding in Asia Pacific and a joint venture in Europe. Half the risk for half the profits, should be interesting to see how this works out.


----------



## So_Cynical (16 May 2014)

*Re: IMF - Bentham IMF*

I sold out of IMF today for a trade profit of 43.4% taking advantage of the latest rally and selling at $1.945 ~ The share price has ranged for the last 4 years and i figure that over that time i would of done a lot better trading in and out of IMF than i have done simply holding, the dividends and franking credits have been nice..but comes a time.

Good luck to the holders and looking forward to the next seemingly inevitable SP dip.


----------



## Toppy (19 August 2014)

*Re: IMF - Bentham IMF*

Anyone have some further views? Trades hit $2.19 briefly this morning. Up nearly 30% from its low six months ago.

I understand the full year result is out tomorrow. Looks like NPAT could be nearly double last year, which would immediately pull the P/E down. Probably a final dividend of another 5c. Case book steady at $2 billion, which the company predicts will resolve fairly evenly throughout 2015-2017. International expansion marching on, new external CEO coming on board next year but the old guard sticking around, another independent director added last December, Wivenhoe Dam proceedings commenced. Good foundations for a much bigger business in future. Provided these blokes can maintain their historical win rate (95%+), this could be a very lucrative story.

_The above is simply my opinion_


----------



## goccipgp (19 August 2014)

*Re: IMF - Bentham IMF*

A break above 2.195 could move it up to 2.564 in short term, according to technical analysis at au stoxline.


----------



## AUSG (28 September 2014)

*Re: IMF - Bentham IMF*

Bentham IMF announced a couple of good news on 10 September


Conditional settlement of a confidential Australian matter, expected income 2.5M and Gross profit 1.76M
More significantly, a US case, potential income of 16M and profit of approximately 7.6M after capitalized costs, before tax

(vested)
https://www.imf.com.au/docs/default...shareholder-action-against-failed-forge-group


----------



## AUSG (2 October 2014)

*Re: IMF - Bentham IMF*

http://www.lawgazette.co.uk/people/...tment-officer-jeremy-marshall/5043701.article

Newly launched third-party funder, Bentham Europe, has announced the appointment of a new chief investment officer to drive its European expansion.

Jeremy Marshall joins Bentham Europe in October from Irwin Mitchell, where he was formerly the London head of litigation and dispute resolution, as the funder celebrates its official launch into the European market.

Bentham Europe is a joint venture involving Bentham IMF Limited. Bentham IMF is Australia’s largest and most successful funder; it was the first third-party funder to publicly list and has funded over 155 cases through to completion with a value of nearly £1bn.

Jeremy has vast experience as a commercial litigator, with particular expertise in UK securities litigation arising out of market misconduct, an area in which Bentham Europe sees significant opportunity. Bentham Europe’s aim is to become Europe’s leading litigation funder by investing in a broad range of high value commercial litigation and international arbitration claims.

Bentham Europe will particularly focus on cartel cases, multi-party actions and securities litigation with a claim value of £5m-plus in single-party cases and more than £30m in multi-party cases. Jeremy will work very closely with Bentham Europe’s managing director, John Walker, who is one of the founders of the third-party funding industry and IMF in Australia.

John Walker said: ‘We are thrilled that Jeremy has joined Bentham Europe at this exciting time. Bentham Europe’s ambition is to become Europe’s leading third-party litigation funder and we have a solid base on which to grow our already-strong team.’

Jeremy Marshall said: ‘I am delighted to be joining a funder with such a strong pedigree and the ability really to transform the market. Bentham IMF is the leading global litigation funder and with the expansion into Europe we will build on Bentham’s internationally recognised reputation.

‘The opportunities are significant and I look forward to developing the European market as we fund major commercial litigation and arbitration claims.’


My blog aiming to track securities Class Actions in Australia
classactionsaustralia.blogspot.com


----------



## herzy (14 October 2014)

*Re: IMF - Bentham IMF*

Topped up today at 1.885

I think long term prospects are good, including EU and US expansion, which should se a revaluation within the next year. 

Aussie $ fall should also see these returns increase.


----------



## galumay (14 October 2014)

*Re: IMF - Bentham IMF*



herzy said:


> Topped up today at 1.885
> 
> I think long term prospects are good, including EU and US expansion, which should se a revaluation within the next year.
> 
> Aussie $ fall should also see these returns increase.




I am tempted, but the continuing negative cash flow worries me, probably just because I cant understand it! 

I might ask the question in my thread on cash flow.


----------



## herzy (14 October 2014)

*Re: IMF - Bentham IMF*



galumay said:


> I am tempted, but the continuing negative cash flow worries me, probably just because I cant understand it!
> 
> I might ask the question in my thread on cash flow.




I'm not great with the finance side of things, but I imagine this is a result of their business model (i.e. spending first and getting returns later) - as a result, negative cashflow is actually good, as that's how they generate their income. As the businesses expands, profits are redeployed into new cases, so even if it appears as negative cashflow, that actually means they're expanding their case portfolio each year. 

Could be way off on this one though...


----------



## galumay (14 October 2014)

*Re: IMF - Bentham IMF*



herzy said:


> ...
> 
> Could be way off on this one though...




I am no more sure than you! The problem for me is that its 5 years of negative cash flows, I would have thought it should show some + in that time scale! 

I have only recently added cash flow to my metrics for assessing value and I am very much a noob and I am fighting off the sense that its too complicated to add to my measure of IV.


----------



## herzy (14 October 2014)

*Re: IMF - Bentham IMF*



galumay said:


> I am no more sure than you! The problem for me is that its 5 years of negative cash flows, I would have thought it should show some + in that time scale!
> 
> I have only recently added cash flow to my metrics for assessing value and I am very much a noob and I am fighting off the sense that its too complicated to add to my measure of IV.




Haha we can just battle our way through it together until McLovin, SKC or RY come along to help us. 

The also didn't document revenue for many of those periods, although clearly they've been making profit and have more cash now than 5 years ago... Again, I imagine it's due to the way they structure their accounting - but beyond that I have no idea.

Regarding investment strategy, I'm much more approximate and try to find businesses I like that I think will be making more money in future than they are now - more after emulating ROE than a strict IV calculation methodology. Nothing against it at all, I just haven't had the time to educate myself enough, so gut feel, simple but good businesses (IMF, AAD, JIN back in the day, etc) which I can understand, try to avoid debt, have a good history and a nice 'story' and price and I'm normally happy enough...


----------



## VSntchr (15 October 2014)

*Re: IMF - Bentham IMF*

Without knowing the company well: IMF is a lumpy cash flow business. They win a big case, they get a large cash inflow. Look at 2013 and see the first line of investing cash flows. $87m proceeds covers the $44m in costs for employees (lawyers) as well as the other operating costs which are shown in the operating cash flow section (interest on debt, income tax, suppliers and employees (probably admin employees here?). So I would class 2013 as a positive cash flow year. 

IMF is an interesting one from a cash flow perspective as OCF will likely always be negative, and the heavy lifting will be done by investing cash flows - if and when they win cases.


----------



## McLovin (15 October 2014)

*Re: IMF - Bentham IMF*



VSntchr said:


> Without knowing the company well: IMF is a lumpy cash flow business. They win a big case, they get a large cash inflow.




Yeah, it's not the best to work off the cash flow statement. They do estimate the portfolio claim value and you can guesstimate what their share of settlements will be (it's been around 18%-20% over the last few years) and then what their case expenses are. That relationship might start to breakdown in the future because, at least in the US, their income is based on % of how much they invested whereas in Australia it has historically been a cut of the payout.

If you use last year's numbers (and exclude the BOQ loss) you'd get case proceeds of ~$70m for this year.


----------



## herzy (16 October 2014)

*Re: IMF - Bentham IMF*



McLovin said:


> That relationship might start to breakdown in the future because, at least in the US, their income is based on % of how much they invested whereas in Australia it has historically been a cut of the payout.




How do you know this? 

I know if lawyers are fronting the fees themselves (in Australia), it's the opposite - they can add a 25% premium to their fees if they win, but they can't take a % of the payout, whereas in the US you can have purely contingency-based fees (% of payout). That said, it is likely different/less restricted for funders, but I'm not sure.


----------



## AUSG (16 October 2014)

*Re: IMF - Bentham IMF*



McLovin said:


> Yeah, it's not the best to work off the cash flow statement. They do estimate the portfolio claim value and you can guesstimate what their share of settlements will be (it's been around 18%-20% over the last few years) and then what their case expenses are. That relationship might start to breakdown in the future because, at least in the US, their income is based on % of how much they invested whereas in Australia it has historically been a cut of the payout.
> 
> If you use last year's numbers (and exclude the BOQ loss) you'd get case proceeds of ~$70m for this year.





If I may, I suggest an alternative method to guesstimate the value of their portfolio. You can use the Intangible Assets figure on their balance sheet, apply a multiple to that number to estimate how much future income they can derive for their portfolio. You may want to look back historically to guess how much of their costs will be written off, for cases they lose. Happy to be corrected on this though, if there is anything wrong with this.

Agree with McLovin and Valuesnatcher. The cashflow isn't the best way to look at it. Also I think the loads of cash on the balance sheet is deceptive. This is a cash intensive business. In 2013 they spent 40 million on cases, so they have roughly enough cash to fund cases for 2 years or so. 

MY 2 cents' worth


----------



## McLovin (16 October 2014)

*Re: IMF - Bentham IMF*



herzy]How do you know this? [/QUOTE]

They told us pretty much since they went into the US that the payment arrangement would be different:). Here's from this month. [url]http://www.asx.com.au/asxpdf/20141009/pdf/42ss3clzs7xyg4.pdf[/url]

Third slide said:


> If I may, I suggest an alternative method to guesstimate the value of their portfolio. You can use the Intangible Assets figure on their balance sheet, apply a multiple to that number to estimate how much future income they can derive for their portfolio. You may want to look back historically to guess how much of their costs will be written off, for cases they lose. Happy to be corrected on this though, if there is anything wrong with this.




The only problem with that method is that costs are capitalised as they are incurred. They don't estimate total costs at initial recognition. For a long court case the amount contributed may be many multiples of what is initially capitalised.



AUSG said:


> Agree with McLovin and Valuesnatcher. The cashflow isn't the best way to look at it. Also I think the loads of cash on the balance sheet is deceptive. This is a cash intensive business. In 2013 they spent 40 million on cases, so they have roughly enough cash to fund cases for 2 years or so.




Carrying the cash also serves as a deterrent.


----------



## AUSG (16 October 2014)

*Re: IMF - Bentham IMF*



McLovin said:


> The only problem with that method is that costs are capitalised as they are incurred. They don't estimate total costs at initial recognition. For a long court case the amount contributed may be many multiples of what is initially capitalised.
> 
> 
> 
> Carrying the cash also serves as a deterrent.




Agree with you on the cost thing, it does neglect the potential costs down the road. Claims may be a better number to forecast the future earnings.

Can you elaborate on the "cash also serves as a deterrent"? Do you mean as a deterrent to the defendants in the class actions, because they know that IMF has the cash to sustain a lawsuit, and so they would be encouraged to settle rather than go to court?


----------



## McLovin (17 October 2014)

*Re: IMF - Bentham IMF*



AUSG said:


> Can you elaborate on the "cash also serves as a deterrent"? Do you mean as a deterrent to the defendants in the class actions, because they know that IMF has the cash to sustain a lawsuit, and so they would be encouraged to settle rather than go to court?




Pretty much.


----------



## AUSG (19 October 2014)

*Re: IMF - Bentham IMF*



McLovin said:


> Pretty much.




Thanks McLovin


----------



## System (19 November 2014)

On November 19th, 2014, Bentham IMF Limited changed its name to IMF Bentham Limited.


----------



## AUSG (29 November 2014)

IMF Bentham behind legal action against Tesco for overstating profits
ANDREW CLARK THE TIMES NOVEMBER 26, 2014 1:42PM

AN Australian firm that specialises in whipping up shareholder fury has turned its guns on British supermarket chain Tesco, which is accused of overstating profits.

Investors in Tesco are being invited to sue it over its bookkeeping scandal under a legal action co-ordinated by Bentham Europe.

http://www.theaustralian.com.au/new...rstating-profits/story-fnb64oi6-1227135692337


----------



## AUSG (5 December 2014)

https://www.imf.com.au/docs/default-source/site-documents/productivity-commission-report

The commission report is out.

One point of interest is the proposal to allow damage based fees for lawyers.


----------



## herzy (5 December 2014)

AUSG said:


> https://www.imf.com.au/docs/default-source/site-documents/productivity-commission-report
> 
> The commission report is out.
> 
> One point of interest is the proposal to allow damage based fees for lawyers.




Very interesting, but I doubt very much it will happen...


----------



## Rainman (16 January 2015)

I find it interesting that the market seems to value SGH's growth potential significantly more highly than it does IMF's.       SGH's PEG ratio is just over 1.3.  IMF's is a measley  0.17.  I appreciate that the PEG ratio on its own does not say much about a company's value but the discrepancy here between IMF and SGH seems to point to a very myopic view of what IMF is doing in the UK, Europe, the US and more recently in Hong Kong.  Any thoughts anyone?


----------



## galumay (16 January 2015)

Rainman said:


> Any thoughts anyone?




I will have to go back and check, but when I was selecting companies for my SMSF late last year, SGH came out better value than IMF at the time.


----------



## Rainman (16 January 2015)

galumay said:


> I will have to go back and check, but when I was selecting companies for my SMSF late last year, SGH came out better value than IMF at the time.




IMF is an uneven earner.  That probably partly accounts for its discount to SGH.  But I think that IMF's business model will ultimately prove to be superior to (that is to say, more profitable than) SGH's.


----------



## galumay (16 January 2015)

Rainman said:


> IMF is an uneven earner.  That probably partly accounts for its discount to SGH.  But I think that IMF's business model will ultimately prove to be superior to (that is to say, more profitable than) SGH's.




Maybe, they have some catching up to do in terms of cash flow, ROC, ROE and margins, but I also found it hard to make a straight comparison because of some of the accounting practices in IMF's Annual Report!


----------



## AUSG (25 January 2015)

Australian Lawyers With Financial Interest In Litigation Funder Restrained From Acting In Class Action

In July 2014, in Melbourne City Investments Pty Ltd v Treasury Wine Estates Limited (No 3) [2014] VSC 340, Ferguson JA of the Supreme Court of Victoria found there was a serious risk of a conflict of interest where a legal practitioner was a sole director and sole shareholder of the lead plaintiff in a securities class action. Consequently the legal practitioner was restrained from acting for the lead plaintiff.[1]
On 26 November 2014, in the case of Bolitho v Banksia Securities Limited (No 4) [2014] VSC 582 ("Banksia Securities") Ferguson JA found that a solicitor and senior counsel with a pecuniary interest in the outcome of the case, beyond their legal fees, should be restrained from acting for the lead plaintiff. The concern was that the substantial (direct and indirect) shareholding of the two legal practitioners in the litigation funder which was funding the class action may impinge, or have the appearance of impinging, on the integrity of the judicial process. In particular, "the practitioner may not fulfil or may not be seen as fulfilling their obligations to the Court".[2]
Banksia Securities is illustrative of the Supreme Court of Victoria's continuing willingness to restrain a legal practitioner from acting so as to safeguard the proper administration of justice, and the appearance of justice, where a legal practitioner has a financial interest in litigation over and above the legal fees that the practitioner will earn from the litigation

http://www.jonesday.com/Australian-...medium=syndication&utm_campaign=View-Original


----------



## robusta (9 February 2015)

Just had a glance at the interim report, there were some nice lumps of cash flow in this half. They are expecting to increase investments in the next half however.


----------



## AUSG (11 April 2015)

ANZ loss will scare off fledgling litigation funders


----------



## herzy (17 June 2015)

I topped up at 1.76 - very close to yearly low of 1.75. 

At a market cap of $300 million (and with $128 mill in cash), I think IMF is trading very cheaply at the moment. Despite recent Bank Fees loss, I think long-term prospects are very good. As AUSG points out, losing such a large-scale case could easily deter competitors from entering the market, too. 

US expansion going well (lower AUD makes this even better) - in about 4 years, they've managed to get a case-load of $500 mill, new office opening etc. HK and EU prospects also good, as well as Aus. 

Any other thoughts? Something I'm missing?


----------



## Rainman (18 June 2015)

I read the Federal Court judgment of the Full Court in the Bank Fees case.  Chief Justice Allsop wrote the leading judgment.  My view is that the basis on which the Full Court allowed ANZ's appeal is correct and that it will be upheld by the High Court.  For that reason, I think the Bank Fees' case is going to be one of IMF's losers.  

I remain long IMF and have recently started adding to my position.  However, I am going to keep some powder dry because, if, as I expect, IMF's appeal to the High Court fails, its share price may dip down a little further following the High Court appeal.


----------



## Rainman (30 June 2015)

herzy said:


> At a market cap of $300 million (and with $128 mill in cash), I think IMF is trading very cheaply at the moment.




I agree with that.  I worked out the other day that IMF has a present earnings yield of 13% based on its average earnings for the past 5 years.  If you factor in the dividends that it pays, that is a yield of well over 15%.


----------



## herzy (30 June 2015)

Rainman said:


> I agree with that.  I worked out the other day that IMF has a present earnings yield of 13% based on its average earnings for the past 5 years.  If you factor in the dividends that it pays, that is a yield of well over 15%.




Yep, plus lots of positive signs from their expansions into the US. HK and EU seem to be going ok too. 

I think this Bank Fees case is providing a good opportunity to find a very low entry point.


----------



## Wysiwyg (30 June 2015)

herzy said:


> Yep, plus lots of positive signs from their expansions into the US. HK and EU seem to be going ok too.
> 
> I think this Bank Fees case is providing a good opportunity to find a very low entry point.



How are they managing in Hong Kong? There notice indicates a third investment there and a spike from the relentless down trend.


----------



## skc (30 June 2015)

Rainman said:


> I agree with that.  I worked out the other day that IMF has a present earnings yield of 13% based on its average earnings for the past 5 years.  If you factor in the dividends that it pays, that is a yield of well over 15%.




Are you sure? IMF P&L over last 5 (and a half) years

FY15 H1 $23.01m
FY14 $9.868m
FY13 $13.814m
FY12 $42.966m
FY11 $22.86m
FY10 $11.896m

So let's just take FY15 full year to be $30m, the average of the last 5 years = $23.9m. Current market cap = $288.5m so earnings yield = 8.28%.

Dividend yield comes from earnings yield so shouldn't be double counted.


----------



## Rainman (30 June 2015)

skc said:


> Are you sure? IMF P&L over last 5 (and a half) years
> 
> FY15 H1 $23.01m
> FY14 $9.868m
> ...




Yes, you are right.  I stand corrected.


----------



## McLovin (8 January 2016)

Bought some more. These guys seem to be getting dragged down by SGH (as does SHJ), but they're completely different sort of businesses.


----------



## VSntchr (8 January 2016)

McLovin said:


> Bought some more. These guys seem to be getting dragged down by SGH (as does SHJ), but they're completely different sort of businesses.



With a post like that you'll fit in perfectly over at the pairs thread 
Assuming we aren't starting a longer market wide correction (which is always an assumption but perhaps more pertinent currently?) then the unhedged read-through reversion trade looks good to me. I traded SHJ in the previous smack down.


----------



## Klogg (8 January 2016)

McLovin said:


> Bought some more. These guys seem to be getting dragged down by SGH (as does SHJ), but they're completely different sort of businesses.




The 4 cases they lost in FY15 probably doesn't help.

Of course, it then becomes a question of whether their case win % will revert to mean... which will only occur if their ability to identify the right cases hasn't diminished.

Given the company is trading at book, there's very limited downside.


----------



## Ves (8 January 2016)

McLovin said:


> Bought some more. These guys seem to be getting dragged down by SGH (as does SHJ), but they're completely different sort of businesses.



Are you sure it's not because of the uncertainty (or maybe lack of faith by the market) regarding their expansion into the US and Europe? 

I haven't been following very closely,  but it appears they have taken on lots of new cases during the last year,  which means that cash outflows will start ramping up in the next few years.  It also appears that they under-estimated the timeframe of the settlement of a few of their open cases,  which have continued to drag on for longer than expected.  

I also noticed that they experienced a few case losses in 2H 2015.   These are of course part of the long term nature of this business  (good years,  bad years),  but they'd had a pretty immaculate record since listing up until then.

It's not the easiest investment in the world to understand and value,  so I guess if you add them all up they would impact short/medium term sentiment.  

A lot of the market's perception of this company's value is under-pinned by the level of trust in management as good case portfolio managers.

I still have a look at this company every now and then,  because given the nature of it,  there's likely to be heaps of times where it'll be sufficiently misunderstood to offer a pretty good entry price.


----------



## McLovin (8 January 2016)

Ves said:


> I also noticed that they experienced a few case losses in 2H 2015.   These are of course part of the long term nature of this business  (good years,  bad years),  but they'd had a pretty immaculate record since listing up until then.




They did but it was sort of a perfect storm. National Potato was from 2009, bank fees was from 2010 (and only lost on appeal).  They are trying to diversify their portfolio with more investments and smaller $$ value, which explains the ramp up in case load. Overall they've had decisions on (iirc) 8 cases in the US and lost one. Sorry not being deliberately brief, but I'm on my phone which is PITA. Also don't forget if you lose in the US you don't have to pay other sides legal bills, unlike here.




> It's not the easiest investment in the world to understand and value,  so I guess if you add them all up they would impact short/medium term sentiment.
> 
> A lot of the market's perception of this company's value is under-pinned by the level of trust in management as good case portfolio managers.




Absolutely. And given SGH's problems started with that fuzzy accounting valuation of WIP (essentially investment in cases), it's not hard to understand why IMF SP is also under pressure . But I think they're very different, for one thing, IMF doesn't have hundreds of lawyers who need to be paid rail hail or shine.

Always good to hear your thoughs, ves.


----------



## Ves (8 January 2016)

McLovin said:


> Always good to hear your thoughs, ves.




Honestly,  I haven't ran the numbers on this in a while.   Thanks for the prompt!


----------



## Triathlete (8 January 2016)

Summary from Lincoln indicators stock doctor

IMF exhibits unacceptable levels of financial risk due to a below benchmark Financial Health score. Investors need to be aware such companies pose* risks and warrant a speculative investment only*. Any prospective investment should be managed with tight stop losses implemented.

From a technical view it has broken through the 50% levels of both the All time high $1.24 and 50% All time range $1.30 which are the two strongest levels this is not a good sign at present for this stock. Watching with interest....


----------



## Rainman (8 January 2016)

Triathlete said:


> Summary from Lincoln indicators stock doctor
> 
> IMF exhibits unacceptable levels of financial risk due to a below benchmark Financial Health score. Investors need to be aware such companies pose* risks and warrant a speculative investment only*...




I have bought more of this as well.  But I don't expect much love from it for a while.  It is in the doghouse at the moment.

Do people really take their cues for buying and selling from things like Lincoln Stock Doctor?   

Either way, the good doctor obviously has very demanding standards of "_Financial Health_".  IMF has a current ratio of 5.5 and a debt to equity ratio of 26%.


----------



## Klogg (12 January 2016)

I've had a look at this recently and most things check out. Whether you value you it using a percentage return on intangibles/cases or as a percentage of claim value (using investment portfolio as of 30/09), it's difficult not to see value.

However, it seems Saker (MD) has no holdings in the company, and a 20% of his Short term incentive coming from an increase in case loads of 5%. Is this the reason for the recent increase in cases? (maybe it only appears that way to me)

Only in the LTIs is there a link to quality of cases, which is through the flow on in metrics (through relative TSR and CAGR).


What's more is the other two STI's incentivize profits in the short term... 
Extract from the annual report:



> The STIP metrics set for the 2016 financial year are
> as follows:
> The STIP has been set at 35% of TFR.
> 
> ...


----------



## Rainman (13 January 2016)

Klogg said:


> ... However, it seems Saker (MD) has no holdings in the company, and a 20% of his Short term incentive coming from an increase in case loads of 5%. Is this the reason for the recent increase in cases? (maybe it only appears that way to me)...




The rationale behind increasing the number of cases is for IMF to take on smaller cases with a quicker commencement-to-resolution profile.  The idea is that this will reduce the lumpiness of IMF's annual earnings.


----------



## robusta (13 January 2016)

Hugh McLernon the previous MD controls around 5mil shares. He was not ready to retire but when the opportunity to employ Mr Sakir came along was more than happy to step aside.


----------



## Klogg (13 January 2016)

robusta said:


> Hugh McLernon the previous MD controls around 5mil shares. He was not ready to retire but *when the opportunity to employ Mr Sakir came along was more than happy to step aside*.




Thanks Robusta. May I ask where you found out that bit of information (bolded)? 
I looked through the investor presentation prior to his appointment, and the Board Changes announcement on 05/01/15 and didn't find anything indicating this. I've clearly missed it somewhere.


----------



## robusta (14 January 2016)

Klogg said:


> Thanks Robusta. May I ask where you found out that bit of information (bolded)?
> I looked through the investor presentation prior to his appointment, and the Board Changes announcement on 05/01/15 and didn't find anything indicating this. I've clearly missed it somewhere.




Pretty sure it was during the Q&A on one of their recent results podcasts, I will try to find it.


----------



## Ves (18 January 2016)

Any thoughts on the legislation risk for this stock?   There were rumblings from the Senate (inquiry announced at the time, but I can't find it) and Productivity Commission recommendations early in 2015.  But can't find anything since.

Here's a blog post from a court justice in Victoria written in March 2015 that summarises the state of play and potential changes:

http://www.supremecourt.vic.gov.au/...nding+in+class+actions+should+it+be+regulated

Capital adequacy,   changes to contingent fee prohibition and caps on percentage of proceeds receivable by firms are all probably detrimental to IMF Bentham and friends in varying degrees.


----------



## Klogg (18 January 2016)

Ves said:


> Any thoughts on the legislation risk for this stock?   There were rumblings from the Senate (inquiry announced at the time, but I can't find it) and Productivity Commission recommendations early in 2015.  But can't find anything since.
> 
> Here's a blog post from a court justice in Victoria written in March 2015 that summarises the state of play and potential changes:
> 
> ...




There;s this from the Productivity Commission, which you've mentioned:
http://www.pc.gov.au/inquiries/completed/access-justice/report/access-justice-overview.pdf

I couldn't find much in the way of contingent fee caps, but the capital adequacy components should be a net positive.
Whilst it forces the litigation funder to maintain sufficient levels of capital, it would definitely drive out smaller players. 

There were also rumblings about an increase in frivolous lawsuits as a result of litigation funding, but this really makes no sense, and the PC didn't agree with it either. On page 22 of that report:


> ...the evidence that there has been an increase in unmeritorious claims is weak and concerns do not appear to relate to the activity of litigation funders, but to the underlying laws and rights to which they facilitate access





In addition to all this, check out the JustKapital write up here. 
I should mention I do have a small position in JKL, but no other link to the research whatsoever. Still, a decent read.


EDIT: Thanks Robusta - I'll try and find the right audio clip.


----------



## galumay (18 January 2016)

Rainman said:


> I have bought more of this as well.  But I don't expect much love from it for a while.  It is in the doghouse at the moment.




My thoughts on this are not worth much - i looked at IMF when I bought SGH, and all my analysis suggested that IMF was much more expensive, relative to my calculated IV, than SGH. Events have proven my analysis to be worth bugger all in this case! 

Meanwhile I sit in the corner and lick my wounds!


----------



## Ves (19 January 2016)

Thanks Klogg,   looks like there's enough "noise" around to follow need to watch the government's actions closely.  Could take years for anything to happen,  but they are definitely looking at it. 

I'm also wary of the competition entering the market.   Some of these will be "opportunistic" in nature,  but some of them will be well resourced and disciplined players looking to compete for some of the profitable, lower risk cases.  Seems to be lots of reports of a growing, expanding litigation market in Australia,  that sort of attention always attracts interest.

Is there any way for IMF Bentham to place themselves in a position to keep getting the profitable class actions? Does reputation matter?


----------



## Ves (19 January 2016)

More on the Productivity Commission's proposed removal on the prohibition of lawyers charging "contingency fees":

http://www.companydirectors.com.au/...ne/legal-contingency-fees-coming-to-Australia


----------



## SmokeyGhost (27 July 2016)

Rainman said:


> I read the Federal Court judgment of the Full Court in the Bank Fees case.  Chief Justice Allsop wrote the leading judgment.  My view is that the basis on which the Full Court allowed ANZ's appeal is correct and that it will be upheld by the High Court.  For that reason, I think the Bank Fees' case is going to be one of IMF's losers.
> 
> I remain long IMF and have recently started adding to my position.  However, I am going to keep some powder dry because, if, as I expect, IMF's appeal to the High Court fails, its share price may dip down a little further following the High Court appeal.




Your view is correct.  The appeal was dismissed with costs.

Probably some sad faces on those members of the class action who hoped to have a win.  Oh well, thems the risk with litigation.  So pay your bills on time and not incur a late fee or use cash/debit card.  That's the choice they face to avoid such fees I feel.


----------



## McLovin (28 July 2016)

SmokeyGhost said:


> Your view is correct.  The appeal was dismissed with costs.
> 
> Probably some sad faces on those members of the class action who hoped to have a win.  Oh well, thems the risk with litigation.  So pay your bills on time and not incur a late fee or use cash/debit card.  That's the choice they face to avoid such fees I feel.




The Court was pretty scathing of the appeal. Rightly so, imo. IMF got involved in this case when it was chasing ever larger class actions. Thankfully it seems to have put those days behind it. 

As an aside, Justice Keane went into some interesting legal history on where the common law against penalties originates. The Church was looking out for the nobility. Who would've ever guessed it could be so duplicitous.



> Professor Biancalana273 has traced the common law's engagement with penalty clauses back to the 13th century,
> noting that the penalty rule originated as an aspect of the jurisdictional tussle between the ecclesiastical courts and the courts of common law. According to Professor Biancalana, the common law courts were, at first, disposed to uphold penalty clauses as lawful, but by the turn of the 14th century had come to regard them as objectionable on the basis that they were a form of usury, which was unacceptable to medieval Christianity. It may also be said that the development of the law reflecting the Church's disapproval of usury was aligned with the economic interests of the dominant political class, the landed aristocracy, who, asset rich but cash poor, were chronically disinclined to keep their contractual engagements to those who had the recurring misfortune to have lent them money
> 
> ...
> ...


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## kid hustlr (11 May 2018)

I think these guys are ambulance chasers?

Not sure how I feel about the company however the set up on the charts looks pretty good with a nice base/reversal at a longer term key level


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## Darc Knight (31 December 2018)

IMF Bentham Limited (IMF,
 formerly Bentham IMF Limited) is engaged in the investigation, management and funding of litigation and arbitration claims in Australia and other jurisdictions. IMF's clients include ASX200 companies, SMEs, individuals and insolvency practitioners. IMF's commercial clients span a range of sectors, including financial services, superannuation funds, manufacturing, retail, mining, energy and resources, health, tourism, transport and pharmaceuticals.
https://www.marketindex.com.au/asx/imf

STOCK PERFORMANCE WATCH:
IMF Bentham Limited (ASX:IMF) has five years performance of 76.136364% and weekly performance of 8.77193%. The stock has been moved at 4.377104% throughout last twelve months. The stock has performed 11.510791% around last thirty days, and changed 2.310231% over the last three months.
IMF Bentham Limited (ASX:IMF) stock has performed 2.65% and changed AUD$0.08 while share value reached at AUD$3.1 in last trading transaction. At present, the stock 52 week high price sited at 3.33 and 52 week low situated at 2.23. 158865 shares traded on hands while it’s an average volume stands with 263168 shares. It paid dividend of AUD$0.049287 over a trailing one year period. The current analyst consensus rating clocked at 2 on company shares. Analysts estimated that stock to reach value at AUD$3.73 price in one-year period.
https://connectinginvestor.com/2018/12/29/what-are-analysts-saying-imf-bentham-limited-asximf/


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## peter2 (17 February 2019)

IMF appears to be breaking out of the huge triangle consolidation pattern.

The chart below is part of a research project and should not be considered a recommendation to buy this stock. If you want to read more about the project log in to read the P2 Weekly Portfolio thread. 

Setup: BO of a weekly triangle pattern
Grade A 
Buy limit: 3.35, iSL 2.80, let it go much higher, trail stop conservatively


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## System (3 April 2020)

On April 3rd, 2020, IMF Bentham Limited (IMF) changed its name and ASX code to Omni Bridgeway Limited (OBL).


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