IMF.ASX - IMF Bentham

[Gregmal]

I guess to simplify it, while many who look at the threat to the investment thesis as competition from other litigation finance co's, I view the threat as moreso coming from the law firms. They make a ton of money, can do the work for whatever price they want, and because of the partnership structure of most of these firms, have the flexibility to charge the approach faster than a traditional company. That said, this, being the biggest threat IMO, is still not really something to worry about for the time being. Other litigation finance companies can pop up, but they dont have any data or sourcing advantages that the bigger guys dont have as well, which then begs the question, why would anyone go with the newer, lesser known funds, all else being equal?

[cameronfen]

These guys, and particularly the partners at the senior levels, aren't terribly interesting in passing up the above fees and four figure hourly billings on a maybe.

With regards to litigation finance, what do you mean by a "maybe"?

Some of my concerns regarding the future returns here revolve around the question of "what if the law firms start doing this on a contingent basis or taking more of the pie that the current setup allows people like Burford to grab?". As I mentioned in a different post, the bulk of the need here is people can't afford to pay the lawyers. Look at the Hulk Hogan case for instance. The edge goes away if the law firms start approaching these from an entrepreneurial standpoint rather than a fee collector position.  But from what I've gathered, given their positions and culture(which is probably the biggest aspect at the top law firms), they just dont want to work unless the billings are guaranteed. Using the Hogan case for instance, where Peter Thiel apparently made a killing doing exactly what Burford and co do... from the law firm's perspective, they rather just take the monthly billings and a smaller cut, or turn down the case and lets say do work for a larger corporate client at $40,000 per month.... than go whale hunting for little up front cash. I bought a little more BUR and have been putting on positions in some of the other names as well(taking the basket approach) because I think for the short to intermediate term... returns here are safe. Compeition will not be a intense as people think. The Legalist's and Mighty's can continue to pop up, but the pie is very big and I think the more experienced players do have a competitive advantage. However longer term, I definitely expect that to change.

Ahh I see.  I guess one problem from a law firms perspective is reputational.  How do the clients know you are acting as a fidutiary when you not only get paid for acting as a lawyer but get large payouts based on contingents?  I'm espeically thinking about cases where clients also want something other than money like for example a company wants a copyright or patent enforced or a individual wants some vindication.  I think (although not sure) this is one reason why the British legal system is even hesitant for lawyers to accept any contingent fees. 

[cameronfen]

So one thing that seems to be lost in all the hubbub around Burford is IMF is primed to benefit.  Money is still going to flow into litigation finance, but with Burford looking tainted, where will it flow but the second-largest asset management player? 

[Gregmal]

I added to this the other day at 3.20. If nothing else the drama around BUR has put into perspective how Bentham has been able to quietly go about business for nearly two decades, while posting similar, more easily verifiable returns. MW actually highlighted IMF as "how you should do your accounting".

[cameronfen]

IMF announced a private placement in conjuncture with a rights offering: 

https://www.imf.com.au/docs/default-source/investor-presentations/investor-presentation-october-2019

The directors are all taking part in the rights offering.  It looks like some institutions were backstopping it, but I'm not sure.  I can't tell though if directors will be able to get the remaining shares based on people that didn't undertake the rights offering or were ineligible.  Doesn't help that this situation is in Australia and I have no good handle on how its suppose to go.  I can't partake as I don't like in Australia or New Zealand, but I'm wondering if people who know more about these special situations have a handle on if the BoD is trying to increase there stake in the company, or if they basically just sold off 20% of their high ROI mainly asset management business for a company that makes money with predominantly financing litigation through portfolio investments.