GCIAnalyst comment for Manolete Partners
Its great when one's investment thesis starts to play out relatively quickly.
For the past 3 months, I've talked exclusively 3x on Vox Markets about the substantial value & hidden growth potential at . The UK's #1 'Insolvency Litigation Funder' - enjoying a >50% share of the 3rd-party funded sector.
Ok, but why am I bullish on the stock?
Well, firstly my eldest daughter works in 'business restructuring / insolvency' - & after experiencing a quiet period in H1'21, is now extremely busy.
Next this is super specialist stuff, with #MANO possessing deep vertical expertise. Buying cases from say Insolvency Practitioners, which fit its core USPs, strengths & knowledge base. Meaning are in a much better position to price risk than anyone else.
Moreover, typically the historical RoI's of such cases have been >100%, and very few ever have to go to trial (Est <5%).
Plus the working capital profile is attractive too. In fact from the point of buying a case, it typically takes on average just 2 years to settle the dispute with the defendant & collect all the agreed cash.
Hence with the government now lifting the moratorium on medium/large company insolvencies from 1st Oct’21. Then I could see (by say Spring 2022), a deluge in new business wins for , alongside a shortening of case settlement times, as the firm picks off 'low hanging fruit', the economy normalises & the industry's huge backlog is gradually whittled down.
Lastly wrt valuation, I estimate #MANO should be able to achieve £13m-£15m of sustainable EBIT over the next 3 years. Which on a 13x-15x multiple would generate a theoretical price of >400p/share vs today.
CEO & founder Steven Cooklin saying today: "FY21 trading has been in line with FY22 expectations (Mar y/e). With the recent [phasing-out of the UK's] temporary [Insolvency] measures from 1st Oct, we expect to see a return to more normal conditions in H2 & beyond. And are very well positioned for long term profitable growth."
Onwards & upwards.
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