So for one if you join the group and we known people tender, you could still also tender right. So that would protect downside in some sense. If you get stuck in a private vehicle, it's terrible I think for a small investor. So you would probably need to sell into the market before delisting at some discount.
Well done on such a detailed write-up. I'm still not comfortable with the cashflow profile of Anexo. I'd disagee on your comment on the level of debt. From 2017 to 2023, the total liabilities tripled to £100m and the Cash from Operations over the same period totalled -£500k.
I get that they have a very long WC cycle as they're aggressively growing the business but at what point do shareholders get rewarded with reliable FCF. I guess the case for buying the stock will be if the Bond Turner side of the business grows big enough as this is the side of the business with better cashflows as you mentioned.
I thought this was interesting, and possibly a real risk to the longer-term economics of the business, if a proportion of cases result in Anexo being liable for the insurance companies' costs it might significantly impact their income on the credit side of the business going forward.
- I'm not usually one to complain about sending capital back to shareholders, but it's frustrating to see them pay out almost 9M in dividends over the past 5 years when their cost of capital is so high.
- the stock is definitely cheap but management has already shown they have no problem ripping off shareholders, that makes me a bit wary. do you think this was just a one-off and generally they have acted honestly?
- i don't really agree the cash flow statement is that misleading, I think it shows a similar picture to what you paint, though obviously it lags behind given the longer cash flow cycle of part of the business.
- H124 "other legal services" showed 731k cash from ops vs. H123 12.2m, which included the VW agreement. I think this is a good sanity check for your ~14.3m number.
1. I agree strongly, if we would elect new directors in the future, this would be my step 1, try to cancel the dividend. For now it indeed just seems like a complete waste.
2. Management has 2 thing going against them, this deal, and the fact that they finance part of the litigation finance themselves for hazy terms. On the surface it does seem very similar to the other litigation finance loans though, so might be market rate, but just not something I like.
But al in all they, seem to be decent opportunistic operators who want the best for their business, so a bit of a mixed bag. Hence, why it would be good for the minority to try and elect a new director.
3. I think the cash flow statement is better understood if you actually think of all revenue as cash flow that we than choose to reinvest. i.e anexo receive around 70m of cash a year and reinvests all of that. But indeed there is still some insight to be gained from the FCF statements in it's current form.
4. Honestly I just hate they way they explain the way the cases payout worked. This was my best guess. Anyone who has a better guess I am open to. My sanity check was the IRR. I think if the payout is much lower the IRR seems very low for such a risk endeavor, which could be the case.
yeah more than 50% seems bit steep, I am also note sure if the 2,120 is only the award money to the claimants ex legal fees, which could explain this number. I've read online that a take fee of 40% is not uncommon tho.
Hi Iggy. A very clear discussion of the company. Thank you.
How do you think about the downside if the consortium manage to get 75% of the vote?
So for one if you join the group and we known people tender, you could still also tender right. So that would protect downside in some sense. If you get stuck in a private vehicle, it's terrible I think for a small investor. So you would probably need to sell into the market before delisting at some discount.
Well done on such a detailed write-up. I'm still not comfortable with the cashflow profile of Anexo. I'd disagee on your comment on the level of debt. From 2017 to 2023, the total liabilities tripled to £100m and the Cash from Operations over the same period totalled -£500k.
I get that they have a very long WC cycle as they're aggressively growing the business but at what point do shareholders get rewarded with reliable FCF. I guess the case for buying the stock will be if the Bond Turner side of the business grows big enough as this is the side of the business with better cashflows as you mentioned.
Yeah you just don't buy this one for for the FCF, you buy it for a growing receivables book.
https://www.keoghs.co.uk/keoghs-insight/keoghs-secures-test-case-victory-against-credit-hire-organisation
I thought this was interesting, and possibly a real risk to the longer-term economics of the business, if a proportion of cases result in Anexo being liable for the insurance companies' costs it might significantly impact their income on the credit side of the business going forward.
Thanks had found this piece, yet. with success rate of 98%+ this will not destroy economic but could definitively hurt.
did they make the offer on 5/20? finally getting around to taking a look at this but can't find
No it was delayed. So I think it is now moved to 17/6/2025
curious how it turns out! some thoughts:
- I'm not usually one to complain about sending capital back to shareholders, but it's frustrating to see them pay out almost 9M in dividends over the past 5 years when their cost of capital is so high.
- the stock is definitely cheap but management has already shown they have no problem ripping off shareholders, that makes me a bit wary. do you think this was just a one-off and generally they have acted honestly?
- i don't really agree the cash flow statement is that misleading, I think it shows a similar picture to what you paint, though obviously it lags behind given the longer cash flow cycle of part of the business.
- H124 "other legal services" showed 731k cash from ops vs. H123 12.2m, which included the VW agreement. I think this is a good sanity check for your ~14.3m number.
- there's also this https://www.fleetnews.co.uk/news/manufacturer-news/2022/05/25/volkswagen-group-agrees-193m-settlement-for-dieselgate-claimants £2,120 per claimant in that case, which makes £1200/claimant to Anexo look a bit high but not out of the realm of possibility.
1. I agree strongly, if we would elect new directors in the future, this would be my step 1, try to cancel the dividend. For now it indeed just seems like a complete waste.
2. Management has 2 thing going against them, this deal, and the fact that they finance part of the litigation finance themselves for hazy terms. On the surface it does seem very similar to the other litigation finance loans though, so might be market rate, but just not something I like.
But al in all they, seem to be decent opportunistic operators who want the best for their business, so a bit of a mixed bag. Hence, why it would be good for the minority to try and elect a new director.
3. I think the cash flow statement is better understood if you actually think of all revenue as cash flow that we than choose to reinvest. i.e anexo receive around 70m of cash a year and reinvests all of that. But indeed there is still some insight to be gained from the FCF statements in it's current form.
4. Honestly I just hate they way they explain the way the cases payout worked. This was my best guess. Anyone who has a better guess I am open to. My sanity check was the IRR. I think if the payout is much lower the IRR seems very low for such a risk endeavor, which could be the case.
yeah more than 50% seems bit steep, I am also note sure if the 2,120 is only the award money to the claimants ex legal fees, which could explain this number. I've read online that a take fee of 40% is not uncommon tho.