A very interesting and potentially lucrative share price versus value anomaly has materialised in Manolete Partners (LON:MANO) . I thought I’d highlight this ahead of their first half figures which will be announced this Tuesday 10th Nov. (The table below has now been updated with the figs reported on the 10th - presentation available here)

About the Business

Manolete Partners (LON:MANO) is a litigation finance company (as are AIM listed Burford Capital (LON:BUR) and Litigation Capital Management (LON:LIT)) but only deals with insolvency cases in the UK and is thus likely to benefit from the Covid-19 lockdowns and any consequential corporate distress, or indeed Brexit fallout. Manolete Partners (LON:MANO) buys cases from insolvency practitioners, thus in effect becoming the claimant, which gives them full control over how to pursue the case. The outcome is that 97% of cases are settled, rather than taken to court, and thus resolved far more quickly (c. 11 months on average). This is a key point of difference between Manolete Partners (LON:MANO) and Burford Capital (LON:BUR) and Litigation Capital Management (LON:LIT), says chief executive Steven Cooklin. "If you’re funding someone else, the decision to settle is that party’s decision".

High Quality characteristics

In this specialist niche they are dominant with a 67% market share. To quote Steve Cooklin (31 Mar 20 unaudited interims) “we continue to deliver outstanding investment returns, yielding an average Money Multiple of 2.7x and ROI of 174% on 257 completed cases since inception.” These are exceptionally attractive returns and reflected in Stockopedia’s metrics:

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Strong Growth Profile

Since its floation in Dec 2018 (at 175p Mkt Cap £76m) Manolete Partners (LON:MANO) has been deploying the £14.7m net funds raised to scale-up the firm’s capacity to ramp up its business significantly: Below are the six month period key metrics and leading indicators.

Period-end

30Sep18

31Mar19

30Sep19

31Mar20

30Sep20 updated Actuals

6 month periods

1H19

2H19

1H20

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