You've probably gone to the heart of IMF-Bentham's and the understanding of it in your first question! Many posts have not arrowed in so quickly to IMF-Bentham's 'problem'.
It's answer is well answered in the threads, so it could be well worth your while to read them.
It seems absurd, assuming that after a full distribution of the cash, about $1.20 per share; operations that generate about $20m
AFTER TAX ($0.124 per share) is achieved on roughly $100 m capital employed! So why the hell can you buy these at only $1.70 each!
Pray. Why!?
Why oh why?
The reason perhaps is contained probably or if not at least possibly in these considerations:-
i)
IMF funds legal entities with major litigation.
IMF-Bentham is in effect a 'trade finance' financier of legal firms. All that cash that looks so much like juicy low hanging fruit on the balance sheet, is needed to fund operations.
It will eventually all be used up. IMF-Bentham is signed up into "case investment" (the amount that is being fought for at court) for a staggering few billion of $3.4 bn ($3.2 bn latest figures), the cost of operations, only a fraction of the case investment, WILL hoover up a large % of that cash.
Almost all the cash, and IMF-BENTHAM has loan caveats that put a cap on its cash. So cash is a constraint.
Over the last six years money has been sucked up into operations in 4 years , broken even once (2013) and only made 'money' once, in 2015.
ii)
IMF sinks cash into litigation that can take years to turn.
For instance - a major case funded by IMF-Bentham is the 2011 Floods of Brisbane, which will only go to trial in 2018, with expected resolution in 2019, and maybe settled at the end of 2019? Maybe? Perhaps? Justice delayed, is justice denied. I know of a few flood victims who have died of old age... before the a55 that is the law, comes to their err... aid?
The flood case may be an exception, as a lot of cases are rather quickly resolved, and quick "go away" money is paid. Happily for IMF-Bentham.
But overall cases turn every two to three years.
Point here is returns and cash flow are lumpy. In 2011 & 2010 ( and yes you need to keep a long time line here) staggering returns on cap. were made! Investors who aren't too attuned to IMF-Bentham thought "Halleluja, The coming of the lord!"
But the next three years were woeful, and a lot of investors (including large asset managers) jumped ship in alarm.
IMF-Bentham can be a scary ride.
iii) Another lesser factor is IMF-Bentham has had to try decide how to present a fair set of accounts to deal with the long 'cyclicity'.
I think they've adopted 5h1t accounting policies, that are innappropriate to the entity. Point is, they capitalise the ongoing expense & money needed to fund
operational litigation cases, on the premise that cases are intangibles. (And so have adopted accounting policies that apply to intangibles. An accounting that was never, to my mind, intended for operational assets. Sure there is nothing to physically kick out there, but the conventional intangibles definition is an accounting term, that I believe these lawyers have misinterpreted. ) So be it.
Point is the accounts are;
i) not prudent (costs are taken off the income statement)
ii) a ripe royal pain in the a55 to understand. You really need to sharpen your pencil, take a huge big breath, and be prepared to sit down for a long while, until you can figure out (hopefully) what is actually happening in IMF-Bentham. This, if only to compare it to it's competitors accounts, who are not that esoteric in their accounting policy option.
Nothing is hidden though.
It is "all there". IMF-Bentham is perhaps the most enthusiastic continuous disclosurer on the ASX. They win all the gold stars.
Nothing is hidden, but
much is lost in the confounding disclosures.
"Methinks they talk to much..." but that's me.
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Good luck mate
