Investment Criteria

We assume you’re familiar with the space, but arbitrations are a niche, discount-rich (optionality) field uncorrelated to the market.

To give you an idea, we devote time to candidates who meet the following criteria:

Valuation: MC < 0.3x Probability-Adj. Award net of liabilities; significant margin + optionality of pre-award market adjustment

Case Qualities: clear merits (incl. enforcement), documented proof of dispute subject (e.g. Government Acts), specialist lawyers + funders with favorable track records, and poor Respondent record (max 49% win rate in comparable cases). We’re fans of BSF / Tim Foden; Burford; BWA; and LCM.

Management Diligence: ability to get sound legal counsel / funding on good terms (economically speaking), and keep the market up to date / retain attention on the stock

Instrument Options: beyond common stocks (preferably), often via private placements (given good terms with warrants etc)

Bonus - A ‘Win-Win Hedge’: If two shareholder groups (e.g. resource / arbitration investors) valuations raise from opposing outcomes, and one has pre-emptively sold down, recovery is likely either way: E.g. permit renewal seems unlikely and is being arbitrated → resource investors from pre-arbitration sell pre-emptively → if renewal is approved, they buy now de-risked stock again, and if not, arbitration investors buy on back of stronger case.

For reference, we often see MC < 15% probable net award meeting all criteria, with sub-5% for longer durations (more uncertainties).