One of the great things about IMF Bentham is that its revenue is uncorrelated to market forces, which means the share price largely is robust, defensive and counter-cyclical. In normal times - those not panicked by COVID-19 - these things hold true. Current market conditions are for short-term traders, rather than investors. The thesis and strength of the IMF Business model has not changed, and if you are a long-term investor the current market conditions will come and go, the earning power of IMF will cut through. Similar outcomes happened - and are really not too different to the market effect during the SARs epidemic, MERs epidemic, Bird Flu... blah blah blah.
Some of the weakness in current share price can be attributed to the challenge by QLD agencies in respect to the Wivenhoe Dam case, which will have the impact of: 1. Potential for liability to be overturned resulting in an adverse outcome (being no (massive) revenue generation); and 2. Adverse cost implications, partly off-set by the insurance IMF took out to limit downside risk. The 3. consideration is that should they win Wivenhoe at appeal, the pay-out is likely to be substantially larger although somewhat delayed.
I think there are some larger funds taking calculated risks by taking their money out of IMF (having registered a nice profit over the past 12 months), and will buy back in when there is a little more clarity as to the likely outcome.
IMF Price at posting:
$4.01 Sentiment: Buy Disclosure: Held
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