Listed legal businesses buck downward market trend


Keystone Law: Good investment in 2018

Several listed legal businesses in the UK bucked the downward trend of the stock market in 2018, with ‘challenger’ firm Keystone Law the standout performer.

A Legal Futures analysis showed that Keystone, which ended 2017 on 191p, closed 2018 on 360p, up 88%. The shares peaked at 443p in September after strong interim results.

Legal Futures has been tracking the progress of listed legal businesses, with 2015 proving a good year for them, when they beat the market, but 2016 generally far less so.

While 2017 was a mixed year, 2018 proved to be much stronger against the background of the FTSE 100 dropping 12.5% and the AIM All Share diving 18% – all the legal shares are listed on AIM.

Gordon Dadds began 2018 on 142.5p, and spent most of the last quarter of the year with its shares suspended during the negotiations with Ince & Co, meaning it closed on 172.5p, an increase on the year of 21%.

However, the market liked the announcement of the deal and the shares jumped to 190p when they began trading again last week.

Knights listed on 29 June 2018 on 145p and closed on 31 December at 175p, up 21%, following significant merger activity. Its shares have since risen further to 190p.

Anexo Group, which combines a credit hire business and a law firm, and went public on 20 June 2018 at 100p, hit 136p before ending the year on 117.5p – a 17.5% jump.

However, City firm Rosenblatt, which listed on 8 May 2018 at 105p, reached a high of 135p a few weeks later, but its share price has declined steadily since then – for no obvious reason – to close the year on 74p, a fall of nearly 30% on its initial price.

Gateley, the first law firm to list in the UK, did so at 95p in June 2015. It was 130p by the end of 2016 and 172.5p a year later, reaching 190p not long after. However, it has been downhill since, and it saw out 2018 on 128p, a 26% slide on the year.

Redde, the accident management firm that owns two alternative business structures – NewLaw and Principia Law – has been steady in recent years, ending 2017 on 175p, was just 5p or 3% lower a year later, although it had been as high as 196p.

Away from law firms, third-party funder Burford Capital has been a stand-out performer for investors for years.

Having been 121p at the end of 2014, it was 193p 12 months later, 573p at the end of 2016, 1152p when 2017 drew to a close, and hit 1670p on 31 December 2018, another 45% jump – having been even higher 2040p earlier in the year.

NAHL – the legal marketing company that owns National Accident Helpline – had a disappointing 2018, which perhaps reflects the uncertainty surrounding the personal injury market despite its efforts both to diversify and protect its personal injury income streams by setting up alternative business structures.

Back in October 2015, it reached a peak of 404p. After a poor 2016, NAHL’s share price recovered somewhat in 2017, ending the year 21% up at 165p. However, it closed 2018 35% down at 107.5p.

Two other litigation funders listed on AIM at the end of last year – LCM, which issued at 52p and closed December on 70p, and Manolete Partners, which went from 175p to 194p in its first two weeks as a public company.




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