Listed legal businesses power ahead of stock market in first half of 2018

Keystone Law: Shares rose on day of admission to AIM

Most listed UK businesses with a strong legal element are beating the market so far this year, with Keystone Law’s share price rocketing, a Legal Futures analysis has found.

But the long-term bet has been third-party litigation funder Burford Capital, whose share price has increased 12-fold in just three and a half years.

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, so far 2018 has been very strong as new legal businesses have joined AIM.

The FTSE 100 and FTSE All Share indicies, by contrast, have both been static over the first six months of the year, having recorded growth of 7.6% and 14.7% respectively during 2017.

Keystone, which listed on 27 November 2017 at 160p, has made the most eye-catching impact, ending 2017 on 191p and closing last week at 339p.

Gordon Dadds also performed well. Listing on 4 August 2017 at 140p, it closed the year a shade higher, but ended the first half of 2018 at 173p.

Rosenblatt, which only listed on 8 May at 105p, hit 123p on 29 June, the day when Knights started trading. It closed yesterday already at 173p.

Anexo Group, which combines a credit hire business and a law firm, and only went public on 20 June at 100p, hit 113p last week.

Burford has been a stand-out performer for investors. 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 1498p last week.

Some of the other longer-standing stock have been steady if less spectacular. 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. It closed last Friday just a penny less.

Redde, the accident management firm that owns Cardiff firm NewLaw, rose 7% during 2017 to reach 175p by the end of the year, and it was 177p last week.

NAHL – the legal marketing company that owns National Accident Helpline – is the only legal stock to have 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.

After a poor 2016, NAHL’s share price recovered somewhat last year, ending the year 21% up at 165p. However, last Friday it closed at 121p. Back in October 2015, it reached a peak of 404p.

The other legal share worth noting is ULS Technology, which provides technology and panel management for conveyancers and also owns well-known legal regulation consultancy Legal Eye.

After a couple of years of strong growth, which saw the share price up 54% to 149p during 2017, it has fallen back a little to 130p last week, although in March it reached a high of 161p.

Last week, ULS unveiled its results for the year to 31 March 2018, recording revenue up 38% to £31m and profit before tax up 26% to £5.5m.

This analysis did not consider those businesses for which legal services are only a tiny proportion of their activity, such as the large insurance companies that own ABSs, Capita – owner of Optima Legal – and New York-listed Markel, which owns Markel Law, the rebranded LHS Solicitors.

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