ReBuild LL – A Proxy Fight to Boost Growth and Profits at Lumber Liquidators › Forums › General › What value can be put on Lumber Liquidators' insurance lawsuit?
Ooo Blah DeeJuly 3, 2019 at 10:08 amPost count: 0
(I’m not affiliated with the Ehrenberg Bass Institute for Marketing Science, but I’ve chosen their website for my guest link in a bid to get Charles Tyson’s interest in one of his countrymen’s work.)
The lawsuit making its way through the Wisconsin court system seems too large not to have been discussed here. I’ve estimated a minimum value for a win of $75 million reimbursement in legal expenses and a maximum value of that plus another $180 million for settlements, inventory impairments, test kits, etc. Obviously, to win $255 million in court would add greatly to a market cap of $330 million, so the market must be “predicting” either a low probability of winning the suit, a low award for any win, or an intrinsic business value for LL of as little as $75 million.
What value has Rizzi Capital put on this litigation and why?Mario RizziJuly 3, 2019 at 12:28 pmPost count: 0
They won’t win anywhere near those amounts. It would be great if they could, but it wont happen.
As a value investor, I calculate the value of the company based on assets and a conservative multiple to average expected earnings. I’m not a lawyer and I cannot and don’t place any expected value on positive legal settlements especially at this point.Ooo Blah DeeJuly 4, 2019 at 12:40 pmPost count: 0
I agree that the law is pretty hard to predict. But if the cost of legal settlements could be ignored, we’d have nearly as much cash today as the market cap. Why so sure that the legal fees originally covered won’t be reimbursed? As longs, wouldn’t we all benefit from some valuation being placed on a possible settlement?