Full disclosure - I own LFG and my firm was involved in the IPO, though my purchase was made in the last 12 months.
This is one company I think is underappreciated. Liberty operated privately as a non bank lender successfully for many years before IPO. Since IPO they have delivered performance ahead of Prospectus and delivered overall profit growth in both FY21 and FY22. My sense is the management team, which has been very stable, know what they are doing. While I understand the cyclical nature of the industry and there are obvious near term headwinds, the valuation does not make much sense to me.
1h23 results are out in a few weeks but on a trailing basis, the stock is <6x earnings and offering a distribution yield of 13%+ based on paying out ~70% of profits. Other non bank lenders sit around 8-10x and the big banks substantially more.
The biggest issue imo is that the business is still run like a private company despite being publicly owned. When I last looked at it, KMP owned close to 70%+ of the register and why would any of them let the stock go given the regular payouts and low valuation.
A $1.2bn market cap delivering $200m+ npat and suffering from low liquidity... That low liquidity hurts on the way down but if they can navigate the next 12-24 months well, that low liquidity will be a tailwind on the way back up too.
