Minimizing downside risk

“Minimizing downside risk while maximizing the upside is a powerful concept.” – Mohnish Pabrai

Safety, income, and capital gains are the three significant objectives of investing. But they’re not the only guiding principles. Over the last century of emerging markets, climbing and crashing stock exchanges, bubbles, crypto, dotcoms and some of the most diverse changes ever, there are common rules that successful investors always seem to hold on to.

Here are a few:

• Set yourself goals
• The bigger the potential returns, the higher the level of risk
• Don’t put all your eggs in one basket
• Invest for the long-term
• If it seems too good to be true, it usually will be.
• Only invest in something you understand.

This last one is particularly important to our team at GreenPark Platinum. We’ve been in this exciting neck of the alternative-investing-woods (Litigation Finance) for a long time, and we’re always aware that we’re still meeting new investors every week who have never heard of litigation finance.

As our founder, Laura Mann, likes to explain it: litigation finance is when a third party provides capital to a plaintiff, in return for a share of any successful financial outcomes from the lawsuit. The funder will receive a share in the profits of the case. The funding provided applies to litigation costs, including attorney’s fees, investigative fees, expert witness fees and court expenses.

We firmly believe that ligation finance makes strategic corporate sense in terms of mitigating downside risk, offering security and the advantage of focusing on the problem rather than on costs. Everyone and anyone can benefit, from individuals to class actions, large companies to universities and businesses of all sizes.

Here are some examples:

• Helping smaller firms with limited financial resources to have a fair chance (similar to assisting David to fight Goliath, litigation finance provides David with a slingshot)
• Liquidity for working capital – so businesses can spend on marketing, research, and development to continue growing their business rather than paying legal bills.
• Time for negotiation – reducing the risk of a premature settlement or having to acquiesce to lowball offers.
• Accessing top legal talent – funds can help recruit top legal talent, increasing the chance of success.

A bonus is that litigation finance is a non-correlated, alternative asset class which produces solid and absolute returns. Regardless of how the economy is doing, there will always be legal claims. Interest rates, stocks and bonds are irrelevant when it comes to litigation finance. Litigation finance outperforms other alternative investments and offers a moderate time to liquidity – the liquidity time for litigation finance is only 12 – 24 months.

Greenpark Platinum’s speciality is litigation finance, and we are renowned globally for raising capital in litigation finance cases. At Greenpark Platinum, we utilise our extensive knowledge and experience to deliver unique opportunities to diversify portfolios and generate returns that are not related to organisational performance or stock markets.