Analysis

Legal Cheek listed law firm fund chalks up 38% increase in just six months

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Puts the FTSE 100 and S&P 500 in the shade

It’s the half-way point for the Legal Cheek listed law firm fund, a basket of legal shares that I invested in back in January with monthly progress reports until the end of the year. And so far so good.

The £600 I put into the fund at the beginning of 2021 is now worth £829.65, an increase of 38%. By way of comparison with the major indexes, the FTSE 100 is up 7% in that period and the S&P 500 16%.

So it seems that, so far, some of the early doubters, who strongly questioned the wisdom of investing in law firms after the value of the fund initially dipped as low as £532.90 in its first few weeks, have been proven wrong.

Who have been the biggest risers?

Well, one is way ahead of the others: Rosenblatt Group Holdings. The law firm founded by solicitor Ian Rosenblatt and now run by Nicky Foulston, previously a successful motorsports boss, is now worth 139% more than when I invested in it in January. Market watchers expect further rises for the firm, whose turnover is forecast to hit £46 million this year following its recent acquisition of Memery Crystal.

The 2021 Legal Cheek Firms Most List

The next biggest riser is Gateley, whose share price is up 37% since early January, followed by The Ince Group, up 26%. Then there is Keystone Law, up 22% and DWF, up 20%. Only Knights Group Holdings has fallen, by 2%.

So what happens next? With the corporate legal market already busy, and a strengthening recovery expected during the second half of the year, there’s no sign that listed law firms’ bull run is set to end yet. Indeed, with US newlaw giant LegalZoom going public earlier this week — and immediately enjoying a 35% increase in value — and other big firms like Mishcon de Reya and Irwin Mitchell reported to be considering their own IPOs, listed law firms seem to have momentum.

Also expect investors to be watching the traditional legal sector closely as financial results season for unlisted partnership law firms gets underway this month. Murmurs suggest we could be in for some strong figures, particularly in respect of profit per equity partner, which may surge at many firms amid a plunge in business costs resulting from international travel restrictions and working from home. Rosy results could buoy market sentiment enough to further lift listed law firm share prices.

The Legal Cheek listed law firm fund

DWF Group: £118.81 fund value (109p per share)
Knights Group Holdings: £96.14 fund value (418p per share)
The Ince Group: £126 fund value (66p per share)
Keystone Law Group: £115.60 (680p per share)
Gateley Holdings: £134.82 (214p per share)
Rosenblatt Group Holdings: £238.28 (148p per share)
Total fund value: £829.65 (up from an original total of £600 invested in January this year)

This series is in no way intended to amount to financial and/or investment advice.

8 Comments

The Truth

Pump and dump-esque article from LC. We see through you.

(18)(5)

Anon

“So it seems that, so far, some of the early doubters, who strongly questioned the wisdom of investing in law firms after the value of the fund initially dipped as low as £532.90 in its first few weeks, have been proven wrong.”

Alright Warren, it’s been half a year. Phillip Fisher famously stated that he should only be judged on his holdings once he had held them for three years. Short term gains do not constitute savvy investment. Prove this is more than a gimmick by analysing each firm with a DCF model that they’re not fairly valued.

(17)(3)

IB tho

I would be interested to see a comparison against a basket of advisory-only banks. This has the potential to change the law firm business model, at least for partners, and I suspect it will happen fast.

(4)(0)

Warren

Stocks go up in a raging bull market – hardly a shocker. How about providing some technical analysis and comparing these to other listed professional services companies?

(9)(3)

US Bore Firm Associate

Come on mate this is a legal gossip website. You’re not going to find ‘technical analysis’ of any kind here

(0)(0)

Touker

“So it seems that, so far, some of the early doubters, who strongly questioned the wisdom of investing in law firms after the value of the fund initially dipped as low as £532.90 in its first few weeks, have been proven wrong.” Who have you proven wrong? A short rise of £200/38% in half a year is both a paltry sum and is not long enough to judge the performance of a portfolio. The fact that you would have made even more money over the longer term by investing in a basket of credible companies in sectors such as tech, energy and even real estate is irrefutable. Please just stick to writing fluff pieces.

(9)(4)

Da DogeFather (I’m not Elon Musk…or am I…)

38%? I’m up 38,000% on Doge

(4)(1)

A non-snob sitting slightly above mid-tier

I know it’s in vogue to insult via LC these mid-tier firms, but in fairness they’ve created a strong sense identity (and fulfil a purpose with their work – not everyone wants to pay MC / US fees). Rosenblatt, in particularly, with their litigation team picking up some high profile cases and diversifying their income through acquisitions. I think listing is here to stay.

(1)(0)

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