HASelect – FTM
Medical Receivables
Litigation Finance Fund SP

HedgeAct Select-FTM is a truly alternative investment vehicle which invests in Medical Receivables Litigation Financing. The fund seeks to generate positive returns using a market-neutral, absolute return strategy, unaffected by fluctuations in the broader financial sectors.

HASelect - FTM Performance

JFMAMJJASONDYear
20192.051.221.481.476.36

Important Considerations: HASelect – FTM Medical Receivables Litigation Finance Fund SP commenced operations on February 1, 2019 (the “Commencement Date”) when it made its initial investment. The performance results for the fund represent actual unaudited returns from the fund investment for the period from the Commencement Date to present, net of the fund platform fee and expenses. For more information on the fees and expenses, please see the Confidential Private Placement Memorandum of HedgeACT International SPC LTD.

Why it works

  • The U.S. medical system is rife with structural inefficiencies.
  • Delays incurred by doctors, hospitals and medical practitioners prompted the development of this strategy.
  • Cash flow is key to meeting operating costs and many practitioners are willing to accept a lower payment in return for expediency.
  • Medical Receivable Litigation Finance (MRLF) funds the purchase of medical receivables by assuming the payment risk at a pre-negotiated discount.
  • The Fund proposes to loan its capital to a third party MRLF firm in the U.S. (“Borrower”).
  • FTM’s original fund has been in operation since 2010 and is diversified across many insurance companies with the largest component at 8.55%, hence a relatively low concentration of providers.
  • FTM’s purchase of investment receivables has historically been a highly selective process with a significant percentage of applications being refused. This differentiates FTM from other providers who adopt a pooled asset approach.

How we do it

  • Each investment opportunity is based on a personal injury case for which the plaintiff is represented by counsel on a contingency basis.
  • The Fund’s investments will be secured, will utilise zero leverage and will be completely uncorrelated to broader markets.
  • The secured positions are lien-specific and underscored by underwriting procedures developed by FTM and the Borrower, which are highly selective and use a robust review process.
  • The Fund is expected to have a low beta to reinforce a low negative volatility and lack of correlation to the broader market.
  • The medical receivables funded by the Fund through the Borrower are expected to have a shorter average duration (12-30 months) than traditional litigation finance (3-5 years), with multiple sources of revenue.
  • The medical receivables funded by the Fund through the Borrower are expected to be fairly small, which can lead to reduced settlement times.
  • The Fund would expect to exceed FTM Fund’s past return profiles (back cover) by a factor of 1.5x based on expanded sourcing, wider opportunity spread and increased capital availability.
  • The FTM Fund’s historical performance demonstrates superior collection history with revenue write downs of only 1.2%, well below the market benchmark for finance strategies. The FTM Fund has never completely written off a loan.

5 ways to generate a return ensuring diversification and a consistent settlement stream resulting in growth and diversification.

Pharmaceuticals

Pharmaceuticals

Patients have
out of pocket
costs or
high co-pay

Medical Records

Medical Records

Work intensive and high costs from operations for attorneys

PI Funding

PI Funding

Case Funding and Management essential to settlement success

Medical Imaging

Medical Imaging

Essential
to establish
value of
case

Pain Management

Pain Management

Essential to
patient’s well
being if surgery
can be avoided

Investment Concept

  • A motor vehicle accident occurred.
  • One party (called the “tortfeasor”) is alleged to be at fault, and one party was the injured victim (called the “plaintiff”)
  • The plaintiff needs medical care.
  • The receivables company (Borrower) requires that the plaintiff be represented by an attorney before funding any medical services.
  • The attorney and the plaintiff are also required to grant to the Borrower a security interest in the Plaintiff’s case by signing a lien document.
  • The Borrower has negotiated discounted contracted agreements for specified procedures with various medical service providers. These providers may have discounted their receivables to Borrower based on patient referrals, volumes and expedited payments.
  • The due diligence process entails the Borrower requiring additional case information in order to proceed and approve medical care on lien funding.
  • Plaintiff receives medical care.
  • Medical provider sends the medical claim (invoice) and notes to Borrower.
  • Borrower pays contracted rate to provider on plaintiff’s behalf.
  • The attorney submits a demand to the Tortfeasor’s insurance carrier for medical expenses and pain and suffering.
  • If and when the claim settles, funds are disbursed by the Tortfeasor’s insurance carrier to the Plaintiff’s attorney’s trust account.
  • The Plaintiff’s attorney distributes funds for expenses, fees, and medical liens.
  • The Plaintiff’s attorney distributes funds to the Borrower honouring the lien.
  • The Borrower’s income is the spread between the contracted provider rate and the lien payment from the attorney. The Fund’s income would be interest the Borrower promised to pay the Fund.

HASelect - FTM Performance

JFMAMJJASONDYear
20192.051.221.481.476.36

Important Considerations: HASelect – FTM Medical Receivables Litigation Finance Fund SP commenced operations on February 1, 2019 (the “Commencement Date”) when it made its initial investment. The performance results for the fund represent actual unaudited returns from the fund investment for the period from the Commencement Date to present, net of the fund platform fee and expenses. For more information on the fees and expenses, please see the Confidential Private Placement Memorandum of HedgeACT International SPC LTD.

Sub-Advisor Historical Performance

FTM and its principals have been engaged in the medical liens market for many years, including through managing multiple funds that invested a majority to all of the assets in medical liens. The following audited data shows the gross performance of the FTM Fund, net of expenses and management and performance fees.

JFMAMJJASONDYear
20190.720.680.730.732.89
20180.760.710.750.740.680.730.760.670.700.730.760.739.08
20170.730.720.740.750.770.750.700.690.710.760.750.779.21
20160.380.700.720.690.410.770.760.770.780.760.730.768.55
20150.750.590.330.650.710.390.710.730.780.760.750.758.18
20140.690.650.090.750.740.760.630.690.720.670.730.718.12
20130.700.650.080.710.640.690.770.740.740.740.690.728.25
20120.760.660.770.600.650.080.850.820.210.600.730.687.67
20110.850.760.870.830.860.760.840.860.690.650.591.0110.00
2010-0.001.150.910.951.030.800.780.880.820.800.839.32

For noting: These returns were achieved without deployment of leverage.

The performance results above are for the FTM Fund and not the Fund. The returns show the FTM Fund’s gross performance net of expenses and management and performance fees. GCM has not independently verified the veracity of the FTM Fund’s actual performance. The Fund has different management and performance fees and different timing of fees. Investors in the Fund may have lower returns as a result of increased costs and expenses associated with the Fund. The Fund may have performance results that differ materially from the FTM Fund’s results, depending on factors including the Fund’s risk tolerance, expenses and other factors. Prospective investors evaluating the past performance of the FTM Fund must appreciate that the FTM Fund’s structure differs from that of the Fund, including the laws under which the FTM Fund is organized (which may materially alter the rights of an investor in the Fund as compared to the FTM Fund, and vice-versa), a different sponsor / investment adviser, and that an investor’s after-tax results may differ from what they could achieve in the FTM Fund. Finally, neither GCM nor any of its affiliates have sponsored or managed a fund with the investment objectives and strategies for the Fund in the past. The Fund’s investments will be made under different economic conditions and in different investments than those which generated the FTM Fund’s returns shown. Additionally, the Fund may not be able to deploy as much capital as the FTM Fund, nor deploy it as efficiently as the FTM Fund has deployed it. The information given herein is historic and should not be taken as any indication of the Fund’s future performance. Past performance is not indicative of future results.

HASelect-FTM

Contact us for more information