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I’m a 27-Year-Old Hedge Fund Founder Managing Almost $1 Billion: Here’s Why I Prefer Alternative Investments to Stocks

Eva Shang is the co-founder and CEO of Legalist, a hedge fund that specializes in technology-enabled alternative investments, including litigation finance and government contracts. Shang, now 27, founded the company after dropping out of Harvard in 2016 and has since grown her initial $10 million asset portfolio to over $800 million. Her fund is about to close on another $200 million, which will bring its assets to roughly $1 billion.

Read the full article on Yahoo Finance.

How a Machine-Learning Program Finds Litigation Financing Deals

For litigation finance firms, finding the right lawsuits to invest in requires quite a bit of time, effort, and capital.

Like other nascent investment strategies, high returns are the result of highly knowledgeable investors, of which there are few and far between.

But Eva Shang, co-founder of Legalist, is trying to change that. Her firm uses quantitative techniques and machine learning applications to find easy-to-manage deals in litigation finance, bankruptcy, and government receivables.

Founded in 2016, the firm now manages more than $650 million and is on track to hit $1 billion in assets under management by the year’s end. So far this year, the firm has built a board with ex-Nuveen and Canyon Capital executives and garnered investments from endowments, foundations, and insurers.

And the strategy is all about the technology. “Even though each of our strategies is hyper-targeted, our core thesis is that our technology allows us to scale across asset classes,” Shang said. She added that the strategy generates alpha by sourcing deals quickly across the databases it scours.

Sitting outside of a Midtown, Manhattan coffee shop, Shang pulled a laptop out of her backpack to demonstrate the firm’s proprietary technology. She dove deep into Legalist’s tech, peppering in anecdotes and even threw in a few memes during the conversation.

Read the full article on the Institutional Investor.

Legalist’s Growth in Private Credit Featured in Alternatives Watch

There have been times when market ideas, boldness and technology have come together at the right time and the right place. Think D.E. Shaw or Renaissance Technologies. If Legalist CEO and Founder Eva Shang’s first few years in business are any indication, lightning may have struck again in the arena of private credit in San Francisco.

Read the full article on the Alternative Watch.

Inside in Full: Growth of litigation finance seen as ‘ominous’ if reforms don’t pass

The growth of third-party litigation finance is an indisputable challenge for the insurance industry, one that looms large as US courts return to full operations this year with pandemic-induced restrictions winding down…

The precise impact that the flood of funds from investors to law firms large and small is having on social inflation – or increased losses resulting from rising claims settlements and jury verdicts – is impossible to quantify due to the hidden nature of the vast majority of this financing. But the influence is visible in rising losses across multiple lines, from medical malpractice to personal auto and multiple commercial lines.

“The answer for almost anybody who wants to be honest about it is we don’t know,” said Dale Porfilio, chief insurance officer at the Insurance Information Institute. But he said it’s clear that litigation funding is a “material contributor” to social inflation. “I don’t think anybody can break it down and say 25% of the cause or 50% of the cause.”

“We know we feel the impact,” agreed David Perez, CUO, global risk solutions at Liberty Mutual. “But identifying exactly which actions are impacted and which aren’t is tough.”

2022 may shine some light on the actual impact of this funding stream as courts fully reopen and cases that lingered through the pandemic resolve.

What is clear is that there are few tools available to counter its expanding influence.

Industry groups are waging a state-by-state battle for laws that would require increased transparency into which cases have backing from these funders and mandate basic consumer protections, but there’s little guarantee that even successful efforts on this front will produce results that stem the tide of rising litigation costs, soaring settlements and nuclear verdicts.

Read the full article on the Slipcase.

How litigation financing startup Legalist plans to leverage its tech to scale up to $1 billion in assets under management

Eva Shang recalls when, during the initial funding stage of their startup, an investor once called her and her cofounder, Christian Haigh, “tweens.”

That investor’s probably biting their tongue now. Since it made its splashy debut through the prestigious Y Combinator program in 2016 — shortly after Shang and Haigh had dropped out of Harvard — Legalist has raised two funds totalling $110M dedicated to litigation finance and grown into a force within the legal industry.

The current pandemic has only made things even busier.

Shang told Business Insider that there’s been a surge in demand for funding in the last several months, only adding to the growth it’s seen in the past four years.

“The coronavirus has definitely put strain on law firms,” Shang said. “Due to delays in courts, law firms are seeing some of their cases not pay off in the time that they would have expected. And they are also seeing their clients reluctant to divert money away from core operations and toward legal fees.”

The litigation finance startup’s investment strategy is simple: Legalist vets cases by assessing a lawsuit’s likelihood of success, and reaches out to the business involved with an offer to fund its case. If they win the lawsuit, Legalist recovers some portion of the money. If not, it doesn’t recover any money whatsoever.

Read the full article on the Business Insider.