Ever since Gotham City Research LLC released its short thesis on Quindell PLC (LON:QPP) (OTCMKTS:QUPPD), investors have been struggling to understand what exactly it is that Quindell does (queue Office Space references). The company seems to have started out as a country club, moved into the tech space with lots of complicated acquisitions, and now reports world class margins. This combination of serious allegations and corporate complexity has been enough to keep many investors away, which is fair enough, but there is at least a clear explanation for why some people like the stock.

“There is a bull case for Quindell, the country club which founder Rob Terry has turned into a full service legal and technological insurance conglomerate: the deaf,” writes Dan McCrum at FT Alphaville.

Deafness claims more profitable than traffic accidents

Quindell PLC (LON:QPP) (OTCMKTS:QUPPD) says that it’s now targeting industrial deafness claims, where an employee has permanent hearing loss after long-term exposure to a noisy work environment, with a revenue target of £9,000 per case between fees and its percentage of the final ruling or settlement, compared to about £2,500 for road traffic accidents. Between a reduction in the noise level necessary to file a claim (85 decibels to 80 db in 2006) and growing awareness that former employees have the right to sue, Quindell is projecting heavy growth in industrial deafness claims in the next few years.

They are projecting 6000 industrial deafness claims per month with success rate around 70%, which McCrum reports would require a doubling of claims and soundly beating the industry average 40% success rate.

Quindell

Investors should be trying to clarify the debate over Quindell

That’s certainly optimistic, but Quindell PLC (LON:QPP) (OTCMKTS:QUPPD) isn’t exactly the only company on the market setting ambitious goals for earnings growth, and the market has been pretty frothy recently anyhow. But it also doesn’t answer many of Gotham City’s questions, but considering how confused the whole debate has been up to now having clearly articulated bull thesis is a step in the right direction.

Quindell PLC (LON:QPP) (OTCMKTS:QUPPD)’s stock price still hasn’t recovered since Gotham City first issued its report (n.b. there was a 15:1 stock consolidation on June 19), so the company still has a lot of explaining to do. Hopefully we’ll get more detailed information when Quindell releases 1H data on August 21.