Burford Capital Share Discussion Threads

[kuk1doh] 08/8/2024 17:20

I’ve lost a bit of patience with myself for not trimming earlier when it was clear the YPF saga would drag on. Live and learn.

I know that BUR do not manage quarters but can’t help noticing the Sundance/Congo deal was announced on July 1st with cash due end September… so not particularly concerned about Q3 this year.

[riverman77] 08/8/2024 15:24

I lost patience with Burford a long time ago. I know the business is lumpy and Covid added further delays, but it's been an eternity now and still no sign of any meaningful cash generation.

[lomax99] 08/8/2024 15:07

Winning is great, now let's see some cold hard cash....

[djderry] 08/8/2024 14:56

Quote of the day,from Jonathan Molot,'I love winning'.

[kuk1doh] 08/8/2024 11:32

For me, the positive in today’s results is that net realised gains are up from $94M to $128M - I think of this as the gross margin - while total operating expenses are half that and the cash element will be lower still. So cash positive. $245M cash receipts is original cash deployment plus the gain coming in, in simple terms.

There is little fair value adjustment. Always welcome as the unrealised gain/loss can throw the accounting optics. I was expecting some movement up as interest rates move down in the US.

Downside is that the balance sheet cash out to work in actual deployments (the number to use in ROIC/IRR) is relatively unchanged - annd much lower than the headline portfolio $7bn number - and debt is bigger that the deployed balance sheet position.

Needs a big win to fix the cash position.

[chester9] 08/8/2024 07:40

Argentina is waiting for two critical rulings, both expected in coming days.1. Decision by the UK Supreme Court on GDP Warrants. If PTA is rejected, creditors will execute a Letter of Credit for EUR 313 million, and Argentina will have to pay EUR 1.33 billion plus interest.2. Decision by Judge Preska regarding the transfer of YPF shares held by the State to YPF judgment creditors.

[chester9] 08/8/2024 07:39

From SebI need to clarify one thing regarding the first point. In the United Kingdom, in order to appeal a ruling in the Supreme Court, it is necessary to file a request for appeal (PTA) in the Court of Appeal and/or in the Supreme Court itself. Argentina already filed a PTA in the Court of Appeal and it was denied on 21/6. After it was rejected, it filed a PTA in the Supreme Court. It is unlikely that the response will be different. The decision will be in the next few days.

[tomtrudgian] 08/8/2024 06:04

“Fair valuing” of assets means different things to different people, and it has always existed in some form. Eg writing down of bad debts, depreciation, amortisation etc. IFRS is standard in over 130 countries but differ slightly in each. For litigation assets it was first accepted in an Australian court for IFRS 25 years ago. It is not mandatory for IFRS auditors, but is increasingly fully accepted.

BUR wanted it as it enhances their results which on multi year litigation cases like YPF were inevitably very misleading. BUR naturally required fair valuing to be first approved in detail by the SEC, as they knew they would soon have to adopt GAAP.

Negotiations with the SEC took a long time, as FV was viewed with understandable suspicion by US and Canadian investors. Their GAAP was rigidly regulatory and less of an “art”. Unsuitable for the then emerging litigation finance companies, previously unknown.

There has never been “cash accounting” under either IFRS or GAAP. Debtors, creditors and depreciation etc have always been recognised.

[tradertrev] 07/8/2024 16:41

Not sure how " “fair valuing” of assets was never accepted practice under US GAAP or the global IFRS " squares with the fact that BUR first started fair valuing their assets precisely because it was mandated by IFRS. Management wanted to stick with cash accounting (which is how they have always looked at and managed the business) and it was their auditors who insisted on fair value.

[tomtrudgian] 07/8/2024 14:11

Partially agreed tradertrev. The lengthy negotiations some years ago between Burford Capital and the Stock Exchange Commission (SEC) were about whether, and to what extent, “fair valuing” of assets should be allowed by the SEC under US GAAP. To do so might destabilise the US share market, possibly Canada although few others.

Burford, mindful of the then recent Muddy Waters attack on their figures, understandably wanted to demonstrate “best practice”. The SEC eventually agreed a compromise to GAAP, and the differences with IFRS can be clicked on below.

Before then “fair valuing” of assets was never accepted practice under US GAAP or the global IFRS. The juducial acceptance of fair valuing started in Australia 17 years ago.

Further datails from:
hxxps://rsmus.com/content/dam/rsm/insights/financial-reporting/1pdf/us-gaap-to-ifrs-comparisons-20231215.inline.pdf

[tradertrev] 06/8/2024 11:50

I doubt - after all the back-and-forth with the SEC - that there will be any change to the accounting practices and principles.

[tomtrudgian] 06/8/2024 09:17

Burford US shareholders now consist, much later than anticipated, of over 50% of shareholders outside the US. So, effective 1 Jan 25 BUR will become a US domestic issuer. What does this mean for UK shareholders? Quite a lot:

1/ Audited accounts calculated according to the globally more common International Financial Reporting Standards (IFRS) will no longer be produced. Audited accounts will continue, but only according the US Generally Accepted Accounting Principals (GAAP).

2/ That will mean quarterly results, already produced with three quarters unaudited, are now compulsory. Slightly less fair valuing of assets, and less emphasis on accruals and more on cash, both either way.

3/ It may also mean following standard US practices for example: Much reduced dividends, the ending of Trading Updates, and the imposition of US 15% (variable) dividend withholding tax. Probably BUR’s place of incorporation changing from Guernsey to the US, and a greater effect on the sterling share price caused by US events and the dollar exchange rate.

BUR have long believed that the overall effect will be an increase in the share price. About time, some may think.

[chester9] 05/8/2024 14:48

Up against 44m revenue from Q2 23 so should smash Q2. H1 23 425m so will need 381m to bring in line that's harder. H2 23 strong with new reporting, yes we need good news..Thursday will tell at 12:00

[time_traveller] 05/8/2024 13:23

Year lows, and price just prior to previous Q results towers 35% above, Thursday had better be good!

[chester9] 02/8/2024 07:30

More from Seb.YPF judgment creditors seek to expand the number of state-owned companies that can be considered the Alter Ego of the Republic of Argentina. They are asking Judge Preska to order the government to provide information about Banco Nacion, Aerolíneas Argentinas, ENARSA, and ARSAT. They are also requesting a conference..Step by step, it's not quick but it's moving

[kaos3] 02/8/2024 04:01

good find .... thnx

[three black crows] 31/7/2024 15:21

Kaos3 Better to be on by the conservative side than bragging about some big numbers coming in

[three black crows] 31/7/2024 15:18

Kais3Ok if it 50% taken off. We could be looking at an increase in the share price of around 5 pounds. Bringing us up to around 17 pounds.It's been a long wait for this but better than nothing

[kaos3] 31/7/2024 14:25

what percentage of the eventual ypf reward is expected to go to the shareholders - after all other stakeholders take their priority cut?

like government, service providers, employees etc to name just few.

it could be up to 50 % imho depending on the contract signed and tax rates etc... it is mostly baked in already

so -simplictic math to establish value is just it - too simple

PS 50 % is too much - but take 20 % taxes, 10 % bonuses, legal services, legal services as a front for cash distribution to the parties agreeing like 10 - 20 % etc

my experiences are rough - maybe one could explain the exact game similation with numbers range for each stakeholder and of course, naming them

[tnt99] 31/7/2024 14:21

Yet when they won the case I thought 30 pounds was a good valuation in a year or more When the money starts rolling in and dividend increased Happy to wait

[kuk1doh] 31/7/2024 11:51

My valuation is $15 for YPF, $5 for the fund management business (c. $1bn as stand alone for AUM), and $10 for the balance sheet funded portfolio. So $30/£23 or approximately 2.2x current. When cash starts to flow in it should get there.

A watch out on the balance sheet valuation… BUR quote a value for the portfolio based on contract commitments but calculate ROI/IRR based on actual deployments for finished cases. Final deployments are usually lower than commitments. This is important when attempting a valuation for BUR balance sheet funding as the headline $7bn portfolio includes the third party fund business and undrawn commitments. The balance sheet money actually at work is a lot lower. Worth keeping an eye on next week when half year is published.

[kuk1doh] 31/7/2024 11:39

My guess on settlement timing is as good as anyone else. I do think it will be entwined with the Argentine return to financial markets and out of IMF support. Perhaps next summer?

[three black crows] 31/7/2024 09:15

Rivermann 77, Oh yes of course. New calculation after settlement around 18 pounds now.

[riverman77] 31/7/2024 09:05

Some of this potential settlement will already be factored into the current share price (probably £3-4), so not sure you can just add them both up.