Burford Capital Share Discussion Threads

[alter ego] 04/5/2019 16:48

ffs stop responding. it only encourages them. filter and ignore. you wont have to read it and they will tire of talking to themselves. works just fine for me.

[winsome] 04/5/2019 13:33

Isn't there a more appropriate forum for you two guys to go argue on?

[mad foetus] 04/5/2019 09:50

At the Burford lunch Bogart was pretty clear that he didn't see competition as a threat, because firstly law isn't price sensitive, but also because to generate the sort of returns Burford manages you have to do business on similar terms. He said they have never had any potential client decide to use an alternative funder, but they do get potential clients deciding to self/fund

[jonwig] 04/5/2019 09:17

Thanks for that. Bestace is probably on the right side of a lot of obfuscation in the application of accounting principles, but another thing caught my eye when looking through the LIT prospectus.

That is - LIT capitalises its expenses incurred during the period of a "contract", but BUR does not, it expenses operating costs as they are incurred. This factor works in the opposite direction to the choice of IFRS 15 vs. 59.

If a case/contract results in a loss, LIT would maybe have less to write down on its valuation of the case, but would have to write off all its capitalised expenses. The evidence from BUR is that fair-value write-downs happen very rarely (or not at all) when a case has already been up-valued, so in practice the accounting difference doesn't matter.

My conclusion would be that LIT probably has more to lose unless its success rate is at least equal to BUR's.

Personally, I haven't got involved in LIT, but I found MANO a compelling prospect and a very simple one which I approve of: go after dodgy directors on home (UK) turf.

[rar100] 03/5/2019 17:49

Winsome, I wrote the above before reading that you had actually bought, well good luck with it anyway not that you will need luck I think.

Such a shame about the trolls, I resent them taking even a nano-second of my time, but I now have made them feel good....can't win but thank heaven for filters...

Spoke with a director of EKT today, he said nothing had changed with forward guidance issued in February (which was good news)

[rar100] 03/5/2019 17:39

Winsome, good luck with your future trade, if I had the cash I would do the same, I don't know why you bother with the trolls though...

[jonwig] 03/5/2019 17:06

Maddox - quite so!!

Interesting to add that there are still 3 cases (out of 16) incomplete from the 2010 vintage. (At the 2016 capital markets meeting they 'let slip' that they had great hopes for that year.)

Also 4/14 from 2011, 1/9 from 2012, 4/12 from 2013, 9/23 from 2014, 8/17 from 2015, 15/20 from 2016, ... [AR 2018 p20]

... so her 'average life' appears to ignore a large standard deviation.

[minerve 2] 03/5/2019 16:58

Where ARE the graphs?

[maddox] 03/5/2019 16:38

I've managed to get hold of a copy of the Cannacord report by Portia Patel. It's always easy to fall victim to one's own confirmation bias so thought it would be worthwhile to challenge my investment rationale and work my way through her valuation analysis.

However, I've got to say its 'logic' undermines its own basis of valuation. As has been presented above in several posts PP has decided to exclude a value put on in-flight cases. This is on the basis that these valuations are based only on BUR management estimates and there isn't any mark-to-market bench-marking available as there is no secondary market and no transparency over how the estimates are derived.

OK fair enough. PP wants to base her valuation on what she terms a clean-NAV excluding un-realised cases and their dubious valuation. As she states:

"We believe that a “clean” NAV excluding the unrealised portion of litigation investments (i.e. cumulative fair value gains) is the best starting point on which to value BUR."

The problem is of course that looking forward to forecast a clean-NAV for FY20 she has to assume the realisation of currently open cases, I quote:

"Assuming a 2-3 year average life of investments, we assume that the “in progress”
investments which had some “unrealised221; value attached to them in FY18 would be
resolved by FY20. Hence, FY20 NAV excluding fair value gains, which we calculate to
be $1,142.9m, is the basis for our valuation."

Surely, this is contradictory? In order to get to a 2020 NAV she is happy to assume that the 2018 unresolved cases get resolved. I thought she was excluding them and their value?

Excluding unrealised income might work as a valuation method looking backwards - where a high proportion of cases will be settled and their outcome known. But, forecasting forward a business like Burford where the vast bulk of its assets are in the form of in-flight unresolved cases - requires attributing some value to them like-it-or-not.

Regards Maddox

[minerve 2] 03/5/2019 14:24

Yes, steeplejack, you are quite right. There must be some correlation between a noisy BB and the performance of the share price (not the company).

I could name quite a few quiet BB where the company is good value and it hasn't attracted fan boys or troll groups.

Sorry to see you go, but you are not missing anything here IMO; neither advice from posters nor the underlying stock.

[johnwig] 03/5/2019 14:01

Go ahead, winnifroth, I'm waiting. As I keep on saying you fool only the stupid. That's why you fool yourself.

[elcapital2018] 03/5/2019 13:57

Its a short term short i will be out by the time it drops to 1500, no need to lend

[williamcooper104] 03/5/2019 13:51

Sorry typo 40x