Burford Capital Share Discussion Threads

[sogoesit] 30/5/2019 07:25

Re. Teinver:
Am I right in thinking that, in addition to $7m being recognised as income, there will also be a provision of $100m written off?

[jonwig] 30/5/2019 07:21

This should have Canaccord do some head-scratching:

In aggregate, the Teinver investment produced $107 million of proceeds on a $13 million investment for a total profit of $94 million, a 722% return on invested capital and a 39% IRR.

A bit higher than 51%, this one!

[time_traveller] 30/5/2019 07:20

. With the put now expiring, the $7 million will be recognised as income in Burford's financial results for the six-month period ending 30 June 2019.


"Now that this investment has concluded, Burford is able to provide a valuation history for the matter, which illustrates Burford's longstanding and conservative valuation process....
In aggregate, the Teinver investment produced $107 million of proceeds on a $13 million investment for a total profit of $94 million, a 722% return on invested capital and a 39% IRR."

One in the eye for that woman at Canaccord! (Meanwhile, any informed and diligent investor/analyst would be entirely unsurprised)

[brexitplus] 30/5/2019 07:07

Mad

Yes, looks very good. That’s the way to make money.

[mad foetus] 30/5/2019 07:04

Nice RNS explaining Tienver and accounting process

[jonwig] 28/5/2019 12:23

Thanks, here's the link:



Sorry ... paths crossed!

[brexitplus] 28/5/2019 12:18

Very good broker note from Jefferies.

JEFFERIES REITERATES 'BUY' ON BURFORD CAPITAL, SAYS VALUE OF PETERSEN RECOVERIES UNDERESTIMATED

Analysts at Jefferies reiterated their 'buy' recommendation for shares of Burford Capital, pointing out to clients that the company's share of the legal recoveries from the Petersen investment might reach $2.5bn, which would equate to 55% of the company's market capitalisation.

In their opinion, the market was underestimating that value "although it is both an overhang and a potential positive catalyst for the shares."

The Petersen case involved two Spanish firms - together known as Petersen - which were pushed into bankruptcy by the Argentine government's decision to expropriate oil outfit YPF in 2012.

Those two companies sued the Argentine government in the States, alleging that the expropriation should have been carried out through a tender offer and at price set out in YPF's bylaws, and were now waiting for America's Supreme Court to decide whether or not it would hear an appeal on what the correct jurisdiction for the case was, the US or Argentina.

On the other hand, the asset was also a possible source of capital at a premium to its carrying value on the balance sheet.

Jefferies bumped up its target price for the shares from 2,253p to 2,364p, but only on account for changes in its foreign exchange rate assumptions.

The next step in the jurisdiction would likely take place in the summer or autumn, Jefferies said, with the broker also estimating that the case could be heard in 2020.

[biggreenoak] 28/5/2019 06:48

Has there a recent US SC decision on whether a U.S. court has a jurisdiction on Petersen already??

I am doubtful that even once such decision is rendered, it would push Petersen valuation up.

[lomax99] 28/5/2019 06:30

Down to the recent Supreme Court decision, it is edging forward.

[biggreenoak] 28/5/2019 05:41

Lomax99, what do you think will warrant a higher valuation of Petersen today vs. the last sale?

[lomax99] 26/5/2019 16:18

Great, thanks. An RNS relating to another partial sale, at a much higher assumed value, before the July results would be welcome!

[bestace] 26/5/2019 16:01

Not quite, this is what they said in June 2017:

"Burford has agreed that it will not engage in further sales of its interest in the Petersen claims at an implied value of less than $600 million and that Burford will not reduce its holding below 65% until after 31 December 2018 and will permanently hold at least 50.1% of the economic entitlement in the Petersen claims"

[lomax99] 26/5/2019 15:43

Good find bestace.Did BUR agree not to sell any more of their interest in the Petersen claim?

[bestace] 26/5/2019 15:20

Also this article in La Nación:


which includes this intriguing snippet:

"In recent months there have been informal contacts between at least two [Argentine] government officials who passed through Washington and people who attributed a proximity to Burford and suggested that the fund was willing to open a negotiation"

[biggreenoak] 23/5/2019 20:40

Jonwig, there is next to zero chance the governing law is the law of Argentina. It is 98% chance NY law and 2% chance that it is the law of England.

[bestace] 23/5/2019 20:10

I've been looking at some of the Argentine press coverage of the Supreme Court news and this article from Clarín is interesting as it talks about Argentina's 'plan B', which essentially involves filing a lawsuit in Spain against Burford and Petersen, to challenge the validity of the process through which Burford acquired Petersen's interest in the YPF litigation.



Some selected excerpts (via Google translate):

"The Government and YPF are already working on an alternative solution, whose main axis is in Spain...

In the Iberian courts, there is already an Argentine lawsuit against Petersen Energía and Burford (it is called Prospect Investment).

In Spain, they will try to challenge the transfer of Petersen's litigious rights to the Burford fund. YPF claims the "nullity" of the transfer of indemnification rights.

"We are going to prove that there is lack of standing (which is the ability of a party to be able to demonstrate its right to sue before a court), that is to say that Burford is trying to act on behalf of Petersen in an irregular manoeuvre", assures the Argentine defense."


YPF's Q1 results issued earlier this month also mention the Spanish litigation against Burford and Petersen:



"On February 28, 2019, the Company filed a complaint in Spain against Petersen and Prospect Investments LLC ("Burford") seeking the definition of the legal nature of the agreement that was subscribed by Burford and Petersen's Trustee in Bankruptcy."

[lomax99] 22/5/2019 13:43

BUR goes XD tomorrow.

[jonwig] 22/5/2019 07:02

biggreenoak - the bond you're referring to will be the 100-year maturity issued in 2017 and hugely oversubscribed. That it was USD-denominated is probably a key factor. I can't find any reference to governing law for this issue, but the Elliott holdout actions were largely based on this question. This is the nearest I can get:

Because Argentina had been historically so unstable, it would have been difficult for it to solicit investors to buy bonds in Buenos Aires under Argentine jurisdiction, as few external investors trusted Argentina courts to enforce bonds against their own government. This consideration led Argentina to transfer the issue of bonds to New York, under United States law, on April 20, 1976, as were most subsequent bond issues.[53] The bonds were therefore issued under a special kind of bond contract, a "Fiscal Agency Agreement" that was drafted by Argentina's U.S. attorneys under the law of the state of New York.



Regarding the October elections, the Peronists now seem to be ahead in polls, and the surprising development is that their presidential candidate is Alberto Fernández (no relation) who has been publicly critical of Cristina (the vice-p candidate). A smart move.

[xajorkith] 22/5/2019 06:41

Maybe bgo, but knowing is better than believing.

Not wholly unexpected as you suggest, but another layer of uncertainty removed which should be reflected in the “value” of the claim & share price imv.

Happy long term holder either way.

[biggreenoak] 22/5/2019 03:32

Xajorkith, I actually do not think that the stock would move much. At least, it should not (but the reality can be different). I think the consenus view was that the U.S. Supreme Court would deny Argentina's request.

[xajorkith] 21/5/2019 23:41

Great news, with the Supreme Court decision now all but assured, and would expect an RNS from BUR tomorrow in response.

Regardless of when this case eventually concludes, the unrealised value has significantly increased following this decision, and would be reflected in any further partial realisations should they occur in the meantime.

Very happy to have added more below 1500.

[biggreenoak] 21/5/2019 23:17

On Petersen.

1. I do not think the negative amicus curiae brief automatically means that the U.S. Supreme Court would deny Argentina's request for hearing even though the chances of that are extremely high.

2. Enforcement.

I think that enforcement should be a lot easier now than it was a few years ago when Eliott was chasing Argentina. Back then Argentina was largely cut off from the world's financial system. Now it is back into the system. For example, Argentina issued bonds a few years ago. Does anybody know whether the governing law is the law of the State of New York? I assume so (80% chance) but I have never checked. One thing that Burford can do (if it wins the case) is to arrest interest payments when they hit the system and collect that way. The legal background of that is a lot more complicated than what I wrote but it is a plausible avenue and I think likely to be successful.

Also, if / once won, Burford can sell a lot more of its stake at a valuation only slightly below the awarded amount.

3. Applicable Rate

It is up to the court. Generally, it is the sovereign debt rate. However, I have seen cases (though by an international arbitration panel and not a U.S. court), where the interest rate was U.S. Treasury (even though the defendant who lost was a developing country with a rate on its debt being a lot higher than U.S. Treasury rate).

[galatea99] 21/5/2019 23:15

This is actually a tremendous card now in Macri's hand. The YPF expropriation law was in 2012, under the last Kirchner government. There is talk of there being all kinds of dirty linen still waiting to be disclosed in respect of that administration, as well of all kinds of side deals involving politicians from Santa Cruz state in Patagonia, the home fief of the Kirchners. Argentina is now very much dependent on the international bond markets. I very much doubt that even Kirchner would be prepared to turn the clock back, default once more and condemn Argentina to decades more of autarchy and economic isolation and ever stagnant living standards. I doubt that the business community or the ordinary people would want to go along with that kind of situation for very long. That's an opinion based on my own business knowledge of Argentina, going back to the really nasty days of the last military junta (and on having now an Argentine son-in-law). Now, whether Macri would be prepared to use that card and open up the Pandora's box of corruption under the Kirchners and make an election issue of it and go hell for leather with it, that's a political matter and like all political matters it is impossible to call. Is the Macri administration clean enough itself to fight that one out?

It could end up as a cat and mouse game of enforcement but, imo, Argentina really has too much to lose in that situation. Nobody would trust them ever again, nobody would want to do business with them ever again. I wonder whether there is a different kind of solution there, one that could be swallowed politically and one that would not involve the Argentine people in paying the cost of the corruption and the disastrous expropriation of YPF. Now that Vaca Muerta is really producing the goods (they started exporting LNG this week), I wonder whether a private Argentine company would be prepared to buy the 49% in YPF not already held by the government and whether Burford and other claimants could be paid out of that money. A solution of that kind could save face, get the government off the hook, cost the Treasury nothing, be fairly popular in Argentina, as well as preserving Argentina's hard-won access to international financing.

Only my musing, of course, but the news today from the US could be a step on the road to getting minds concentrated in Buenos Aires.

All IMHO, DYOR.

[bestace] 21/5/2019 20:54

I may be completely misreading this, but I can't see Argentina settling with an election coming up, and possibly not at all.

Now that the jurisdictional issues have been resolved they still have to go through the regular court process, which will itself be subject to further appeals so there is still plenty of opportunity to kick this into the long grass, which if you're Macri means it becomes the next person's problem even if he wins re-election.

And even if they lose the case and all avenues for appeal are exhausted, they can simply refuse to pay and then it becomes a cat and mouse game of enforcement. Argentina can drag that out for years - they have plenty of experience in defending enforcement attempts around the world, and it has to be said, with a fair degree of success in doing so.

[mad foetus] 21/5/2019 20:29

That is a total slam dunk for BUR, so strong that you would have thought Argentina will be forced to settle. One question I would like to know is what interest rate is applied to this claim: as it arises from actions many years ago, that will be material to the outcome.