Burford Capital Share Discussion Threads

[stoxx67] 24/6/2019 16:36

trading at a ridiculous price, even with a conservative P/E we should be over £21 now , yet we languish at £16.

great results last time were met with a derisory share price response, lets see if todays news and the lead up to results are the catalyst to Burford share price finally making a solid push North, it is somewhat overdue.

[galatea99] 24/6/2019 16:30

Bloomberg report on the Supreme Court decision. They seem not to have picked up Burford's RNS.

[djderry] 24/6/2019 16:07

Excellent,prudent risk management and cash in the bank.Now,will Argentina be more inclined to settle?

[mad foetus] 24/6/2019 16:05

Can't help but wonder if Woodford offloaded a few into that spike: it is significant news and you would expect a more sustained reaction

[shanklin] 24/6/2019 15:55

Blimey Xajorkith, perhaps you should read the RNS.

[xajorkith] 24/6/2019 15:51

Great news ahead of next month’s half year results.

Not only a 25% increase in the underlying value of their holding, but another $100m (pre-tax) of realised gains banked for H1, almost guaranteeing eps upgrades.

Significantly oversubscribed, so clear demand should they wish to sell a further 11.15% (over and above the remaining 50.1%).

Nothing certain of course, but highly likely Argentina settle by end of 2020 imv.

[brexitplus] 24/6/2019 15:07

The sale

“The sale was to 11 institutional investors and was significantly over-subscribed. Including prior purchasers, there are now approximately 40 institutional investors participating in the Petersen secondary market.”

Impressive

[shanklin] 24/6/2019 14:57

So, ignoring any potential implications of today's RNS, what was BUR's 71.25% has increased in value from

71.25% of $800m, ie $580m as per the RNS on 11-Jul-18...

...to 71.25% of $1Bn, i.e to $712.5m,

so by $132.5m, or circa £104.2m at the current GBP/USD rate of 1.2718.

Not sure of the tax chargeable on this gain.

[syoun11] 24/6/2019 14:50

Here we go £££;££

[galatea99] 24/6/2019 14:46

TREMENDOUS!

A win of the whole case next year for Burford must now be short odds. $$$$$$$$$$!

Besides that, the $100m just cashed in, as well as a revaluation of the 61% stake still held, will be in the half-year results due on July 24. They should blow all forecasts out of the water.

TAKE THAT, CANACCORD GENUITY!

[qruz] 24/6/2019 14:46

BUR is Undervalued. Hope this makes 1H 19 results and its a belter.

[syoun11] 24/6/2019 14:45

Here’s what has just been release on IG news board This announcement contains inside information.

24 June 2019

US SUPREME COURT DENIES PETERSEN HEARING, FURTHER BURFORD SALE OF PETERSEN
INTERESTS

Sale of 10% of Petersen entitlement yields $100 million at an implied $1
billion valuation

Burford Capital Limited ("Burford Capital" or "Burford" or "the Company"), the
leading global finance and investment management firm focused on law,
announces that the US Supreme Court has declined to hear Argentina's and YPF's
appeals in the Petersen case, with the result that the lower court decisions
finding jurisdiction for Petersen's claims in the US are now final. The
Petersen case will now return to the trial court for merits proceedings.
This continues an unbroken string of victories for the Petersen case in the
courts. While we are pleased with this decision, it is important to
emphasise that this decision relates purely to a preliminary jurisdictional
question and does not foreshadow any particular result in the underlying
litigation.

Although the Supreme Court's decision is a matter of public record, Burford
has issued this announcement as a matter of convenience. However, Burford
does not intend to regularly issue such releases for other interlocutory steps
in the proceedings, of which there are likely to be many before a final
resolution.

Burford also announces that it has sold a further 10% of its entitlement in
the Petersen matter into the secondary market it has been developing, leaving
Burford with 61.25% of its original entitlement. The sale price was $100
million, implying a value of $1 billion for Burford's entire original Petersen
entitlement. Burford has now generated $236 million in proceeds from
Petersen sales. As the market value of the Petersen matter has continued to
rise (and as Burford also has further exposure to YPF-related claims through
the Company's investment in the parallel Eton Park matter), reducing Burford's
total holding and locking in significant profits represents prudent portfolio
management. However, Burford has committed always to hold at least 50.1% of
its original economic entitlement in the Petersen matter. The sale was to 11
institutional investors and was significantly over-subscribed. Including
prior purchasers, there are now approximately 40 institutional investors
participating in the Petersen secondary market.

Burford will consider the impact of the Supreme Court's decision and further
secondary market trading activity as part of its investment valuation process
for the six months ended 30 June 2019. Our valuation process is discussed in
detail in our annual reports.

The person responsible for arranging for the release of this announcement on
behalf of the Company is Elizabeth O'Connell, Chief Financial Officer.

[lomax99] 24/6/2019 14:41

Burford Capital Limited Supreme Ct Hearing Denial, Petersen Interests SaleSource: UK Regulatory (RNS & others)TIDMBURRNS Number : 2309DBurford Capital Limited24 June 2019This announcement contains inside information.24 June 2019US SUPREME COURT DENIES PETERSEN HEARING, FURTHER BURFORD SALE OF PETERSEN INTERESTSSale of 10% of Petersen entitlement yields $100 million at an implied $1 billion valuationBurford Capital Limited ("Burford Capital" or "Burford" or "the Company"), the leading global finance and investment management firm focused on law, announces that the US Supreme Court has declined to hear Argentina's and YPF's appeals in the Petersen case, with the result that the lower court decisions finding jurisdiction for Petersen's claims in the US are now final. The Petersen case will now return to the trial court for merits proceedings. This continues an unbroken string of victories for the Petersen case in the courts. While we are pleased with this decision, it is important to emphasise that this decision relates purely to a preliminary jurisdictional question and does not foreshadow any particular result in the underlying litigation.Although the Supreme Court's decision is a matter of public record, Burford has issued this announcement as a matter of convenience. However, Burford does not intend to regularly issue such releases for other interlocutory steps in the proceedings, of which there are likely to be many before a final resolution.Burford also announces that it has sold a further 10% of its entitlement in the Petersen matter into the secondary market it has been developing, leaving Burford with 61.25% of its original entitlement. The sale price was $100 million, implying a value of $1 billion for Burford's entire original Petersen entitlement. Burford has now generated $236 million in proceeds from Petersen sales. As the market value of the Petersen matter has continued to rise (and as Burford also has further exposure to YPF-related claims through the Company's investment in the parallel Eton Park matter), reducing Burford's total holding and locking in significant profits represents prudent portfolio management. However, Burford has committed always to hold at least 50.1% of its original economic entitlement in the Petersen matter. The sale was to 11 institutional investors and was significantly over-subscribed. Including prior purchasers, there are now approximately 40 institutional investors participating in the Petersen secondary market.Burford will consider the impact of the Supreme Court's decision and further secondary market trading activity as part of its investment valuation process for the six months ended 30 June 2019. Our valuation process is discussed in detail in our annual reports.The person responsible for arranging for the release of this announcement on behalf of the Company is Elizabeth O'Connell, Chief Financial Officer.For further information, please contact:

[bestace] 24/6/2019 14:41

certiorari denied:



(it's on page 4)

[galatea99] 24/6/2019 14:36

SP just jumped. Is the Supreme Court decision now public?

[glawsiain] 24/6/2019 14:35

judging from the spike... has the US Supreme Court deciden on whether the Petersen case is to continue in the US?

[sogoesit] 24/6/2019 08:17

“such rich returns can’t continue indefinitely”.
Not sure about that statement because:
If we assume that, probability distribution wise, the litigation pool from which returns are garnered remains relatively constant (indefinitely) and the distribution of the returns (ROIC) from that pool remains constant then the source of litigation cases can continue relatively indefinitely. (Realistic assumptions or conservative in a growing market?). The risk here is market interference, or regulation, from government.
Where “the action”, so to speak, is will be in the competition for, and risk management of, the cases that each competitor screens for selection for their own case portfolio. We see from BUR that their screening process leads to selection of a fairly small proportion of opportunities from the overall pool, or pool presented to them, and this is likely to continue. The competitive market may lead to specialisation and may change how each competitor relies on their relatively individual risk perceptions for selecting cases, and how they manage the overall portfolio.
These skills, which determine overall returns to the funders, will continue for the foreseeable future in my view. That is to say that there will be winners and losers or segmented categories of risk and reward among the competing players eventually. In such circumstances one might get a dominant player in a particular category which endures (indefinitely) due to the uniqueness of that set of people’s risk perceptions and business model in managing a portfolio and each of these players will have a unique risk/reward profile adequate for investors to back for different investment profiles. Returns per se will stabilise at reasonable market levels and be maintained amongst the winners in each category resulting in differentiation between players.
It seems to me therefore that there is enough space, in market evolution terms, for this to continue for the foreseeable (long term investor time horizon) future.
Which metrics to watch, and develop for analysis, is the key question in keeping abreast of this market evolution which seems to me to be immature.
For example, specialisation in bankruptcy/administration recovery may be a unique skill set where a dominant player might emerge. This specialisation trend should not affect the returns of competitors focusing on a different set of cases from the overall general pool... Edit:... or even an aggregator role.

[mad foetus] 22/6/2019 14:44

When I was at the lunch with Bogart in the spring he said that in his view, the only way to generate Burford's returns with Burford's level of risk was to copy Burford's approach and terms. So others may be forced to choose cases with a lower prospect of success, or to seek a smaller percentage of the returns, but they will struggle to manage that risk/reward balance. Bogart was also keen to say that pricing in law was remarkably inelastic: people are generally happy to pay top dollar for the best, rather than negotiate on price, though whether that applies to litigation funders in the way it does to law firms themselves must be a moot point.
I think from now the results will become more and more interesting as they will start to show whether returns are being squeezed or not. All the indications are not as yet, but my instinct is that such rich returns can't continue indefinitely.

[galatea99] 22/6/2019 14:09

US Supreme Court decision on whether the Petersen case is to continue in the US expected on Monday.

[jonwig] 22/6/2019 10:27

bestace - yes, demand from law firms is increasing (greater "awareness" of TPLF), and supply is provided for the reasons I gave. At present, the former would appear to be greater.

My concern is that a funder such as Burford ("A-lister") can afford to reject 95% (right figure?) of propositions it receives, and continue to do that. Is this necessarily the case with the increasing number of firms, including law firms who set up their own funding arm? That's the bit where I'm sceptical. Of their ability to discriminate.

Some other firms can become A-list without directly competing with Burford: Manolete, for example, in a niche area.

So, yes, my example of CAT bonds wasn't altogether appropriate.

[bestace] 21/6/2019 19:18

jonwig - As far as I've seen, the bear argument seems to focus on increasing supply of capital whilst ignoring demand.

"Too much capital chasing not enough investment opportunities" seems be the nub of it, which seems like first order thinking to me where second order thinking would involve a consideration of the interaction of supply with demand.

If you take the IMF Bentham press release at face value, the increased supply of capital is being driven by increasing demand from law firms, corporates etc. in need of litigation funding, it's not being driven by yield-hungry investors pushing more capital into the market than can be supported by the demand.

If you're suggesting the demand vs supply dynamics led to cat bonds being issued at rates lower than their underlying risks merited, can you point to any evidence of the same thing happening in the litigation finance industry? It's a risk of course that could happen in future but I don't see it right now. It would manifest itself in a deterioration in IRRs and ROCEs and I don't see any evidence of that with Burford or any of the other listed players, let alone see any deterioration to the point where returns have fallen below the cost of capital.

Is there any evidence that excess supply of capital in the litigation finance industry has led to more competition on pricing, which is a slightly different point? The only example I can think of for any of the litigation funders is where Burford have quoted a 10% cut on the AMP class action case in Australia compared to the usual industry 30% [*].

However that case could be considered atypical as far as Burford are concerned: class actions are not something they generally get involved in, it was a launch case into the Australian market - a self-styled "headline-grabbing entry... to compete for the largest case in the country, which thoroughly disrupted that market", and the royal commission findings have surely reduced the litigation risk such that a lower fee need not result in a lower IRR (AMP have already admitted wrong-doing).

So I don't think the AMP case can be considered characteristic of overall pricing trends in the industry, indeed there were two blog posts published on the Burford website just this week which detailed at some length how pricing is not the main determinant of winning business.

As ever, I'd welcome any counter-arguments.

* source:

[arregius] 21/6/2019 15:22

That is what i meant lol