Burford Capital Share Discussion Threads

[minerve 2] 25/7/2019 17:03

LOL

Fanboys - they're so funny.

[winsome] 25/7/2019 17:02

CC neglected to say at the end of their note "...and when you sell your holding in BUR as per our recommendation, put your money into LTCM instead. It's a wonderful litigation funder and we are their house broker"

[lomax99] 25/7/2019 17:01

IC comment:

Burford: hung jury

Given the complexity and opacity of its accounts, Burford Capital (BUR) sparks sharp reactions whenever it opens its books. Soon after interim results dropped, shares in the litigation finance outfit were up 7 per cent, as investors swooned at a 40 per cent surge in income, a 36 per cent leap in post-tax profits, and a 32 per cent internal rate of return. Once the market digested the half-years with lunch, the stock was off 6 per cent.

Gladstone opened a 0.5 per cent short position. Canaccord Genuity expects a capital raise before 2020. Memories of last year’s aborted IPO by peer Vannin Capital linger.

The bear argument suggests Burford has inflated its past returns on partially-realised investments, faces lower future returns, walks too-fine a line between commitments and self-funding, and makes up for a lack of earnings visibility by prematurely booking an increasing proportion of unrealised gains when valuing its investments.


Pointing to these results, Burford bulls could counter that return on invested capital climbed to 98 per cent, cash holdings hit $297m shortly after the period end, and unrealised gains dropped to 49 per cent of income, below a three-year trend.

Berenberg forecasts adjusted earnings of 176¢ per share in 2019, rising to 190¢ in 2020.

IC View

In short, Burford’s business requires a lot of trust in management. How else do you swallow a boast of a $130m commitment with a global business “that goes well beyond anything seen in the market before”, faced no competition and yet would have been impossible for peers to manage? Recoveries and liquidity were strong here, and an earnings-based view of the shares still offers value. Buy. (at £15.52)

[riverman77] 25/7/2019 17:00

This reminds me a little of what happened at RPC. Good solid packaging company was attacked by a rogue analyst trying to make a name for himself claiming profits were overstated, then all the shorters piled in and share price went into freefall. Never really recovered and was eventually bought out by a US company, but well below the price before the attack began.

[williamcooper104] 25/7/2019 16:59

There is a very high level of insider investment - but the senior management sold down on about half of their stake about 18 months ago - and it would be good to see some of that come back into the stock (that's also when I halfed my position)

[minerve 2] 25/7/2019 16:57

Cannacord may say they see a need for more capital but Bogart said on the CC they don't envisage an equity raise any time soon


Yeah right, can we have that in writing.

"don't envisage"

Soft words.

[minerve 2] 25/7/2019 16:56

ROFLMAO!

This is just behaving EXACTLY how I predicted well over a year ago.

Keep drifting in the ocean, hoping and waiting.

Time has no cost, honestly!

ROFLMAO!

BURFORD SPECIAL BREW

[dgdg1] 25/7/2019 16:47

Cannacord may say they see a need for more capital but Bogart said on the CC they don't envisage an equity raise any time soon

[alter ego] 25/7/2019 16:45

I'm puzzled by the assertion that the share price is down because of the need to raise more capital. That seems to be based on an assumption that the pace of growth can only be maintained by cranking up the capital available for deployment but at the same time rather ignores the fact that the share price does not reflect a company growing very rapidly. It seems to me that the share price isn't pricing in rapid growth at all but at the same time being knocked back because rapid growth cannot be sustained without more capital.

the assertion that BUR needs to raise more capital seems to assume that that means asking shareholders to buy more shares. It therefore ignores the evidence that BUR can raise capital by issuing loan stock, creating investment funds, recycling profits and creating access to SWF capital.

Some posters here seem determined to use innuendo to sow doubt at every opportunity without any actual evidence. referring to Quindell (AKA Swindle" for example is grasping at straws to discredit BUR. Posters doing this lose credibility and show themselves merely to be talking their own book rather than generating discussion based on something tangible.

[steeplejack] 25/7/2019 16:35

Canaccord is rocking the boat today.This is a copy and paste from Alphaville.Fairly self explanatory.Stocks like Burford are vulnerable to trading activity,not dissimilar to KWS for example.Maybe its because such stocks don’t have any immediate peers for comparison purposes or because they’re relatively new kids on the block and have been such marked outperformers over last 5 plus years.The market has ushered a contracted period of consolidation.Thereagain, they’re listed on the UK market and international investors aren’t giving the UK market in its entirety,the benefit of the doubt .It’s been very easy to make money in the US in recent years but tough in the U.K. unless you’ve stuck to overseas heavyweights like AZN and even they have been choppy.Burford would probably get a real fillip from a NASDAQ listing and that’s probably the best place to have an equity fund raising.I reckon they should dump the AIM listing a few years down the road.

“......Headline metrics appear strong but on a cash basis progress appears to be slower. We remain
of the view that BUR will require external fundraising in H2 if it is to achieve our balance sheet
lending expectation. Total income, $287m, +40% y/y. Litigation investment income contributed
$265m, +36% y/y. Of this, net realised gains (i.e. cash) were $124.7m, +3% y/y (includes
$100m from the Petersen secondary sale completed in June). Fair value movements were
$134.7m, +80% y/y and 47% of total income. Balance sheet additions were down by 41%
y/y. Cash and cash equivalents have declined to $127.6m (including the $100m from the
Petersen sale). This compares to $237.5m at the end of 2018 and $236.0m at the end of
H1’18. Unless BUR is able to raise external sources of funding, our current forecast for onbalance
sheet additions of $742.8m for the full year ($657.7m in FY18) appears to be a stretch
too far ($147.2m deployed ytd). Stock trades on forecast FY19 cash NAV of 5.1x CY19 falling to
4.2x CY20 for a forecast 23% cash ROE through our forecast period. Maintain SELL.”

[gettingrichslow] 25/7/2019 16:34

William, haven't a large number of Burford senior management already got a very large sum invested each in one of the new fund mechanisms announced at the time of the SWF investment? That struck me as an unusually high commitment from a large number of informed people...

[williamcooper104] 25/7/2019 16:32

Perversely I'm after today both more positive on the company and negative on the share price

[williamcooper104] 25/7/2019 16:31

Now reinvested half my spread bet fun at average of mid 15 Think it will be a long wait for share price to reflect fundamentals A US listing and management matching unbridled optimism with their own cash would be v helpful

[riverman77] 25/7/2019 16:20

Ramridge - that's just my view based on sharp swings and Burford is heavily traded, but I don't claim to be an expert on technicals so happy to be corrected. In a sense it's academic as I'm here for the long haul and not planning to sell for a long time (I would use this as an opportunity to top up but there's nothing I want to sell and it's already a big position).

[eentweedrie] 25/7/2019 16:18

couldnt resist - 12k worth @ 1550pwaaaaay oversold now

[qruz] 25/7/2019 16:16

Wish the BoD or would buy some shares if it’s cheap to show some confidence.

[brexitplus] 25/7/2019 16:13

I’m here for the next 10 years. Good buying opportunity.

[ramridge] 25/7/2019 15:51

riverman77 - if you say the volatility is caused by short term traders, where is your evidence?
This is not a dig against you, but so far all I have read about the causes of the share price fall are wishy-washy statements.

[galatea99] 25/7/2019 15:43

Stocko simply has a series of algorithms that are supposed to apply equally to every company of every description and every size and in every line of business. That two or three word heading they have against every stock is, frankly, a rubbish concept, totally meaningless when applied to any company that is, by its nature, even slightly unconventional.

[portugull] 25/7/2019 15:37

My biggest position and in my view superb results.

Market reaction is very hard to comprehend.


I subscribe to Stokopedia and they feel it is a sucker stock.


I just do not know what to think but I feel confident that Burford have top drawer Management and they will have the last laugh.I am not selling.

[riverman77] 25/7/2019 15:35

Ramridge - you'd be surprised, the big boys often don't know more than anyone else - the big fund managers need to invest across hundreds of companies, so their analysis can often be quite superficial. If they really knew more, how come most fund managers fail to beat simple trackers? I think the volatility we're seeing is coming from short term traders.

[williamcooper104] 25/7/2019 15:34

"ShadowFall remains convinced that Burford has a pretty strong inverse relationship between its profitability and cash flow." WTF - this applies to any profitable and fast growing business My big concern was about applying an earnings multiple to what may be temporarlty high profits - the fact that spending commitments are growing hugely puts that to bed Of course there's cashflow risks - but they've got great access to capital

[ramridge] 25/7/2019 15:33

Bogart's lukewarm attitude to a US listing is very odd.
He must realise that the silly share price gyrations on the London Stock Market can be easily solved by having a listing on NASDAQ say.

[djderry] 25/7/2019 15:32

Was on the earnings call and in question to put questions but it ended before I had the opportunity to speak.Ah,well,as long as they weren't billing me by the hour! I've just added another tranche (527 shares) a moment ago,scouring the portfolio for more to invest.

[mad foetus] 25/7/2019 15:29

Burford and the board need to realise that they have a responsibility iro the share price. When I went to an investors lunch I asked about Woodford selling and was told by the host (not Burford) that I should ask who is buying. Well, I still want to know who is selling. But I've seen this with a few companies recently and it ends with a takeover and "market not valuing us appropriately" RNS