Burford Capital Share Discussion Threads

[qruz] 25/7/2019 20:08

Yes tomorrow will probably be another volatile day, either it’s going to surge or tank IMO.

My only thing on that Geordie is why didn’t they do that back in March on results also ? It tanked from then on and was huge volumes on the day.

[rar100] 25/7/2019 19:55

Geordie, thanks for that encouraging info!
I recall similar gyrations on results in the past that's now happened today, so maybe what you are saying here happened before (If it worked then, seems like they will repeat it)but after the gyrations the share price rose to become a higher benchmark.
I hope that when the dust settles, the share price will be a bit more where it should be. Shame this is a traders share now. I cross my fingers for tomorrow...

[geordieshores] 25/7/2019 19:54

Canaccord GenuitySomeone mentioned comments made by broker Canaccord Genuity. Remember Canaccord are a large shareholder of Burford's largest competitor, Manolete. I last posted about this in May on on the London South East website when Canaccord had a 9.2% stake in Manolete.Canaccord are always making negative comments about BUR.In May Manolete shares were 600p. Today they are 483p.

[geordieshores] 25/7/2019 19:40

After hours trades - late buys (BIG ONES!)At 16.35 a UT (uncrossing trade) went through for £3.1m. UT's are always big end-of-day trade that many confuse with buys.However.... at 16.53 a buy went through for 175,771 shares at £15.55 totalling £2.73mAt 16.59 another buy went through for 114,354 shares at £15.43 totalling £1.7m.At 18.27 4 buys went through. 2 x £449k and 2x£682So £6.7m of late trades. Looks like the MM's were artificially lowering the price to fill some big orders.The last 30 trades were all buys (excluding the UT trade).Remember the MM's get a % of the total order value. If client A wants to buy £1.7m worth of shares but only wants to pay £15.43 per share the MM's will drop the price to accommodate. This is how big players can wait for good results to be posted so they are certain the company is doing well and then do a deal with the MM's to lower the price to their required entry point. Lets see what Friday brings....

[galatea99] 25/7/2019 18:32

Bloomberg Law article:

"Burford Capital’s share price fell as much as 9% on Thursday after the litigation finance company reported a record first half for profit and commitments to invest in new lawsuits but a research firm questioned its cash balance.

Burford said its adjusted pretax profit rose 41% from the prior first-half period to $231 million as its total assets rose 37% to $2.3 billion. Its core litigation finance business—investing in standalone disputes and portfolios of lawsuits—allocated $381 million to new investments in the first half of the year. That was up 47% from the prior year period, and driven in large part by a new agreement to finance $130 million of an unnamed company’s portfolio of cases.

The amount Burford actually spent in the period to back new investments grew at a more tepid 8% to $448 million. That figure includes business lines outside of core litigation finance such as asset recovery, post-settlement financing and legal risk management.

Research and fund management firm Shadowfall said in a Tweet it has a short position in Burford due to its belief that “Burford has a pretty strong inverse relationship between its profitability and cash flow.”

Burford CEO Chris Bogart in an interview said that criticism was “a little naïve” when applied to a fast-growing business that relies on investing its capital. He said Burford had used debt and capital fundraising to fuel its growth because of the long-term nature of investing in lawsuits.

“There are two choices: To grow much more slowly, in which case we are generating enough cash” to cover new investments, Bogart said. “And the other is to grow more quickly, in which case we need to rely on the availability of external capital as well. And that has always been our approach.”

Bogart attributed the share-price dip to investors taking profits on the firm’s good news. While the shares have risen to nearly 17 times its 2009 IPO level, they have fallen roughly 5% year-to-date, lagging the broader market.

More broadly, Bogart said Burford’s first-half results showed “considerable” growth in the business driven by “the growing ubiquity of capital” in the legal industry. Burford will celebrate its 10th anniversary in October.

“We have gone from this being an esoteric, remarkable thing to being business as usual,” Bogart said. “It’s that concept of this being business as usual that drives a fair bit of our growth.”

[lawdawg759] 25/7/2019 18:25

JW, I recall CC predicting a fundraising via equity, while BUR (through CB) say in H1 19 that any fundraising in the near future would be via debt raising

[shanklin] 25/7/2019 18:11

IIRC BUR said today they might raise debt but not had no plan to raise equity. Can't see how BUR increasing debt would help Canaccord's ridiculous analysis.

[trident5] 25/7/2019 18:03

Galatea
So far, AFAIK no-one has found fraud at Quindell. But near the end there was a lot of talk about finding a solution by selling shares on the US market.

Enron - my response to you saying the London market was pathetic.

[jonwig] 25/7/2019 17:59

Canaccord have set themselves a test of their credibility: further fundraising in H2 - ie. by end-2019.

On the evidence, they might have a point, as the retail bonds BUR2, 3 and 4 were issued in 2016, 17 and 18. If it does happen, they might be tempted to see this as vindication, rather than the simpler explanation that demand for their services is outpacing their ability to fund through reinvested profits.

[galatea99] 25/7/2019 17:57

trident5,

That's Quindell you've mentioned, now Enron.
You are now implying that there is fraud?
Are you for real?

[traderglt] 25/7/2019 17:44

If you believe those figures you need to rethink about dealing in shares

[trident5] 25/7/2019 17:44

Galatea - you could have said much the same about Enron - not quoted on the London market.

[pen8] 25/7/2019 17:35

If you look at the market today 3.4million buys and a million sales
Tomorrow strong rebound so I will but more first thing

[dsmith57] 25/7/2019 17:32

Almost had enough here. Held for around 18 months and still, after some top ups I am only very slightly in profit. It seems that( very) good news means we get hammered back and perceived neutral or bad news means the same. In between these two positions it crawls up and then back down. The market now has serious trust issues and the nature of the business means that news which might just affect us positively is very infrequent. Had the opportunity to sell at near £21 some time back as many had. If it gets anywhere near that figure I will leave with a sigh of relief.

[galatea99] 25/7/2019 17:09

@gettingrichslow

I understand that every single member of staff holds shares. That is, presumably, including all their people in all their offices on several continents, many of these people being top-class lawyers.

Now, if I thought they are all having the wool pulled over their eyes in every one of the hundreds of cases being handled or under consideration by Burford......

If I thought the SWF that has committed to what, a billion dollars of investment or so, has done no due diligence and is also being taken for a ride and is too stupid to see it.......

If I thought all the forty institutions who have bought shares in Petersen from Burford on the secondary market are all being taken for a ride and are too stupid to see it............

If I thought that all the leading law firms in several countries who have entered into agreements with Burford are all being taken for a ride but are too stupid to see it.........

If I thought all the other eight or nine analysts from reputable firms who have given buy recommendations with target prices up to 70% above today's closing price are all being taken for a ride and are too stupid to see it........

Then, only then, might I give any kind of credence to one analyst in Canaccord who has produced so-called "analysis", an offering that even other analysts have already torn to shreds.

Then, only then, might I give any credence to the rather idiotic screeds put out by pathetic little short sellers out to make a bob or two.

The London market really is pathetic, better suited to online rag merchants and pub and bar groups.

[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.”