Burford Capital Share Discussion Threads

[redartbmud] 05/8/2019 09:18

Sale of the Century?

[shanklin] 05/8/2019 08:42

Significant element of this thread are like an alternative reality.

I don't think anybody has suggested false accounting or have they?

There is a high level of disclosure from management.

They are the biggest listed participant in this space.

BUR's litigation process is being endorsed by a great deal of third party funding; presumably they have done due diligence.

If you believe the financials, and accept there will be a big range of potential returns of the various cases they pursue, the share seems very cheap

This is before the fees likely to accrue going forward on the various funds they have created.

[trident5] 05/8/2019 08:24

BA - Peterson revenue is not from settlement but from sales in a secondary market that Burford appear to be trying to build.

Ultimately, the business model will be dependent on generating revenue from courts or settlements, if those returns prove unattractive secondary market sales will be impacted.

[bestace] 04/8/2019 20:33

I think the jury is still out on the 'one-off' or otherwise nature of Petersen/Teinver. When arguing against that notion, Ms O'Connell didn't point to the older vintage cases which have not yet settled, she pointed to the Gray case (profit of £31m), 2 securities cases from 2011/12 (profit of £33m and 36m) and an energy arbitration case from 2014 (profit £25m).

After Teinver and Petersen (profit of £94m and c.£230m so far not counting unrealised gains), those cases she cited are indeed the next most profitable of all their investments, but they come a pretty distant 3rd, 4th, 5th etc.

If those cases are to be considered "large successes" as Ms O'Connell suggests, then applying that same description to Teinver and Petersen really doesn't do them justice - they deserve a whole new category of largeness to describe them.

Some of those cases which are still unsettled may end up generating returns similar to Teinver/Petersen, but that has to be taken on faith until they do settle, so I can understand why some might be sceptical of treating them as 'business as usual'.

[winsome] 04/8/2019 16:37

I'm no accountant but I get the gist of the reply to Jeffries. For the time being I won't obsess about ROIC and IRR levels as they are very strong and there is a lot of leeway there before future profits would take a meaningful hit.

I am with them when they say that their 3 or 4 biggest wins should not be regarded as one-offs. Tenvier and Petersen are very public but I'm sure they have a number of other big cases that are not will settle before reaching court under NDAs.

I'm not sure how much more detailed they can make their financial reports given the nature of their business but they are still way more detailed than any other company I know of. However, they will never satisfy those missed-the-boaters who are now trying to punch holes in their success story.

[luckymouse] 03/8/2019 11:11

Tks bestace - so a different guy - shame - an outside view would have been good

That guy in one article said he thinks Woodfords fund may close

[bestace] 03/8/2019 10:31

It's Julian Roberts of Jefferies:


He covers "UK and European diversified financials".

[luckymouse] 03/8/2019 10:17

I am aware - agree its unusual to not have an ACCA cfo & a red flag in terms of profiling - is a CFA is tough though

[trident5] 03/8/2019 10:08

LM - but they haven't even got a qualified accountant as CFO!

[luckymouse] 03/8/2019 09:54

The negative interpretation of that email response (if its genuine - there is no byline!) is that its Enron complicated - ie its so densely complex only a seasoned chartered accountant specialising in that area could decipher it.

The positive is that they are american, and US reporting tends to be way more complex, lengthy & with lots of footnotes compared to UK RNS - we are just not accustomed to the heavy duty US reporting style.

[mad foetus] 03/8/2019 08:59

Thanks Tudes, realised my mistake when I woke up.

[3dwd] 03/8/2019 08:05

Was given to me ...that's all I know ..but I felt it should be posted ..

[tudes100] 02/8/2019 23:12

Julian Robins is the Fundsmith head of research

[williamcooper104] 02/8/2019 23:10

Yep - but it's a lottery syndicate that's been remarkably successful over 10 years in grabbing some big wins I agree that it makes sense to value the elephants on a lower multiple - but you cannot ignore them And they produce cash - lots of it - which even if invested at the bottom end of their return range will still be better than most PE/HF achieve

[williamcooper104] 02/8/2019 23:03

The legitimate criticism of Burfords valuation (IMO) is what represents normalised earnings without exceptional gains - as it's that that you should start with to apply a multiple too However if day there's £100m of Peterson it still is cash in bank which can then be reinvested at at least 20 percent so you would strip out say 80 percent of the exceptional gains to get to a normalised earnings level but there's a lot of cash to come from historic cases which can then be reinvested So you would lower current earnings but then project forward much lower PE/or higher share price going forward Haven't had the time to work this through properly but my gut is that you would move 10x out to 15x but that 15x would then fall to 7/8x in 2-3 years time This is still however you look at it cheap Especially when the entire German yield curve just went negative

[trident5] 02/8/2019 22:22

Oh okay. But most investors under-perform the market.

[mad foetus] 02/8/2019 22:09

No it's a similar model to a small cap investor who expects, based on statistical analysis of investors in general, that 90% of his gains will come from 10% of his investments. BUR expects some cases to be total losses, some to break even, some to make a small profit and a small number to make a huge return. Is that so difficult to grasp?

[trident5] 02/8/2019 21:50

But is it a similar business model to a lottery syndicate scooping up the small wins every now and then and holding out for the big jackpot?

[djderry] 02/8/2019 21:39

3dwd,very informative post,giving even more granular information than we've ever seen.The prelude to the detailed answer says it all.It's not the way to value Burford but,if you insist,here are the figures.The reply gives the only reasonable response to the ludicrous bear suggestion that the company should preclude its outsized wins when computing ROICs and IRRs.Talk about pathetic.Imagine a premier League team that's asked to preclude their victories over top teams when computing their points tally! This is what we've come to.Posters with misnomers like ' truthteller3' who posit the view that it's a 'sell signal' ! We're in Alice in Wonderland,where the opposite of everything is so.

[mysteronz] 02/8/2019 21:04

More like it is complicated and you don't understand truthteller. This isnt a lemonade stand they are running here.

They are transparent but its not as simple and 1+1 =2.

[truthteller3] 02/8/2019 21:01

That long reply from BUR, if it was from them, looks very desperate to me. It seems deliberately designed to obfuscate. I would see it as an immediate sell signal. They obviously don’t know what they’re talking about if they cannot explain it more clearly than that.

[dekle] 02/8/2019 20:52

3dwd where did your transcript come from, who originated it and when was it published and if today was after market closed?

[mad foetus] 02/8/2019 19:58

FWIW Julian Roberts is, if I recall correctly, the number 2 at Fundsmith. I wonder if that can be the same Julian Roberts asking the question. If it was, that would be interesting.

[3dwd] 02/8/2019 18:36

Probably not !!!..

[trident5] 02/8/2019 18:13

I don't think we are supposed to understand that.