Burford Capital Share Discussion Threads

[ltcm1] 06/8/2019 18:36

To return to jonwig's post about frauds generally being done by only a few people, there is the dishonourable exception of Enron. So you can never say never.

Sitting here as someone not invested in any of these companies and without much knowledge, just from reading the Muddy Waters statement it could even be more of a Patisserie Valerie type situation.

Just looking at the 'bulled up' comment, Boo-hoo and Fevertree are two that come to mind, in that historically huge growth does not always mean huge profits. I am not saying it is these companies in any way though.

Plus there were rumours about IQE just a few months ago.

All I am saying guys is there are other companies out there that potentially fit some of the MW crimesheet, it could yet be a false rumour here as regards BUR being the MW target.

[f15jcm] 06/8/2019 18:35

Worth positing this extract from the interims too:

"Cash and liquidity management:
Burford closed the period with $171 million of cash
and cash management investments on our
balance sheet and an unusually high $173 million
of litigation finance receivables. That receivables
balance was simply due to timing; we had several
large payments due in early July and thus those
matters were shown as receivables over
the period end. Since the period end we have
been paid $126 million of those receivables,
as expected. Had those payments been made
before 30 June, our closing cash balance would
instead have been $297 million. That is perhaps
somewhat more cash than we would ideally have
on hand, but the timing of inflows in this business
is unpredictable and we only gained visibility on a
number of those receivables in the final two weeks
of June. On the other hand, our deployments
against brand new investments (as opposed to
continuing deployments on investments made
previously) were reasonably light as some of our
larger commitments will only be drawn down in
the future, and we can predict the circumstances
in which those deployments will be made"

[time_traveller] 06/8/2019 18:34

Surely, the more the cases, the less hazardous it becomes, as exposure to any one loss becomes less, and earnings close in on the mean. And accounting methods would appear compliant with FTSE and NASDAQ.

[badtime] 06/8/2019 18:33

Is that a promise?

[steeplejack] 06/8/2019 18:26

The trouble is that Burford can't really dismiss the concerns out of hand.The bears are saying that "marking to market "is hazardous and what's more becomes more hazardous as you get larger and take on more and more cases.The percentage of notional profits booked in anticipation appears to be getting more sizeable and the rating doesn't leave any margin for error.The thing is,these sort of accounting procedures might not initially ring too many alarm bells on AIM but when it comes to a full UK listing or a desire to list on NASDAQ,there's much more scrutiny.I'm not sure muddywaters are going to say anything that Share Prophets haven't said already but they might say it more forcefully.I'll be more than interested to see Burford's response.

[winsome] 06/8/2019 18:20

Total revenue over last number of years was $1169

Total Cash from litigation investments $1027 (from just their balance sheet litigation investments). Their non-balance sheet cash receipts add much more to this.

So anyone can see that cash receipts are keeping pace with revenue.

[eentweedrie] 06/8/2019 18:19

Of course, we all believe you yawn...

[time_traveller] 06/8/2019 18:18

I also posted last week that the price action looked very worrying, and was rather pompously put down. With a company so incredibly difficult to value, trading on the AIM casino where the dealer normally wins, sentiment is overriding, and massively detracts from what should be a very attractive investment case.

I wonder if Woodford has indiscriminately dumped. He dumped his all his Eurocell holding at the end of last week. Towel thrown.

[davr0s] 06/8/2019 18:09

They are trades not buys

[trident5] 06/8/2019 18:07

Some very hefty buys logged!!! FFS

[steeplejack] 06/8/2019 18:03

It's not just muddywaters who have been blowing the whistle here,it's Share Prophets too.They've been banging on about it for sometime.What they're saying simply is that "marking to market" legal cases as you go along can prove to be overly optimistic.The company is booking a potential profit from a case before it is realised.That is termed as "marking to market"and this method of accounting can give a misleading impression. Burford can declare potential profits but they clearly can't invoice cash received because it hasn't received any yet.This is why the company is coming under scrutiny.Burford is declaring splendid profits but that isn't reflected in cash flow because a high percentage of profits from cases will only come to fruition down the way....and then perhaps not as much as expected.The bears are saying that the risks are such that the stock is on an overly generous rating.

[terry barnett] 06/8/2019 18:02

Some very hefty buys logged!

[time_traveller] 06/8/2019 18:02

Well, even more damning would be if they do know, and the sellers know, but we don't.

Where are the defenders of the AIM listing now?

[trident5] 06/8/2019 17:54

There's been no RNS from the Board to say they know no reason for the fall.
Does this mean they do know?

[lomax99] 06/8/2019 17:53

Well we are now on a prospective PE of c 9.2 for YE 2020, based on somewhat conservative forecasts.Looking forward to seeing the substantive rationale/clarity of thought behind this alleged shorter's note, I suspect though that it will be somewhat lacking! (although it clearly has had the desired effect). I have been averaging down.Had a similar white knuckle ride with PAYS.

[alphabeta4] 06/8/2019 17:34

FWIW I think this all has come mainly down to cash. Whenever there are doubts around this there is an opportunity for shorters to come up with all sorts of theories. In some cases it will be fair, others not. It was pretty obvious in hindsight that Twitter seemed to be gaining a few voices spouting a short case, whether that was coordinated is another story.
Having sold some on the way down I've sold out completely. These things can drag and I can't see how they can turn around the doubters in the short run. The attitude we'll just tap the capital markets is a bit blase, especially when there are doubts over the new cases they're getting into and what it is doing to the profile of the book. Probably a more obvious avenue now will be to sell some more of the claim to release the cash. It's worth bearing in mind though last year's RNS was a plan for our next x amount of new cases, fundraising outside this wasn't supposed to be required.
GLA, having done well here I was in two minds posting this but felt if it stops someone getting overexposed without considering the risk it was worth it. Nearly did it myself a number of years ago and it was a painful lesson.

[f15jcm] 06/8/2019 17:30

Poor Neil W, the guy really can't catch a break

[f15jcm] 06/8/2019 17:23

BUR's cash at year end was almost double the amount of last year so I think people may be barking up the wrong tree, given that liquidity is specifically mentioned in the tweet.

Funny thing is, I suspect the share price wouldn't have fallen by anywhere near as much had BUR actually been mentioned.

[badtime] 06/8/2019 17:20

I hold the bonds so a tad annoyed to see the drop ..not sure if I want to add

[williamcooper104] 06/8/2019 17:14

Think it's well known that they've no cash beyond September - presume they fancy chances with cap in hand to government

[f15jcm] 06/8/2019 17:12

Surprised no one has suggested SXX after this morning's RNS

[winsome] 06/8/2019 17:04

Assuming BUR is not the target I think this is a wake up call for BUR to do a secondary listing on NASDAQ or even move to main London market.

Buffett once said "When good management takes over a bad company its the company that keeps its reputation". You could say "when a good company stays on AIM, its the AIM market that keeps its reputation".

I've not seen the need to move from AIM, but now the silly season and speculation will force their hand to commit to a timeframe.

[feuguru] 06/8/2019 17:03

bond market knows nothing except the fall in the equity price, associated "news" and comment.