Burford Capital Share Discussion Threads

[brexitplus] 09/8/2019 12:43

Burford values its investments, up and down, in a similar way to private equity.

There, unlisted investments are most often valued on directors valuation based on performance/changes, and cash raising (similar to Petersen).

New investments are most often valued at cost.

I really can’t see much difference between Burford and private equity.

[1corrado] 09/8/2019 12:41

any one to by at 900p any taker..........................

[williamcooper104] 09/8/2019 12:38

Yep - I was exaggerating - but was annoyed on the call that they didn't seem to be making any real changes - they were going to get a new board director because one was going to retire (who had been on the board like the others for too long)

[clocktower] 09/8/2019 12:38

Be careful 1corrado that you do not end up singing the following on Monday.:-)

[tsmith2] 09/8/2019 12:37

A parabola move this afternoon? Nice intra day chart

[1corrado] 09/8/2019 12:35

I am only interested to my 900p who wants to by my 10.000 share at 900p any one,please advice accordingly.No waster.

[clocktower] 09/8/2019 12:35

What would be the purpose of a share buy back?

What would happen when the money runs out - back to square one and worse may.

Is it anything rear about the markets being manipulated in either direction.

[adnan17] 09/8/2019 12:33

I think governance issues can be a quick fix. Investors could pile on the pressure and make the necessary governance changes:

1. Make sure there are enough independent directors
2. Salaries of key personnel are reported.

Not sure about changing CFO (even though I have never been too impressed with her presentation skills on conference calls). Not sure if investors should have an issue with the marital relationship. Who are we to come in between true love? Lets just hope they never get divorced other the whole divorce/litigation process could get very messy (including for shareholders).

I'm still in two minds about this whole Fair Value concept. I get that IMF don't fair value but then are they understating their accounts. The whole point of accounts is to provide a TRUE AND FAIR VALUE and not just to be conservative for the sake of being conservative.

The reason for presenting TRUE AND FAIR VALUE is so there is complete transparency in share dealing between buyers and sellers. Hence IMF are not TRUE AND FAIR if reporting on a completely book value basis. If Intu valued The Trafford Centre at book value (when they purchased it in 2011) then that would give a distorted presentation of Intu's financial statements. Hence there is some argument to presenting on some sort of Fair Value

The exact mechanics of how to Fair Value the case of Burford given that I'm not lawyer is what is somewhat difficult. And probably for the entire investing community. But I do think complete book value would be misleading too.

[williamcooper104] 09/8/2019 12:32

Looks like our Great British Peso is more volatile than Bur today

[sweet karolina2] 09/8/2019 12:31

"SweetKarolina, I think your comments about growth of the share price are very misleading. If you look at the Net Assets/Total Assets/Book Value of IMF Bentham it is AUD 368m (page 63 of their annual report). Their market capitalisation is AUD 665m. Hence 1.8x book value (665m/368m)."

Book value at IMF is what they have put in at BUR it is fair value guess work. That is the point.

Has BUR really been growing as quickly as its accounts suggest? Surely IMF would have gone down the same path 10 years ago. If IMF was just a grown up version of BUR that had stopped growing and using lumpy accounting it would report profits of $500m one year and $100m the next not $10s of M in a good year and a loss in bad year.

Hence there is something fundamentally different between the businesses and not just accounting methods, or BUR's accounting methods allow them to report bogus profits and NAV and nobody can tell - it would be very hard for IMF to cook the books.

If BUR really want to clear their name they should get IMF's accountants to produce accounts from the raw data, verifying each bit of data and see how the picture looks - it should just be a more lumpy version of what BUR reported in terms of historic profits.

IMF also report specific cases which have completed in the year. BUR now only produce a summary by cohort so it is not easy to see where values of specific cases have changes (BUR used to, which is why MW were able to catch them out on Napo - BUR just put a different (not particularly convincing IMHO) spin on it, but confirmed the raw facts)

[minerve 2] 09/8/2019 12:30

Fair and balanced report IMO.

[minerve 2] 09/8/2019 12:27

Courtesy Jefferies via FT Markets Live:

Burford has answered the specific points on return calculations raised by the short sell note comprehensively and convincingly in our view. It was also clear that there is a formula used to calculate fair value, but that we will not find out what any individual investment’s carrying value is. Liquidity is not a problem; we expect progress on governance issues and the underlying business is the same as a week ago. BUR looks undervalued to us.

Return calculations. Few questions on the investor call this afternoon related to the seven points raised by the short seller note. There were more about fair value recognition however. The key points from the various answers to them were that:
1. There is a single formula applied in the calculation of fair value and it
never gives a result “close to” the expected return (assuming a successful
conclusion). Our assumption that there is a consistent approach seems
correct therefore, and many investments see no mark up until their
conclusion. We do not think that fair value is calculated aggressively.
2. The company will not disclose the carrying value of individual investments, but implied that Petersen made up a significant part of total fair value gains carried on the balance sheet.

Liquidity and capital. As we thought, this seems not to be a concern: cash balances cover near-term expenses and deployments, and it seems entirely realistic that realisations from existing investments would cover existing commitments.
In terms of any new capital requirements, management repeated previous
statements that they have several possible sources of capital. For the last day or so they have focused on the reply to the short seller note rather than talking, for instance, to the company’s sovereign wealth fund partner. We would expect Burford could still access new capital if necessary, and that any difficulty doing so would delay rather than restrict growth.

Governance. This was covered in least detail in the written response, but on the call there was a sense that a second listing in the USA seems likely in foreseeable future. It also appears that board succession is high on the agenda. The position of the CFO was questioned, not only due to her relationship with the CEO, but also concerning personnel turnover in the role. As we had understood before, Elizabeth O’Connell has effectively been in the job since Miriam Connole left at the end of 2014. The company states that it continues to listen to investors’ views on the matter.

Other points. The CEO and CIO have bought £3.1m of shares between them and the company has stated that other employees have also bought more shares. Investors commented that this was welcome, but noted that it was small relative to management’s share sale last March. The company is considering a share buy-back.

Conclusion. Recent events will have increased the cost of raising new capital and it is too early to assess any possible reputation damage to the operating business, but we think it remains robust. Our overall view of Burford is unchanged: it is preeminent in an attractive market with high returns and growth. It looks undervalued at this level.

[williamcooper104] 09/8/2019 12:24

Adnan - thanks for sharing your numbers I thought Bur had a much higher Fair Value adjustment - Peterson alone is huge Using IMF as a comparable is useful I'd agree with your range if there wasn't governance issues

[adnan17] 09/8/2019 12:20

William thanks for pointing that out.

So if I strip out Burford's fair value movements on its investments (shown on page 34 of the interim reports) then I arrive at a net asset value/book value of USD 1.4bn. Using a multiple of 1.8x (same as IMF) gives a market cap of USD 2.52bn. Using an exchange rate of 1.25x gives me GBP 2bn. Dividing this by 218.6m shares give a share price of 9.15

so potentially that is the floor.

If I apply a premium for the fact that Burford is growing faster and then use a multiple of 2.5x to 3x then I get a share price of 13 pounds to 15.25 pounds.

[minerve 2] 09/8/2019 12:16

"Sports Direct corporate governance"

Steady on, it isn't that bad.

[babbler] 09/8/2019 12:11

oh well their loss. Probably sold lower than today's price. Never mind.

[williamcooper104] 09/8/2019 11:58

Adnan - I think IMFs net assets are at cost where as Burs are at Fair Value - so not comparing like with like Agree that Bur ought to be at a premium to IMF - not sure how big that ought to be - and there's a discount for Sports Direct corporate governance

[galatea99] 09/8/2019 11:57

"GAM cuts all Burford Capital exposure after short seller attack"

"GAM has liquidated all of its exposure to the litigation financier Burford Capital following an attack by short seller Muddy Watters.

The sale of the assets, which first appeared on finews.ch, was confirmed by the spokesperson of the firm.

GAM is among the biggest holder of bonds issued by Burford Capital bonds, which amount to around $620 million since 2014, according to Bloomberg. These bonds were part of the allocation across the three GAM Star Credit Opportunities funds."

[1corrado] 09/8/2019 11:55

to much posting look at the share price the buy and the sell the rest does not count where is my 900p = 12500K there about on top of my 12k done yesterday.I am in my summer house in the Island of Korcula Croatia since 4th April till 5th October.Please pop along I am well know in Korcula.

[williamcooper104] 09/8/2019 11:52

Sk - Bur has had some mega wins - so I don't believe the profit growth is completely false and there's been cash Bur has been growing quickly and shows no signs of that decreasing So it's perfectly reasonable for Bur to be valued at a premium to IMF The key thing is can we expect a Patterson once every 3 years, 5 years or 20 years This becomes less relevant as Bur goes Previously I'd justified Bur as being on one hand on a low PE but on a high growth with much of the earnings on a potentially exceptional basis

[adnan17] 09/8/2019 11:51

SweetKarolina, I think your comments about growth of the share price are very misleading. If you look at the Net Assets/Total Assets/Book Value of IMF Bentham it is AUD 368m (page 63 of their annual report). Their market capitalisation is AUD 665m. Hence 1.8x book value (665m/368m).

If you look at Burford Capital their Net assets is USD 1.56bn. So applying a 1.8x multiple would give a value of USD 2.81bn. Translating this into pounds using a 1.25 exchange rate is GBP 2.25bn. Then given the current shares outstanding of 218.6m shares results in a share price of 10.30

But given that Burford is growing more rapidly one would think the multiple on book value would be 2.5x to 3.5x. Hence the share price floor should be 10.30 if comparing against IMF Bentham.

[trident5] 09/8/2019 11:49

No PDMR staff purchase disclosures.

I guess they were just talking about the staff without managerial responsibilities.