Burford Capital Share Discussion Threads

[goodbloke1] 10/8/2019 16:17

It appears the shorters are wetting themselves and it's not even Sunday! The sweat is almost palpable lol

[ozzmosiz] 10/8/2019 16:09

Spot on Trollwatch

[adnan17] 10/8/2019 15:49

SK

Definitely think you are a representative of MW, just with all your comments.

You are saying the average was 100 for 9.5 years, so therefore the average must continue.

But that is not how a growth company works. Do you know what the word growth means? It means you are spending more money to grow your business to increase your return.

Did you know that Apple's revenue increased sharply after the launch of Apple. Or that Amazon's revenues have been increasing over the last few years. So revenue growing is a shock? What kind of analysis do you perform?

Hence as an addendum to my earlier post the revenue appears to have been funded from the following cashflows. It is best to look at up to 2016 financial statements as it takes roughly 2 years before the cash is invested and the cash is received.

So cash invested in cases according to the Cashflow statement is

2010: 68.2m
2011: 30m
2012: 57m
2013: 46.7m
2014: 91m
2015: 91.4m
2016: 275.7m
This totals to USD 660m

So they put in USD 660m and revenue was USD 1.55bn (see my earlier post).

Of this 75% was realised. 25% was unrealised.

Like I said I'm happy with this. And there is a 2 year delay in putting cash in a business and receipt of cash.

This stock will continue rallying as it GROWS its business and keeps generating its business.

So tired of "shorters" making false accusations. Getting tiring.

[trollwatch] 10/8/2019 15:35

Thanks for that, psychowinnie. You are also chucko1 the failed statistician.

I reckon I can claim the the title of Sherriff of ADVFN now.

That pool of yours is really naff, though. Look out for those snakes.

[chucko1] 10/8/2019 15:26

WC104, there are other outfits who are involved in financial litigation, or providing consulting services relating to them, who have experienced the same thing. A small number of huge cases, but which take up all their time. When these cases end, they are rather at a loss and look to find alternative angles of business. To a degree, well done BUR on having a wider range of scale from this point.

[brexitplus] 10/8/2019 15:24

Can someone tell me where the Gotham RUMOUR originated. It seems to be pedalled as fact.

[psychochomper] 10/8/2019 15:05

SK, agree with much of what you say. You have a bias towards accrual and I have a bias towards MTM. I would agree that MTM is easier to finagle, but I have direct experiences of the things I referred to (Japanese banks) where accruals were plucked out of thin air at the expense of future income. The products to do so were purchased from Western banks!

Western bank: Of course you can have a 24% coupon before March 31st, it’s just that you will get 1% for the next 9.75 years.

Japanese bank: How much can you do?

[williamcooper104] 10/8/2019 15:02

Also even if you assume that the best wins are exceptional you still have to give management some credit for picking them It's a great asset class

[williamcooper104] 10/8/2019 15:00

The growth is backed up by growth in invested capital The growth is real - how much is exceptional is for debate but the growth isn't And over 10 years from start up to acknowledged market leader (ask any litigation funder to check that) you would expect that level of growth The shorts weaken their case by overstating it Bur was probably overvalued - as are lots of things post QE - but it's not an Enron

[goodbloke1] 10/8/2019 14:57

Is that right? How interesting as I never knew that! That would explain the desperation you can feel in the posts lol

[chucko1] 10/8/2019 14:56

But I would also add that long dated derivatives being MTMd is a cause of significant risk. The leverage on the inputs is, or course, multiplied (sometimes by the square of the maturity) and longer-dated input parameters are less liquid and are not even reliable on Bloomberg. In particular esoteric parameters.

But banks do MTM and continue to do so as far as possible as they are aware that the alternatives are far worse.

The paradox, though, is that if all assets of a bank are subject to MTM, then they are periodically insolvent. Were that the case, every bank in the world would have had to be nationalised in 2008. So it resolves to a mixture of common sense and conservatism. Seems Burford are claiming this is just what they are trying to do. And they believe their instruments are essentially financial instruments, though without a market to reliably hedge them. Syndicating parts of them is perfect, though.

[goodbloke1] 10/8/2019 14:55

With the possible share buyback up to 10% we are talking up to 20 mill shares and even if they bought back say 5% or 10 mill shares that will easily move the price appreciably.That will certainly disappoint the shorters on this board!

[stentorian] 10/8/2019 14:49

EY audit both IMF Bentham and Burford.

[sweet karolina2] 10/8/2019 14:34

It will be interesting to see Gotham's analysis tomorrow. Gotham exposed Quindell in a devastating comprehensive dossier about 18 months after TW began exposing all the individual flaws.

We already know MW's MO is to lead with a left jab then respond with a right hook. BUR could already be reeling from Gotham's haymaker when the right hook lands.

Gonna be a fun week next week watching from the sidelines.

[sweet karolina2] 10/8/2019 14:28

Adnan,

Compare Net Revenue from concluded cases to post tax profit.

Net revenue over 9.5 years is on average $100m per year, first half post tax profit for 2019 is $220m, really? that is one hell of an explosive exponential growth story which looks too good to be true, especially when compared to an older peer who uses a different accounting methodology.

Revenue recognition has been shown to be aggressive in a number of cases and although a different spin was put on those cases in the rebuttal, the underlying facts were either confirmed or not disputed. The refusal to strip out Petersen as an exceptional case speaks volumes as does ducking the issue of contingent liabilities from other cases and not being fully open about how much of the revenue recognised is in forms other than cash - we have seen, and the company has confirmed, payment in shares with lock ins which have become worthless, Land which has been unsalable and led to further issues and IP which has become worthless.

[riverman77] 10/8/2019 14:16

Adnan - thanks, that's a good simple way of looking at it. Do you know how much they put in to achieve that 1554m?

[sweet karolina2] 10/8/2019 14:12

Psycho,

"Tell me any other company which reconciles its cash to profits in granular detail? By that I mean asset by asset, or product by product."

IMF Bentham

In the same business. Only accounts for revenue when it is received provides a complete list of named cases that completed in the period how much was spent, how much was gained or lost on each.

IMF is bigger than BUR has been going longer than BUR yet does not achieve stellar profits as reported by BUR and indeed some years reports a loss (2018 was a loss). There is no massive disconnect between net cash generated and profits and dividend are covered by those net cash flows, albeit smoothed so the dividend does not stop in loss years, rather than being paid out of debt and equity raised.

Plenty of other similar businesses have used similar accounting to BUR (Enron, Quindell, SGH) and have come to grief costing shareholders and creditors far more.

There is no reason why BUR could not provide the data that is being asked for, it does not have so many cases running that it could not be done, it is not like asking Cadbury to account for every chocolate bar that leaves the factory.

[adnan17] 10/8/2019 14:08

Another way to look at it is as follows

Look at all the revenue they have reported:

2010: 7.4m
2011: 24.9m
2012: 54.2m
2013: 60.6m
2014: 82.0m
2015: 103.0m
2016: 163.4m
2017: 342.6m
2018: 424.9m
First half 2019: 291.8m
Total is USD 1,554.8m

If you add all that up you get USD 1554.8m. In their website they stated that "Concluded Investments/Cases" is USD 1,158.9m

So 75% of total revenue is REALISED GAINS and 25% is UNREALISED.

So not sure what the fuss is all about. Makes perfect sense there is a lag between gains transferring between Realised (which is mark to market accounting) and realised (which is real money received in the bank).

I'm happy with that 75/25 split

[tsmith2] 10/8/2019 13:58

SK2 clearly knows more than all the lawyers at BUR