Burford Capital Share Discussion Threads

[edmondj] 14/8/2019 18:35

Marking when the culture shifted? From the above link:


But in 2012, the two Americans sold their fund management company to Burford in return for 24.5m shares. This had the obvious outcome of handing Bogart and Molot a valuable stake, then worth £33.4m, in the enlarged company.

But it also turned Burford from an investment fund into a fully-fledged operating company, meaning the market would be likely to value the shares more highly.

Muddy Waters alleged: 'All Bogart and Molot seemingly needed to make this move really pay off is some more earnings. Well, Burford's change in accounting policy delivered.' He alleges that the firm then modified the way it booked its profits to make it seem more successful. Over this time, Bogart and Molot have refused to disclose their pay.

But the total pay to all staff since 2010, much of which is thought to have gone into the pockets of Molot and Bogart, is £139.4m.

[edmondj] 14/8/2019 18:21

I find Muddy Waters' essential critique rings true with a growing concern I had a year or two ago, after being bullish from 2009 on the basis litigation finance was 'something new' with Burford an emerging force: that mark-to-market valuations leave plenty scope for subjective judgment and differ from a conservative culture Burford had at flotation: that investors should bear in mind a key risk, how the outcome of legal cases can be highly uncertain. The more they grew with the help of cheap debt, retail bonds and salivating investors, the easier to file impressive bar charts of profit/EPS growth.

Add to this, weak governance structures of longstanding auditors/noddies and the CFO married to the CEO which was never properly disclosed. Maybe when Bogart & Co came into the group, its culture changed?

Listed litigation finance rivals have sought to distinguish their accounting yet Burford has effectively doubled down on its methods. Burford's broker, and others who have promoted its stock at much higher prices, argue for mark-to-market but the industry differs.

So yes MW is an opportunistic waspish noise trader, and loses credibility for promptly closing its short while peddling 'insolvency' yet Burford needs to ensure confidence in its accounts/governance to genuinely re-rate its stock. Obsessing over short-term market manipulation is quite nonsensical as medium to longer-term the stock will converge on genuine value. Thus MW is spot on with its key critique.

[adnan17] 14/8/2019 18:20

Lefrene, that's not how accounting works.

For example, a development company that builds Crossrail will book profits before project completion. If the project costs £1bn and takes 5 years to make and you only get paid £2bn at project completion, how should you account for that?

Should you really be showing £200m of losses per annum for 5 years (£1bn/5 years)? Or should you be booking some of that future profit of £2bn in the earlier years. That is the whole point of accounting. Try and give a fair view. Booking £200m of losses per annum would not be fair and would not tell the whole story.

One can easily look at the cashflow statement in conjunction with the income statement to see both cashflow and smoothed profits.

[brexitplus] 14/8/2019 17:57

Muddy Waters isn’t called that for nothing. Currently trying to muddy the waters to get off the hook, and using “professional” water muddiers to stir things up and deflect attention away from them.

I hope and expect Burford to be completely focussed on the real agenda of market manipulation.

[galatea99] 14/8/2019 17:48

"IC View
Just how much of a discount could soon be in question. This week’s back-and-forth obscured what would normally be a major development for Burford: the sudden, looming return of Cristina Kirchner to the frontline of Argentina’s politics, with all the ramifications that could bring for the timing of potential recoveries from Petersen. That, along with a growing, ill-advised campaign against a short-seller with a very strong track record, is reason enough to believe the shares will remain volatile, bouncing between large director purchases, a potential corporate buyback, regulatory involvement and the possibility of better disclosures. Hold at 790p.

Last IC View: Hold, 760p, 8 Aug 2019"

[brexitplus] 14/8/2019 17:47

This is all so UNIMPORTANT.

Mrs Brexitplus’s uncle had a heart attack yesterday and we have spent the afternoon with him. Strangely Burford and MW didn’t once come into my mind.

That’s how important it is.

[lefrene] 14/8/2019 17:45

In my book a profit isn't a profit until the money is in my account. Just because I have satisfactorily completed a contract doesn't mean I'm certain to be paid, I don't have a profit until I have actually been paid! I know what it's like to have a customer deliberately fold a company to avoid bills, and then reopen the next day under a new name.

You can dress it up however you like, but until you have the money in your account (not waiting in your clients account for transfer), but actually in your account, then it's not money, it's merely the prospect of hoping to receive money.

So if Burford have been crediting themselves forward with 'expected monies', then I would say they are window dressing. If that is the case, then one has to ask if this is a one off or a habit?

[wardy333] 14/8/2019 17:15

Looks like 2 Director buys at 250k.

[dgdg1] 14/8/2019 16:56

Salix only concluded in 2014. oN the basis of your theory, $800,000 surely wouldn't count as a recovery anyway and would be a reduction in invested amount. Also, why would Salix have been marked up to $15m (from invested amount of $7.4m) in the first place as fair value is only marked up when there is a specific event? So all sounds like a rather spurious attempt to make the most likely explanation look like fraud.

[adnan17] 14/8/2019 16:53

Sorry people, I appreciate my posts have been tiresome, but given that I am a long term investor in Burford and believe in the company I wanted to determine once and for all whether the Napo incident was fraudulent. If it was I would have sold all my hodlings. Given that I have conclusively proven that it was not, I will continue to hold.

Just one final piece of research advice for SK and Muddy Waters.

In "Google" if you use a bit of common sense and type "Napo Settlement 2013" the 3rd item gives details of the Napo v Glenmark case. Not that difficult to be honest. Simple research.

[littlepuppi7] 14/8/2019 16:50

Looks like the CEO has just bought another 250,0000

[adnan17] 14/8/2019 16:36

Your argument linking Napo v Glenmark and Napo v Salix and the amount of the final settlement sounds as follows:

Man Utd 3 v 0 Chelsea
Chelsea 3 v 0 Liverpool

So I conclude Man Utd have beaten Liverpool by 6-0.

[sweet karolina2] 14/8/2019 16:34

dgdg,

Salix had not concluded in 2013, therefore it had a fair value (which should have been written down as the adverse supreme court judgement on 24 Dec 2013 came in. Booking $800k would not have made a significant difference to the full year post tax LOSS BUR should have reported (but also should have been written off IMHO given the significant uncertainty of recovery once Salix was LOST), so what figure would they most likely be able to slip past at late notice? oh the fair value would not rock too many boats just being moved from one side of the accounts to the other now would it?

[compo62] 14/8/2019 16:32

Filtered. Sorry Adnan, I admire your tenacity and agree with your sentiment, but this is now getting tiresome beyond all reason. SK2 filtered days ago, of course!

[adnan17] 14/8/2019 16:31

And once again your are just making up things and numbers. This case was in relation to Napo v Glenmark but yet you adamantly want to use figures from Napo v Salix.

Hence, muddying the waters between the two.

Burford were very clear. The profit booking in 2013 related to another case not to Salix.

You initially supported the view that there was no other case and that Burford had made up the case. I provided you with evidence that there was another case and there was a SETTLEMENT (regardless of who won or lost).

And now you continue to revert back to Napo v Salix. Just to re-iterate my previous point you have zero idea what the commercial agreement was between Burford and Napo for the Napo v Glenmark case.

Hence, it would increase your credibility if you could stop making up nonsense.

Would love to read your Masters. What nonsense did you purport in that? Did you just make up numbers based on no evidence? What university did you get it from?

[sweet karolina2] 14/8/2019 16:28

adnan,

I made it very clear that I could not find another case but that did not mean it did not exist and that on presentation of new reliable evidence I would update my view - which I have.

$150m is in the Napo Salix case information 10% as a fair value carrying value makes a lot of sense, though the deal, had Napo won was probably for a bigger cut. I have provided the basis by which I ESTIMATE $800k.

Given total costs for both cases are just over $7m and the Salix case ran for longer and involved jury trial and Supreme Court appeals which case do you think accounted for the vast majority of the costs?

So leave aside your desperation fuelled optimism and confirmation bias, stop making accusations that I am short when I have made a very clear declaration that I get no financial gain of any kind and actually think critically for yourself. I promise you it will enable you to make better investing decisions both here and at other shares you are considering investing in / are already invested in.

[adnan17] 14/8/2019 16:20

Now you just making things up. First you said there was no other case.

Now you concede there was another Napo case. You have no way of knowing what the contract between Burford and Napo was. However, you will not stop making things up. And you are just making up 10% of $150m. Just throwing up numbers. You come across as extremely fraudulent/manipulative.

Neither you know nor does anyone else. You have been proved wrong on multiple times, but once again you just stir to continue with your short position.

But to conclude you have absolutely no way of knowing or predicting what the arrangement was between Burford and Napo in relation to the Napo v Glenmark case.

All we know is that Burford takes a cut of any SETTLEMENTS. And the exact numbers behind the Napo v Glenmark settlement have not been fully disclosed to the market.

And finally it does not matter who won or lost. Burford win whenever there is a SETTLEMENT. Or do you not understand Burford's unique business model

Once there is any SETTLEMENT there is a fee payable to Burford regardless of who won or lost. That is the business model.

And you are being extremely deceptive in your posts.

[dgdg1] 14/8/2019 16:17

The 15.8 can't be based on a fair value - Burford have said clearly the chart relates only to cash returns and is not marked up or down with fair value. Fair value is on the balance sheet only.

[sweet karolina2] 14/8/2019 16:11

adnan,

Settlements can be in favour of one party or another or a compromise - the compromise here was Glenmark would buy Napo's drug at cost plus 25% not a great margin on a drug and "However, Glenmark shall have the unequivocal right to use an alternate source of supply for CPL or to use sources of supply for CPL" so no exclusivity either and definitely no cash going from Glenmark to Napo.

The award of costs and fees to Glenmark tells you who won. And therefore the direction of any settlement cash.

I reckon $15.8m was $15m as the fair value of the Salix case (10% of $150m) and $800k was the Glenmark costs back. Arbitration and settlement is far cheaper than going to trial. FRR recently tried to sue one of its directors in Cayman, non trial judgements went against FRR and although FRR had the right to appeal, it dropped the case in Cayman. FRR owes its lawyers just under $800k in fees for that. How do I know that? Because FRR has not paid its lawyers and its lawyers are now suing the directors of FFR personally under the personal guarantees of payment they made.

So maybe BUR could have booked $800k as completed (what they had paid out on the Glenmark case) but as the recovery was so uncertain following the loss of Salix surely the prudent thing to do was to book a Zero.

Well done for keeping on asking the questions, but you do need to analyse the answers.

[growthinvestor2001] 14/8/2019 16:06

1corrado - no one is asking for regular updates on your trades. No one is asking for stupid price target predictions and there is no need to post the final trade of the day - we are all capable of finding this information ourselves.

Why do you feel the need to do it? Bet you would not be posting if you were losing.

Please just give it a rest... if you have anything factual or adding to the arguments then that would be a great read - but just blurting out what you are doing or your thought of the minute every few minutes is utterly pointless for the rest of us to read.

Some of us have alerts set up when a new post is added to the board - so please can you (and everyone else who does it) just dial it back a bit? Thanks in advance.

[1corrado] 14/8/2019 16:02

750 tomorrow if not even less or by 4.30 and then below 700 tomorrow happy days are back for me