Burford Capital Share Discussion Threads

[sweet karolina2] 14/8/2019 20:19

Henchard,

Apparently, coming off worse in an arbitration settlement so you end up having to pay the other side's costs and fees, which may have cost BUR $800k to fund, costs the client $15.8m - nice work if you can get it. The best bit is when you lose your second case in under 12 months, you can end up owing BUR $30m. With great deals like that it is no wonder BUR needs to keep raising so much more money to meet the demand for its fantastic litigation funding service.

[senn1] 14/8/2019 20:06

Hench

your on the night shift now ay

Even Mw will move on soon

What you gona do then.

[henchard] 14/8/2019 20:01

adnan17

"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."

Really?

So in every case there's a settlement, even if the settlement is favourable to the other party, BUR wins? How does the litigant that can't afford to litigate without BUR's backing pay the other party's costs and BUR's costs?

[henchard] 14/8/2019 19:43

mad,

"The report is signed off by E&Y and thus we must assume is accurate."

I very much disagree with your assertion we "must" assume that.

[gettingrichslow] 14/8/2019 19:40

Well after another fantastic day here in Tenerife (3 hour horse ride in the mountains today) I have just trawled through the endless debate between SweetK and Adnan.
My conclusion is as follows:
1. Adnan ‘won’ in the sense he was rational and factual and answered all of the challenges put to him.
2. SweetK kept moving the goalposts each time her challenges were met. She was evasive, manipulative and frankly a bit ‘slow’.
3. If having two degrees is the pinnacle of one’s achievement, best to keep quiet!
4. An email to EOC for further details of what actually did happen would surely be a more effective use of time??
5. There is no way someone with no position would spend yet another day of what is, after all, a very short life on this planet, posting like this.

[galatea99] 14/8/2019 19:37

Does anyone subscribe to this journal?

"The big story after the Muddy Waters short-sale announcement was the sharp drop in stock price for AIM-listed darling Burford Capital. And that’s understandable, given the nearly 50% single day decline. But Burford now faces another challenge: a crisis of confidence amongst institutional investors, many of whom currently hold the company’s bonds. "

[dgdg1] 14/8/2019 19:36

Your reply to my actual point is completely incoherent - I genuinely don't know what you're talking about, it just doesn't make any sense to me. Every sentence is just absurd and has no relation to what I said or indeed to any logic. Please explain yourself more clearly. Also you seem to be arguing with MW's idea that Burford received a debt from Napo - so you are proposing a new theory of how Burford was supposedly fraudulent which is different to MW who you are also disputing. I mean, come on, you're really clutching at straws now. And you then completely veer off and distract with a completely different point about the CFO and your case is built on how Burford didn't thank her - so clearly that shows she found something fraudulent - what can I say? If that's the whole evidence of fraud then I'm not worried. So we are left with the fact that Jeffries think Liz was involved in the accounts before and this wasn't referred to in Burford's announcement. Again, is that really your whole case?

[dgdg1] 14/8/2019 19:36

The pressure is intense to report bigger and bigger profits each year, especially when more money has been put in. MW was certainly right to question why the uplift on a lost case. But if $15.8m is just the lost arbitration which probably cost around $800k and the 2014 uplift is the lost Napo case for an outlay of $6.6m this is an incredible way to treat clients. We fund your litigation and win or lose we take what we would have got had you won! Does that really make sense as a good deal? The conversion of "investment" in the court cases converted into debt in Napo 10 Oct 14 according to MW - I am not sure where he got that date from. "Burford restructured its financing arrangements with Napo to become entitled to certain fixed payments and to give Napo greater flexibility to reorganize its business" this was moving the debt into payments that actually came from the IPO and into shares all well down the line. I doubt the IPO could have happened with such a large debt already in place.
Your reply to my actual point is completely incoherent - I genuinely don't know what you're talking about, it just doesn't make any sense to me. Every sentence is just absurd and has no relation to what I said or indeed to any logic. Please explain yourself more clearly. Also you seem to be arguing with MW's idea that Burford received a debt from Napo - so you are proposing a new theory of how Burford was supposedly fraudulent which is different to MW who you are also disputing. I mean, come on, you're really clutching at straws now. And you then completely veer off and distract with a completely different point about the CFO and your case is built on how Burford didn't thank her - so clearly that shows she found something fraudulent - what can I say? If that's the whole evidence of fraud then I'm not worried. So we are left with the fact that Jeffries think Liz was involved in the accounts before and this wasn't referred to in Burford's announcement. Again, is that really your whole case?

[1oughton] 14/8/2019 19:28

Lefrene has this summed up. It appears BUR been crediting themselves a tad early . Been rumours of this for monthsNo smoke n all that boyos.......

[sogoesit] 14/8/2019 19:19

Here's the first pass statistical analysis of returns based on the concluded single cases published on BUR's website.
As you can see, around the median, its pretty constant (ie. between 70% and 45% probability). The median return is about 50% RoI.



You also get a good idea of what the chances for an outlier are.

[lefrene] 14/8/2019 19:11

mad foetus, it took me about £300k of losses before I finally understood that I shouldn't invest in businesses which I don't thoroughly understand. Fortunately for me I had learnt that lesson before Burford came along, I get the concept but found the business too opaque to my mind, to be tempted to buy in. I feel very sorry for persons who have lost money here, and hope over time that the value can be rebuilt.

[sweet karolina2] 14/8/2019 19:10

dgdg,

The pressure is intense to report bigger and bigger profits each year, especially when more money has been put in. MW was certainly right to question why the uplift on a lost case. But if $15.8m is just the lost arbitration which probably cost around $800k and the 2014 uplift is the lost Napo case for an outlay of $6.6m this is an incredible way to treat clients. We fund your litigation and win or lose we take what we would have got had you won! Does that really make sense as a good deal?

The conversion of "investment" in the court cases converted into debt in Napo 10 Oct 14 according to MW - I am not sure where he got that date from.

"Burford restructured its financing arrangements with Napo to become entitled to certain fixed payments and to give Napo greater flexibility to reorganize its business" this was moving the debt into payments that actually came from the IPO and into shares all well down the line. I doubt the IPO could have happened with such a large debt already in place.

What do you make of Miriam's departure some time before 3 Nov 14 ie after the debt conversion and after the bond issue?

The RNS announcing she had left (not was leaving) is here:



but the bit about Miriam is:

Miriam Connole, Burford's CFO, has left Burford to pursue other opportunities. Her current deputies, Mr. Jamie Knowles, Burford's UK-based Group Financial Controller, and Ms. Christina Yue, Burford's US-based Vice President Finance, have been given expanded role accountabilities and, together with the forthcoming hiring of a tax manager, will run Burford's finance function and report to Mr. Garber, who will assume responsibility for the overall function subject to the supervision of the relevant entity boards of directors. Both Mr. Knowles and Ms. Yue are qualified accountants; Mr. Knowles, who also has a law degree, was most recently a financial controller at RSA Group, and Ms. Yue was most recently a manager at Ernst & Young. Mr. Rowles-Davies will succeed Ms. Connole as a director of Burford Capital PLC, the issuer of Burford's retail bonds and a wholly owned subsidiary of BCHUKL.

Do you think it is strange that the notification to the market is after she had gone and also there was no thanks and best wishes blah that normally appears when someone senior who has been there for so long goes. Also Jefferies believes Liz was really in the role from when Miriam left, but certainly no mention of that here.

What do you then make of the Hogwarts defence against the dark arts professoresque procession of replacement CFOs leaving?

You are getting the hang of looking at individual bits in more detail, but it is putting them all together to make the picture which should inform your opinion and therefore your investing decisions.

[dgdg1] 14/8/2019 19:08

By the way MW's whole accusation of Burford being misleading about net realised gains being gains minus original cost and then reducing the year's other fair value gains by the amount of the previous fair value gains in the realised investment - this accounting treatment was clearly explained in the 2010 annual report (page 7) - except that then it was slightly different in that fair value gains were only counted as comprehensive income not profit, but other than that the same principle applied. It was I think in 2012 that Burford changed the accounting to the new IFRS standard and at that point fair value gains became part of profit, but everything else stayed the same. So MW made a whole song and dance of how they had proved in two ways that this is how Burford accounts for net realised gains and made out that this is a major discovery and highly problematic and misleading - when Burford had already clearly explained this and is how it is meant to be done. So who looks unreliable here? And MW's suggestion that this treatment somehow makes Burford's fair value gains look more conservative than they are - sorry I just don't see how it follows. The fact is that when previous fair value gain are realised then you have to allow for the fact the the previous gains have been realised (otherwise you never show up the fact that that amount has been turned into a real return) - so you then need to reduce current fair value gains to offset that. But even if it would somehow give a better impression (which it doesn't) it in any case is the way it has to be accounted for.

[mad foetus] 14/8/2019 19:05

In the end, the only issue is whether the valuations prove to be accurate or not. The company say they are conservative and from memory have only ever written down 2 small cases but have written up many more. The report is signed off by E&Y and thus we must assume is accurate. So the argument seems to be that one should never invest in illiquid assets because there is some uncertainty to their value. Or one should never try to value something illiquid?

[lefrene] 14/8/2019 18:58

adnan17, I feel you are trying to compare apples with pears, comparing a major public infrastructure project with a money lender/legal service provider is a poor argument.

A contractor will get paid in stages as each part of the project meets a criteria and gets signed off, the contractor will not be booking that money to his profit and loss until he has actually been paid. The body overseeing the project and financing it will likely be drawing down finance from their backers against each stage criteria being met, they are spending capital in a straight line. Once the project is complete and all contractors paid off, the new capital infrastructure is put to work, and hopefully starts to earn income to pay down the debt incurred. That infrastructure then might make an operating profit for many years, but the debt servicing would likely consume much of that operating profit. Would the ultimate supplier of the money for the project book a profit? Very likely as long as the overall contracting client kept up the interest and amortisation payments. But that ultimate financier whilst booking a running profit could not declare an overall profit by drawing forward all the expected payments.

I am familiar with accountants having years ago built up a company employing circa 250 people, I know how they can dress things up depending on whether one wishes to show a profit or not. I know how they like to try to interfere in ones business and the damage they can do if you are foolish enough to let them!

This thing seems to boil down to reasonably expected profits actually being counted as in the bag, when they were not actually in the bag. Clever arguments as to whether this an honest or reasonable thing to do, is no doubt going to provide a feast for yet more lawyers. I know where I stand, to me it's sleight of hand, but quite likely the law will divine something else altogether.

[galatea99] 14/8/2019 18:54

Are they not already advisors to Diana Abbott?
(LOL).

Anyway, they don't seem to like actually sitting on BOD's.

[mister md] 14/8/2019 18:53

thats nice for you

[brexitplus] 14/8/2019 18:43

Mister

I’m setting up a new business. I think I’ll invite Bogart and Molot to be Directors.

[dgdg1] 14/8/2019 18:42

If the $15.8m as at 2013 was just made up as you suggest then isn't it strange that in 2014 they would increase the gain even further - I mean that would just be really pushing it for no particular reason. Also, MW's first report said "BUR apparently converted its investment into a debt of Napo totalling $30m as of Oct 10, 2014". Now what on earth is that supposed to mean? If MW and you are right that the Salix case failed then Burford weren't entitled to anything and the $15.8m was invented, so there would be no "investment" to convert to a debt. So MW by implication are accepting that Burford did have an entitlement from somewhere. To explain all this as well as to explain why this $15.8m got ultimately ignored as of the latest chart, and only the cash from Jaguar plus the sale of the Jaguar shares are shown as the amount finally received, I suggest the answer is that the "entitlement" from the other matter was probably an equity stake or similar in Napo. This explains Burford's comment that in 2014 "In the end, Burford restructured its financing arrangements with Napo to become entitled to certain fixed payments and to give Napo greater flexibility to reorganize its business". This explains the increase in return recorded in 2014. However ultimately Napo could not pay all of it, so Burford had to settle for only the amount finally recorded i.e. the $8m cash plus the value of the Jaguar shares which ultimately was not much.