Burford Capital Share Discussion Threads

[pal44] 01/11/2019 13:03

DP today or next week I think ..

[donald pond] 01/11/2019 11:37

Agree with all that and expect to see £9 today

[stockvalue] 01/11/2019 11:33

Well the first question is, did MW report reveal anything new to the market?
I don't think so! Why? As someone who reads everything before investing, there was nothing that MW reported, which Burford Capital had not reported to the market themself before.
First things first, Burford Capital had "fair value accounting" from their very first report in 2010. It just was not reported as Income but as Other Comprehensive Income.
At page 12/13 of that very first report 2010 HY, they already made it clear to their holders under section 2 Principal accounting policies that "IFRS 9 will remove the available-for-sale classification. When IFRS 9 applies, it is anticipated that the Group´s litigation investment will fall within the fair value through profit or loss category"(Page 13, 2010 HY). That means they actually did fair value accounting from the very beginning, never keeping that fact secret or concealed anything. As they already forecasted in their 2010 HY report, they changed their reporting in 2012 FY report to IFRS 9. They again explained that very same matter at page 25 of 2012 FY report. "In connection with the adoption of IFRS 9, the Group has reclassified its investments in litigation-related assets as fair value through profit or loss investment("litigation-relaed investments at fair value through profit or loss"). Prior to 1 January 2012 these were classified as available-for-sale investments."(Page 25, 2012 FY).
Of course MW did not tell the whole story, as that would make their report look ridiculous. MW basically only reported stuff already reported by Burford Capital before in their HY and FY reports. The sad fact revealed by this whole story is, that it shows how little research some investors and even some fund managers do when picking their investments. That is the only laughter inducing thing here. Of course one persons error is another persons opertunity as the Morgan Stanley stake shows. To make a clear statement in the end, NO the MW report did not reveal anything new to the market, if we let the errors of the report aside.

The second question is, does the fair value accounting harm investors?
Let us assume Burford Capital would have an accounting only based on cash. Well the investors would of course have less information than at the moment, which would lead to a wider gap between private and more sophisticated investors. It would be likely that we would experience even greater mispricing. Also we would have even greater volatility. Their would be a tremendous gap between insiders and normal investors. My point is that its always better to have more information through fair value accounting than less. Everyone is free to interpret the given information as one would like. This whole story shows how bad the market can be at certain times valuing a company. Also it show how some fund managers deal with their clients money. The good message is that for the serious investor short term mispricing, even over months doesn't matter in the long run.

[donald pond] 01/11/2019 07:26

Don't wish to hog the thread, but rereading some research notes, the 12 month forward PE here hit a high of 24 in early 2018, before slumping to around 4.5 in early August. The average is about 16, and we are probably at around 8 right now. Between 2017 and 2021 EPS is forecast to grow by 50%, though I think, as with all BUR predictions to date, this will prove to be a significant underestimate. But my point is there is a huge amount of room for the share price to move into: it could double from here and probably, with the growth in EPS, be below its long term valuation.

[donald pond] 01/11/2019 07:12

A respected poster in another place has pointed out that BUR is now coming into searches for being at a 3 month high. It really is time for people to ask themselves whether the MW report changed the investment thesis and if so, to what extent. I think it will be a struggle to get beyond £12 without news of either the US listing, Petersen, general results or something from left-field. But equally, I would be surprised if BUR didn't get near to that value over the next couple of months.

[williamcooper104] 31/10/2019 18:16

Can we please discuss burford and not TW/SP - it's super boring

[mad foetus] 31/10/2019 16:01

I do not know if it is true but I have heard that TWs wife is closely related to the head of regulation at AIM. If that is true it is worth bearing in mind.

[knowing] 31/10/2019 14:58

Well added a few more here and also took some LIT. Both will do well I am sure.

[djderry] 31/10/2019 14:56

Moody's give the bonds a Baa3 rating which Numis says will open the doors to corporate investors.

[syoun11] 31/10/2019 14:40

2 million pound buy just went through

[compo62] 31/10/2019 13:36

Thanks Johnwig - an interesting and disturbing read

[scubadiverr] 31/10/2019 11:08

But you're a fool having a mentor who is only interested in attempting to enrich himself at the detriment of others

[williamcooper104] 31/10/2019 11:07

Do hope Burford ditch their credit rating - they don't need it and it's a huge management burden Although obviously given recent events it's helpful for share price Before anyone starts about rating agencies - they screwed up on structured finance - on corporate and sovereign their track record is not bad And getting an investment grade rating is not an easy thing to do

[george stobbart] 31/10/2019 10:17

Moody's has assigned a Ba3 corporate family rating to Burford with positive outlook but my mentor Tom has assigned a Strong-SELL toilet paper rating on BUR and I believe him and not Moody's.

[stoxx67] 31/10/2019 10:15

having the Muddy Waters farce realised for what it was, i did expect rather a quicker retracement to the upside.

I certainly hope we recapture £20 and beyond next Year, i also trust that in 2020 we will get what we require from the LSE and then end the company that is Muddy Waters.

MF could you offer calculations for £50 please. i'd be very pleased to see that share price, as, one suspects, would all shareholders : )

[mad foetus] 31/10/2019 10:02

Obvs if profit continues to grow at historic rates and BUR returns to 2018 valuation share price target for 2021 would be £50

[winsome] 31/10/2019 09:44

DP, I wouldn't disagree with your assessment. Ultimately the share price level will depend on any 2nd listing. I expect they won't rush to US listing until after end of current tax year so their low tax liabilities don't increase. Increased tax will be the downside to doing a secondary listing. But the US listing will put a rocket under the share price A FTSE listing - not so much.

[pal44] 31/10/2019 09:03

huge spread this morning ?

[winsome] 31/10/2019 08:55

Significant that Morgan Stanley bought 5%. Anyone else wondering if they've heard on the grapevine that either a PE buyout or positive news on a US is on the cards?

I'm also thinking that now is about the right time for a trading update, half way between interim and next FY results. I'd like to know how much cash has come in from litigation cases and how much more they've invested. Shouldn't be too much effort for them to do this

[dgdg1] 31/10/2019 08:54

Donald, interesting comments. I still don't exactly follow why it should be such a problem, why can't Burford just accept whatever reporting methodology the US want? Also, in the absence of a US listing to get to £30 - I'd love to think you are right but it's a pretty bold call (unless there was a takeover in which case I certainly agree it's possible to get that high) - I mean we were struggling at £18 max most of the time even before MW so it would take quite an improvement in sentiment to get up to £30 so quickly.

[compo62] 31/10/2019 08:54

Where's Spartacus?