Burford Capital Share Discussion Threads

[williamcooper104] 03/1/2020 07:36

The operating cashflow deficit is what you would expect in a growing business

[ozzmosiz] 03/1/2020 07:35

Yet the bosses still put their hands in their pockets buying up more more shares.

[williamcooper104] 03/1/2020 07:33

Sure there's every chance that there will be another Peterson at some point in the future - but that doesn't mean that markets should apply an earnings multiple on that hope Land Securities made £1bn profit on one development - the Walkie Talkie - and rightly got no earnings multiple on the profit

[joe say] 03/1/2020 07:11

Two concerns raised - which they then point out are IFRS related

Have a go at the worlds accounting standard setters - not Burford per se.

[galatea99] 03/1/2020 01:32

Long read just published in Chronic Investor on fair value accounting.
Burford mentioned.

Extract:

"Materiality, however, bursts from the fair-value gains recorded by Burford Capital (BUR), an Aim-quoted Guernsey-headquartered company whose role is to provide the finance for civil litigations and take a slice of the settlements. As Table 2 shows, in 2015 Burford’s fair-value gains were a comparatively-modest $22m out of $77m operating profits, or 29 per cent. By 2018, such gains contributed $230m out of $344m of operating profits, 67 per cent of a much bigger total.

The basic concerns are twofold. First, Burford’s fair-value gains stem from level-3 valuation methods at their most unobservable. As Burford itself says about valuing the possible pay-offs from legal cases, “the estimation of fair value is inherently uncertain. Awards and settlements are hard to predict. . . There is much unpredictability in the actions of courts, litigants and defendants... There is little activity in transacting investments and hence little relevant data for benchmarking.”

"Obviously, Burford’s internal valuations are checked by its auditor, the London office of Ernst & Young. For every case where there is a year-on-year change in fair value, the auditor says it tests and challenges management’s assumptions, does external research and compiles relevant secondary-market trading data, such as exists. For cases where there is no change in value, the auditor does much the same but for a sample of cases. That sounds fine. Yet, much like the ways that Burford comes up with fair value in the first place, it’s hard to know from the outside what that really means in practice.

The second, and connected, concern is that Burford’s accounting profits – swollen by paper fair-value gains – contrast sharply with the rate at which cash leaves the group. In 2015, while the group recorded operating profit of $77m, its operating cash flow was minus $9m. By 2018 compared with operating profit of $344m, the cash outflow was $198m. Cumulatively in the five years 2014-18, there was a $1.2bn divergence between accounting profits, which relied heavily on fair-value gains, and cash outflows, which removed the paper gains.

True, all may yet come good at Burford, though the pace of its share-price decline – at 717p, it’s down 65 per cent from its all-time high in mid 2018 – suggests otherwise. Perhaps more important, Burford prompts the thought that fair-value adjustments – great in theory – actually cause more problems for investors than they solve. If so, that would be because, at worst, the effects of IFRS 9 and IFRS 13 turn company accounts from a precise record of past transactions into glorified speculation about the outcome of future events.

Not just that, but such speculation would be strongly influenced by each company’s own bosses. Paradoxically, that would tend to have the opposite effect to what accounting-standards setters wanted when they shaped the fair-value rules. It may make equity investment less efficient because values, rather than being shaped by scores of (mostly) independent financial analysts, would, in effect, be handed down by one or two company insiders. What would be fair in that? "



(Not a holder).

[helicopterflyer7700] 03/1/2020 00:38

If I’m reading this correctly the 25% of the Petersen claim sold for $106m has been resold for $200m - Am I correct, if so it would value the claim at $2bn ?

[helicopterflyer7700] 03/1/2020 00:37

If I’m reading this correctly the 25% of the Petersen claim sold for $106m has been resold for $200m - Am I correct, if so it would value the claim at $2bn ?

[gettingrichslow] 03/1/2020 00:11

William, not sure I understand your logic there...it would be easy to make the assumption that the Petersen case is a one-off but we don’t know that do we? How do you know there won’t be another huge success out of the many investments they’re making? Or 3 or 4 huge successes? In other words, why would you make the most negative assumption you could make?

[cokehookerscars] 02/1/2020 23:33

Has anyone got updated data on this from above ?

"
Total number of shares following Gerchen Keller merger on 15 Dec 2016: 208,237,979

Significant Holdings (06 Jan 2019, total 218,649,877 shs):

Invesco Limited ........ 32,789,655 15.0%
Woodford Investment .... 20,724,001. 9.9%
FIL Limited ............ 18,027,876. 8.6%
Old Mutual ............. 12,777,842. 6.1%
Fidelity Worldwide Inv . 10,681,277. 5.1%
Aberdeen AM ............ 10,284,027. 4.9%
Christopher Bogart* ..... 8,800,000. 4.2% (approx.)
Jonathan Molot* ......... 8,600,000. 4.1% (approx.)
"

[williamcooper104] 02/1/2020 22:45

And Mano is less of a litigation funder and more a debt collector

[williamcooper104] 02/1/2020 22:43

The lack of news is fine Deliver results

[williamcooper104] 02/1/2020 22:42

Maddox - Mano (which I'm also invested in) has granular earnings with an average 12 month recovery period The issue is that a big chunk of Burs earnings are down to one case where they have turned 18m into a few billion (and yes we love then for it) but they are not going to do this year after year - so it's not such an anomaly for Bur to trade at a lower multiple Irrespective of earnings, the NAV is now likely to be at or even above the current share price - so I see no reason to sell But equally no reason to expect the share price to double or triple any time soon

[maddox] 02/1/2020 22:31

Oh I see, rar, you mean the idle speculation and unsubstantiated nonsense that you see on here. I think you should try and be a bit more discriminating if you're giving those comments any credibility.

Have you had a look at the other quoted firm's in this sector Litigation Capital Management (LIT) or Manolete Partners (MANO). The similarities and contrasts are very enlightening. Key point for me is that they are all high margin businesses that are growing strongly in what is a fast growing market. Essentially, they are all have the same operating model. However, the disparity in the value Mr Market is putting on Mano p/e ~20 and LIT ~7 BUR ~5 is difficult to explain looking at the fundamentals.

Excellent video on LIT on Piworld

Regards Maddox

[rar100] 02/1/2020 18:19

Hi maddox

The ones I read on here, latest being takeover by unkowns

[1aconic] 02/1/2020 17:39

BUR weren't concerned about the share price fall - they were concerned about the lies and provided answers. I personally see no value in them wasting time on any more and want them to get on with core business activities that will hopefully create long term value in the company (which is what will get long term holders the best long term results). BUR have never normally provided updates on investments between reporting dates. Management focussing on short term share prices rather than generating long term value is a recipe for disaster in any company; I'd run from any company I thought was doing that. (Again), they said when they'd update on the NY listing... that time hasn't arrived. Why are you so desperate for news... any news? Do you want to sell? If you like what you saw from your research, why not rejoice and buy more at low prices? Talk of BUR being a rumour mill? Virtually all the rumours I see are written by people on here! If we want the rumours to stop, lets stop using this forum to constantly hypothesise using no substantive facts whatsoever!

[dudishes] 02/1/2020 16:49

2018 - £20 - then £15 - now £7.

£3?

All looks rather sticky.

[chimers] 02/1/2020 15:22

Another year and?




Ahhh well ...next year then.

[maddox] 02/1/2020 14:44

Hi rar,

What rumours are you referring to?

[rar100] 02/1/2020 13:08

BUR is just one big rumour mill at present.

I do think it would be good for investors to write to BUR asking the relevant questions and to post replies here.

They can't answer some questions for good reason but they will be naive if they don't think that there is a rising level of anxiety over the stock purely because there is no news.

And no news stokes the rumour mill which certainly is not in there interest, and after this length of time, in my opinion, it does show a disregard and disrespect to their shareholders.

I think it's time for investors to put the pressure on, it's not unreasonable, but the lack of news is unreasonable.

[5chipper] 02/1/2020 13:02

Mgmt have said that they will be unable to update whilst going for US listing.

Will that also include general company or trading updates?

[ozzmosiz] 02/1/2020 09:38

I would love it :)

[time_traveller] 02/1/2020 09:18

Even a buyout at a 100% premium would be below many investors buy-in price. I know most of my purchases were above £15 (albeit some top ups at £7.50). It wouldn't sit well with many long term private investors - the current share price would look just a bit too convenient, and if it were done in partnership with management, are they getting a level of disclosure on key cases which PIs aren't party to?

[bogman1] 02/1/2020 09:05

I agree foetus. BUR were very concerned with the share price fall down to these levels after the mw attack. But have strangely gone quiet over the last few months with the share price still bumbling about in the low 7s. Their lack of info makes me wanna run from this stock...

[mad foetus] 02/1/2020 08:26

But BUR do disclose both the commitment and the amount forwarded in respect of each investment. So you can see the cost or the valuation: it's all there. It gets more complicated with portfolio funding, where BUR could agree to lend £50m over 3 years, have forwarded £30m, 10 cases could have been funded and 3 settled, all with different results. In any event, it seems clear that BUR is either a con that has been found out, run without any concern for shareholders, is about to issue significant newsflow (board update, trading update, listing update), or about to be taken over. I suspect something is happening that is preventing news being issued. It could be a takeover at a big premium or it could be connected with US listing (and if that doesn't happen the share price won't respond favourably). But please BUR, give us some news!