Burford Capital Share Discussion Threads

[adnan17] 12/1/2020 20:51

Also anyone that still believes Burford is committing fraud is just delusional. Why would a company that is committing fraud go openly to the SEC and open their books to the most ruthless regulator on the planet. The first time in history a criminal would openly show his books to the authorities.

In the USA nobody bats an eyelid when someone is shot. But commit white collar crime and the SEC will seek the harshest of penalties. Even Mr. Bogart has some sense not to screw with the SEC.

[adnan17] 12/1/2020 20:37

This is what is wrong with investors within the business. They are solely focusing on Petersen. Burford within their 2019 annual statement addressed the issue. They stated that if one ignored Petersen their ROIC would still be 59%.

From 2014 to H1 2019, Burford have made cash returns of $1.69bn ( 2014 $63m, 2015 $140.2m 2016 $180.8m, 2017 $363.9m 2018 $629.4 H1 2019 $315.1). These are cash receipts.

Petersen only represents $200m of this. So the company is not just about Petersen. They have produced roughly $1.5bn of cash from other cases (i.e. excluding Petersen).

Net profit in 2018 was $317.5m. In 2019 I am projected net profit of $441m. In 2020, I project net profit of $600m. This is based on prior year growth rates.

If we even get a P/E of 8x, which I think is conservative gives a market cap of $4.8bn. So getting to a share price of around £22. Hence, when they release results in March 2021, i.e. 14 months from now, that is where i expect the share price to be.

Any other super-normal gains such as from the likes of Petersen will add to that.

[dgdg1] 12/1/2020 19:34

Donald, I think you make one very good point which is that Petersen, assuming it is won, would massively increase the cash available to invest in more cases. Hsving said that, I don't think we can just blindly use this fact and then continue to calculate eps and PEG in the usual way as if Petersen is irrelevant. I think we need to analyse what exactly the likely profits would be from investing the cash, based on the usual IRR for normal cases. Without going into this properly and this is somewhat off the top of my head, assuming they retained $1bn of profit and distributed the rest, and got an IRR of 30% so that would be $300m per year extra minus costs so say $250m. That would be an extra 115c or 88p, so say eps would become 130p. Although you can't then also count the entire value of Petersen itself, as we are assuming 2/3 will be used to increase future eps. So the value would be the distribution of $500m or 176p, plus say eps of 130p at a pe of 24 or 3120. This gets us to 3300p, which is admittedly a bit more than my original estimate of 2500p. Or you could argue that they might distribute even less on the hopeful win. If they didn't distribute any, then the extra eps would instead be 50% more or 132p, to add on to the present 45p, total 177p. On a pe of 24 this would be a value of 4248p. So we are getting closer to 5000p. Of course you could just assume a pe of 28 and no distribution from Petersen (and all assuming they win Petersen of course!!), this would then get you to 5000p. Anyway it's fun dreaming about this scenario. By the way it may take some years before there is anything from Petersen, assuming it is won, so we are talking some time but 5000p in 3 years is fine with me... Also, you have to remember that the 30% IRR doesn't actually mean that profits would be 30% of investment every year as you need to wait for the fair value gains or actual realisations to come through. And of course this doesn't allow properly for the management funds side of things so all pretty rough, but it sounds nice anyway.

[donald pond] 12/1/2020 17:22

dgdg, Stockopedia have EPS for 2018 at 151c and a CAGR for EPS over the last 5 years of 160%, or 70% normalised. For the first 6 months of 2019 EPS was 100c. Given that BURs results have a history of beating expectations, I see no reason why they won't continue to grow at 25% pa minimum, in which case something around 200c for 2019, 250 for 2020 and 320c for 2021 is reasonable. Does that make a difference to your view? I'm ignoring Petersen in that if it settles the dynamic changes massively, reducing EPS in the short term but massively increasing cash available. I suspect long term it makes little difference to the valuation when it settles provided they make a decent return.

But just let that sink in for a moment on valuation grounds. Profits for the first half of 2019 were 100c. Assume they were the same in H2, and there is an EPS of over £1.50 for the year. Currently Stocks forecasts EPS of 164c for 2019, which would put BUR on a PEG of 0.36. I suspect EPS will be closer to 200c, and PEG somewhere around 0.2.

However you look at it, this is crazy cheap. It may even be one of the opportunities of a lifetime to buy a low risk asset at a huge discount (I think of how PE funds went to 80% discounts to NAV in 2008 as the nearest comparison). But, and its a big one, it all depends upon whether you trust the figures. And the market doesn't. But if BUR lists on a new market, and that market does trust the figures...BINGO!

[mad foetus] 12/1/2020 15:22

At £50 BUR would be very punchy. But my point is that shares are rarely valued "fairly": the valuation is often a product of sentiment. Most brokers have BURs value at mid £20s. Apply a 20% discount and say £20. Currently share price is a third of that. No reason at all why sentiment won't swing the other way. But it needs big new buyers used to US valuations. Didn't Caro-Kahn have a target of £54? Things go from undervalued to overvalued, that's what sentiment rules means, innit?

[cokehookerscars] 12/1/2020 15:12

I will add to that that if BUR (and it is a big if at the moment) can disprove MW and this get back the confidence of the market then we will see a pop in the share price to over its previous highs of £20. But £50 within 12 months seems wildly delusional without some pump & dump schemes ramping it up beyond all rational levels.

[cokehookerscars] 12/1/2020 15:05

I see £6 in the short-term and sadly not £50 within 12,24,36 or 48 months without a number of ludicrously high value cases coming forward and being won.

[dgdg1] 12/1/2020 13:41

£50??? Much as I am a Burford supporter and would love you to be right, I just don't see how you get to that number. I mean I think any reasonable attempt at a valuation has to start with a guess of the value of the Petersen claim, then an attempt to guess what eps has been and is likely to be ex-Petersen, and then perhaps a guess at the chances of there being future Petersen-like returns and add the value of all these things. With Petersen, assuming a likely 50% settlement of a $7bn win using the figures they have given and allowing for the Eton Park claim and the parts already sold, I came to an estimate of $1.54bn or about 540p/share. The trickier bit is guessing eps ex-Petersen but I think it's somewhere between 35p and 45p, of course that's likely to rise in coming years. (I got to that via a spreadsheet which calculates the assumed profits from Petersen based on the increasing value when they sold different parts, creating realised and fair value gains). If you then assume another $100m a year on average for potential profit from Petersen-like cases so that's another 35p/share. So being generous and assuming eps of 80p and a pe of 24, plus Petersen is 1920+540=2460, so beyond £25 seems pretty ambitious to me. Obviously you can make different calculations and assumptions, and I would be interested to hear the details if anyone has made them and what conclusions they got to.

[callmebwana] 12/1/2020 13:38

M/F, thank you for your input,much appreciated. I know you have been a holder here for quite sum time too,you know a lot more about this Co then me....ATB.

[mad foetus] 12/1/2020 11:46

I agree cmb though because of the downtrend you can't be confident that any break will be to the upside. Having said that, BUR is fascinating. It spiked to over £20 on March results so is down 65% on 12 month highs despite no negative news. No slowdown in returns or demand for capital, all purely sentiment driven. I've never seen that before in a company of this size. It creates a huge opportunity but only if and when sentiment changes, and at the moment the majority of market participants think the chance of BUR being a fraud or Ponzi scheme outweigh any potential upside. Results won't do it: company thought last set were great, but that is meaningless in the face of a well orchestrated shorting attack that alleges the results are spurious. It needs new investors, simple as that. With a US listing and no new shares in issue I could see a huge upside. £50 within 12 months wouldn't surprise me. But if, for whatever reason, that doesn't happen my guess would be share price down to £6 (I don't see it going much lower) and a PE backed MBO for £8/9 over the summer.

[callmebwana] 12/1/2020 10:53

Good morning all.

I have just been looking at the chart for BUR. On investing.com.
Things are looking very nice there IMO. For anyone that has any interest in charting.
MACD is looking positive.RSI also low. The most beautiful thing is the Bollinger Bands, they are getting quite tight ( Bollinger Bands getting tight is an indication of a share price breakout either in the Negative or Positive direction).
IMO, it is going to be an upward breakout,time will of course answer this for us.
It is time to lay our bets on.
Have a good weekend all.
ATB.

[sentimentrules] 12/1/2020 08:32

Market reaction to activists is mostly down to their credibility from past campaigns.

MW gets a massive reaction. Others will get far less. Just depends on how good their research was in the past.

[sentimentrules] 11/1/2020 23:16

ShadowFall kicked this off. Not MW

They just joined in

[epicsurf] 11/1/2020 23:13

Peel Hunt's number crunchers have compiled a list of possible takeover targets and some of the names mentioned raise some eyebrows.

They include Burford Capital, the litigation financing business which has come under fire from short-sellers questioning its accounting

[ozzmosiz] 11/1/2020 16:38

So if MW tweeted 14 times are you saying the company would be at 0?What a presumptuous statement

[callmebwana] 11/1/2020 13:44

Good afternoon Mr. Maddox.
I like your moniker :0) Yes, I often use the limit buy order in some stocks,it has proved to be a very good tool from my broker.
The other thing I also use is a trailing stop loss too. That is to protect myself with sudden movements in the stock price. I don't use the stop loss on minnow AIM stocks.
I think BUR is being traded well at the moment,have you noticed it fall in the morning and picks up in the afternoon !!
Have a very good weekend all.
ATB

[maddox] 11/1/2020 08:51

opps double post

[maddox] 11/1/2020 08:51

That's good advice Callmebwana I've been using low limit buy orders recently. Picked up stock on shares that had charged away and at prices which I thought I'd never see again.

BUR may not get down to 600p but certainly a dip to 650p on another MW tweet and bingo your order's filled.

[meanwhile] 10/1/2020 15:33

Nothing wrong at all with breakfast at Bill's or at McDonald's, or at Denny's.
Try the Lumberjack Slam.

Now come on now, now now, now come on, on come, now now.

[callmebwana] 10/1/2020 09:52

CHC good morning.
Why not just set a LIMIT buy order foe a month or so with your broker,if you feel the share price would drop to £6.0?? Though I doubt it will fall that low, I have been known to be wrong too, at times !!

[cokehookerscars] 10/1/2020 06:15

Need to set myself an alert for 600p as a short blip down there would be nice to pick up some more :-)

[callmebwana] 09/1/2020 23:20

I am one of the three wise monkeys
Speak no evil,see no evil, hear no evil.
You lot can carry on with feathers in your caps for being very smart etc.

[minerve 2] 09/1/2020 23:12

Absolutely nothing wrong at all.