Burford Capital Share Discussion Threads

[hazl] 31/1/2020 12:07

Thanks so much Maddox you people here are the experts.
You have lived eaten and breathed it...I've just come on because I saw the opportunity of a great firm, at a bargain price(in my opinion of course).

Will read properly when I'm not dealing with other shares.

[maddox] 31/1/2020 11:26

Hi hazl,

As you've only recently come on-board you may have missed a few things. Burford have responded in detail to MW, the primary docs are:





and they have made changes on the governance issues that were raised. So, I really don't think that there is much more they can do on this front?

A NY exchange listing will drive demand, as there is no intention to issue new shares, this should lift the share price. I've heard a number of analysts say that US investors will find Burford highly attractive and have a greater risk tolerance than UK investors.

However, I understand it typically takes 4 - 6 weeks to go through the process and as their 2019 audited accounts are to be part of their submission to the SEC - this won't start until April.

Burford report their 2019 Results on the 24 March. The H1 results were excellent and there is nothing I can see to suggest H2 will be any different. The other listed players in the market Manolete Partners (MANO) and Litigation Capital Management (LIT) have positive outlooks. I expect to see a trading update from MANO mid-Feb and LIT's H1 results early March - so we'll get some earlier comparatives.

Nevertheless, I don't expect the share price to bounce back to pre-MW levels on the results - even if sparkling - but should mark the beginning of the recovery.

Regards Maddox

[stockvalue] 31/1/2020 10:36

@pal44 Watch this and stop writing nonsense!

[george stobbart] 31/1/2020 10:36

Has it reached its Fair Value of 200p? No? Ok i'll come back tomorrow

[pal44] 31/1/2020 10:27

normal Friday trading pattern up in the morning down mid day do we hold over the weekend ..!!

[hazl] 31/1/2020 09:49

I am really looking forward to results here.
They have the opportunity to really fight back and clarify matters perhaps.

[hazl] 31/1/2020 08:43

I also got some NCYT today seemed prudent.

[gettingrichslow] 30/1/2020 21:20

Donald, although I think there is definitely something in your hypothesis, I’m not totally convinced it explains what has happened here. For starters, why were there so few institutions taking a small stake in the first place? Why was it so ‘all or nothing’? Secondly, as the price fell, why did institutions that weren’t previously holders start to see value and pile in, in greater numbers than they have, to drive the price back higher? It’s certainly a weird situation to say the least. I’m not sure I’ve ever seen such an unusual situation frankly. One thing is for sure, there will be fireworks on results day, and as another poster said recently, I wouldn’t rule out a massive jump.

[hazl] 30/1/2020 20:48

likely to be a better day tomorrow as the Dow has turned up as news better.
In my opinion.

[dgdg1] 30/1/2020 19:56

Donald, thank you, that's very clear now. My own story sort of backs up what you are saying in that I had strong conviction in Burford and thus was very heavily invested before MW, the result being that even after the price crash there was very little scope for me to buy more shares than I already had. It makes a lot of sense that those who understood the model would have been heavily invested from the beginning. So yes what you are saying is a very interesting hypothesis and no doubt is one part of the explanation for the extended low price.

[hazl] 30/1/2020 19:09

For balance there is always the risk of a general stock market crash,but of course that is true of any stock not specific to Burford.
Pleased to be on board.

[hazl] 30/1/2020 19:05

Yes good discussions today.

I am a new investor.

I didn't buy because it was just a 'bombed out' stock.
I looked at the fundamentals,the long-standing strength of the company. before the 'crisis' and indeed the calibre of investor here before the crunch.

We also know that stocks can bounce back after a MW attack, but as has been pointed out, this poor company had double whammy attacks,from both sides of the fence,as Woodford's forced position played out.

I feel sorry for Woodford actually.
Agree stockvalue,this could suddenly jump if new investors see value and simultaneously shorts close.
Then again present investors might add to their holdings?

[bwana4] 30/1/2020 17:40

D/P great posts.
Thanks for tacking the time to do so.

[donald pond] 30/1/2020 16:36

By "investible universe" I mean the entire range of stocks that a fund can invest in. So, for example, a UK Smaller companies fund may have an "investible universe" of stocks outside the FTSE 100. Or with a market cap of below £1bn. A micro-cap fund might have a limit of companies with a market cap below £100m.
Every fund that invested in Burford owned more of Burford than an "index" of the things it could invest in would own. That's what an outsize position means: again, to use a FTSE comparison, it would be as if no funds owned less than say 2% of RIO (assuming RIO's weighting in the FTSE is 2%). They either owned nothing or more than 2%: an outsize position.
Many funds are closet trackers, and will buy a proportionate amount of everything they can buy.
It's also worth adding that being on AIM didn't help. If you are a fund manager and your boss is asking why your largest position is an AIM listed company on the front page of the newspaper, if you want to keep your job the best thing is to sell it. (though I wouldn't go as far as Hargreaves Lansdown and say you never understood it in the first place).
But the psychology of the holders was what made BUR the perfect candidate for a short attack.

[dgdg1] 30/1/2020 15:52

Donald, very interesting comments, thank you. Could you please just explain to those of us including myself who don't properly understand what you mean by the investible universe and having an outsize position - how does one calculate these proportions and what exactly do they mean? Thanks

[borg45] 30/1/2020 15:44

George is busy with his crayons and colouring book

[mad foetus] 30/1/2020 15:41

I don't think it's about blowing MW out of the water, they are likely long gone. It's about producing solid results that attract new buyers. They got institutions to buy at £18.50 and a major sovereign wealth fund, generally believed to be Singapore, to invest a big sum on very good terms. They need to be able to explain to a new group of investors why this is such a great opportunity, and the next results and the commentary around them has to be bang on point.

[cokehookerscars] 30/1/2020 15:20

George, can you explain your working out and numbers behind your 200p value ?
Seriously Interested.
Cheers.

[chimers] 30/1/2020 15:06

Investors never come back. Once you have cheated on them once it will always happen again.
By this time they will be safely tucked up in new investments and be wondering how the hell they had never invested in these new companies in the first instance.

[rar100] 30/1/2020 14:27

Nice post donald pond,

It makes sense to me, I hope that BUR can publicly blow MW out of the water soon, that would bring investors back who sold maybe.

Thanks for the post, hope to hear from you again. rar

[stockvalue] 30/1/2020 14:24

@donald pond
I don't agree on all your assumptions. Forced seller OK, but still why is anybody who bought here even thinking about selling under 10 pound. Only logical explanation for me is that a lot of RI and some fund managers don't have any valuation models in place. Bur is in my eyes a textbook example for a company ready for a LBO or MBO. We will see how it goes, wouldn't be suprised to see a one day jump around 85% to 115% to a more sensible share price range. "current share price has absolutely nothing to do with the company" agree on that one.

[george stobbart] 30/1/2020 14:22

Has it reached its Fair Value of 200p? No? Ok i'll come back tomorrow

[trident5] 30/1/2020 14:03

Wouldn't any II invested in an Aim company have an outsize position?

[donald pond] 30/1/2020 13:31

As well as Woodford and Barnett, there is another angle to why BUR was a great target for shooters. Around a year ago I read an article saying that BUR was the only company on the market where every institutional investor in it had an outsize position. What does that mean? Effectively, that BUR represented say 0.1% of the investable universe for funds, and every fund that invested in BUR had invested more than 0.1% of its assets here. Everyone who kicked the tyres at BUR either wanted a big slice of it or none at all. Nobody had a "token" holding.
As a result, when the price started slipping, and when the shorting started, everyone that held was under pressure to explain why they had a holding well ahead of the benchmark. There were very few people around to buy more: those who didn't buy in the first place felt vindicated and those who held were under pressure to sell.
But the result is that the current share price has absolutely nothing to do with the company: a company that began their results with the 2 following quotes
Sir Peter Middleton, Chairman of Burford, commented:
"As Burford approaches its tenth anniversary, we have unbridled optimism about the future. The industry continues to grow rapidly, due in large part to the pace we set by evolving our products and services to meet the increasingly diverse demands of the users of legal finance. Burford is well positioned to continue to lead the global legal finance industry through the next decade of growth. The Board is grateful for the continued support of our all of our stakeholders."

Christopher Bogart, Chief Executive Officer of Burford, said:

"Burford has had a momentous first half, with profits exceeding $200 million and assets surpassing $2 billion for the first time..."

Of course, you can dismiss it all as BS, as Muddy Waters did. But I think the crux of their approach - which was very well thought out - was psychological. They identified a company which was unusual, with an unusual investor base made up of PIs who were generally sitting on big profits, institutions with outsize positions, and Woodford and Barnett, who were both selling down. And they asked a simple question: not whether the company was overvalued, but rather, if they could muddy the waters, and did start hitting people's stop losses, who would buy?

But while that tactic was exactly right, it also means that the disconnect between the reality of the company and the share price is stark. The challenge now is for Burford to attract the new buyers, which is I think part of the reason why getting a US listing is so important.

[hazl] 30/1/2020 13:05

Sorry been too caught up with GGP today but see a good opportunity,
to add here again.

We'll see.