Burford Capital Share Discussion Threads

[cockerhoop] 14/10/2020 13:53

They own 61.25% of Petersen and will continue to own over 50% so could sell a further 10% or so. I imagine they also have some flexibility over their larger % position in Eton Park.

[bamboo2] 14/10/2020 13:48

Hi mf did you get my message?

[mad foetus] 14/10/2020 13:14

Defaulting on a judgment debt is different to defaulting on a bond. Governments issue bonds to willing purchasers. The risk of default is factored into the price. Judgment debts can be escaped if you declare yourself insolvent, but countries can't do that. So if we get judgment it will be paid.

[1aconic] 14/10/2020 13:01

They've committed not to go below a certain percentage but (without double checking) I think they still have headroom on that. Think it was a bit under 10% more they could sell if they wanted to. Also, I think that only applies whilst the case is active - after resolution they would be able to sell their entitlement and leave someone else to actually collect. Not 100% sure without checking.

[williamcooper104] 14/10/2020 12:50

I thought Bur had given commitments to the purchasers of Peterson not to further reduce their stake in the case further A loss will tank share price - seems unlikely though - and I'll probably buy more if that happens Unfortunately Argentina looks set to - surprise surprise - default on its debts and devalue again - apparently having only $1bn of hard currency reserves So are likely to be in it for the long haul in terms of cash recovery Winning the case though has to still be very positive in terms of sentiment though

[jeff h] 14/10/2020 11:57

Jefferies - What to look out for next year

We stress that BUR is not just about the YPF-related assets, and the H1 2020 results show that clearly, but the Petersen and Eton Park cases are going to trial in June in the Southern District of New York and there is very considerable potential upside......

We would note though that our valuations do not include interest, which might be awarded by the court. We understand that US Federal courts typically apply interest of 9% to judgement debts, charged from the date of the plaintiff's loss.
Burford's top-end outcome of $5.6bn is the same as our valuation on the highest YPF
P/E ratio in the two years to 12 January 2012 with nine years of 9% interest applied (expropriation in 2012, judgement in 2021). It is definitely not impossible that BUR is awarded a sum about three times its current market cap next summer.

Possible outcomes:

Loss - If they lose the case and cannot appeal, BUR will write off $773m of its portfolio, crystallising a loss of $3.52 per share. The share price would likely fall even further. If that happens, we would still be buyers of the stock, because the loss of Petersen and Eton Park will not affect the rest of the portfolio, which would probably be undervalued by the market. We expect BUR would appeal if it lost.
Win - If BUR does win, the defendants will appeal, probably all the way to the Supreme Court. We think it could take another two years for that process to play out. While we understand that there is a constituency within the company which would like to retain maximum exposure to the case, we think there is also an argument in favour of realising some more value from the asset before it concludes completely....

[jeff h] 14/10/2020 11:51

Hi kramch - yes potentially a lot more to come if the YPF case can be won and cash collected.

Note that the case is already included at a USD $773m valuation in the latest Balance Sheet so it is only anything received above this that adds to the valuation and like wise net assets would reduce by $773m if the case was lost or uncollectable.

Having said that 9% interest which others have mentioned on the thread (MF I think?) is also likely to be due.

I still hold all the shares here I bought in 2012 at between 102p - 112p and was the first to mention the case back in 2015 per post 211. It has been a long slog and us holders may still have 2-3 years still to wait before our patience is rewarded but I think we will get there in the end

[hatfullofsky] 14/10/2020 11:44

What block on trading ? IG / BARC no problem to buy

[kramch] 14/10/2020 11:15

Thanks for Jefferies report, Jeff H,
so a valuation of 1150p based on ongoing business, with the potential of another $5.6bn from YPF, say it's only 1/2; $2.6bn, I reckon thats another 977p, so £20/share.

Thanks Muddy Waters, the company has been thoroughly examined, some necessary governance changes made, a NYSE listing, and I have been able to load up ;-)

K.

[dagoberia] 14/10/2020 10:46

Hi mike, they told me shares will remain on the aim/crest. Last trades today up to 4pm.Ive been buying hoping this drop is because of limited buy side..

[5mikemike] 14/10/2020 10:22

Has anyone heard anything back from IG?

[bramcych] 14/10/2020 10:00

MF I agree, that the block on buying on many platforms from today was always going to have this impact, especially today when you can still sell! A separate point; do we know when US Brokers will begin issuing their assessments on Burford? Let's hope they fully address the significant impact of the waterfall fees...

[mad foetus] 14/10/2020 09:56

Fall today may be due to many not being able to buy. From tomorrow you can't sell either until next week

[bogman1] 14/10/2020 08:42

My advisor also elected to have my shares in crest/aim

[lazg] 14/10/2020 06:38

@Ollie, I have been asked to make a choice.

Wierdly, I received two messages: the first was dated 2 Oct, and stated that the default was going to be US, Then, on Monday, I got a revised message telling me the default was changed to UK.

I was going to opt for UK but was consulting my tax advisor first as a change in location may trigger capital gain tax. Thankfully, tax had not responded by the time I got the second message. Therefore, I hadn't answered to the first message either, Now I can just chill and go with the default.

This was DKB Bank, located in Germany.

[olliemagern] 14/10/2020 00:31

Trading in the US through DTC, costs a lot more and there are currency exchange charges. Has anyone been able to make a CREST Election to be able to continue trading on AIM ?

[syoun2] 13/10/2020 20:57

Wanted to say Donald ( Smiley face) I’m easy with, I do know my charts but I’m 80% Fundamentals. I’m fairly heavily invested in this one & intersted in commentary from all.

We’re Over the RSI today so assuming/hoping it’s a pause rather than a ...

[bamboo2] 13/10/2020 19:42

dp, sent mf a pm.

[ali47fish] 13/10/2020 17:32

can anyone explain what we should expect with the crest change in bur holdings following the US listing please?

[jeff h] 13/10/2020 13:33

Jefferies

Burford Capital Ltd - A Big Year Ahead

Key Takeaway
The HY results supported our thesis that the large commitment vintages of 2016
and onwards should start to have a bigger impact on the P&L from now on. We have
high conviction that the $262m receivable generated in the period will be collected, meaning BUR will emerge from the pandemic into a target-rich environment with plenty of firepower. We expect the US listing to be positive, and the YPF cases should go to trial in June. Our PT increases to 1,150p, Buy.

Good contribution from recent vintages: H1 realisations of $308m from the direct
portfolio included $266m from 18 related cases from three vintages (2016, 2017 and
2019). Although this means returns were fairly concentrated in the period, of the
other $42m realised, the bulk came from the 2017 vintage ($39m). So the bigger,
more recent vintages provided almost all the realisations, income and profit in the
period.

Collections will be strong in H2: The cases underlying the bulk of realisations concluded late in H1. They related to a North American Federal Statutory law case in the insurance sector; all avenues of appeal have been exhausted. The company's complete confidence in the creditworthiness of the defendant corresponds with the defendants in matters we can find which concluded before BUR's results on 28 April.
We, therefore, expect the company to collect the receivable in full, and most of it this year.

War chest building: We expect deployments to remain muted in H2, but slightly up
on H1, and the same for commitments. This means our balance sheet cash forecast
is $416m for the year-end, up from $316m reported as of 15 September. Assuming
the pandemic recedes next year and legal and business processes begin to return
to pre-Covid levels, 2021 could be a strong year for commitments, with deployments
picking up after that.

Investment case reinforced and doubts allayed: The H1 2020 earnings benefited
from high returns on 2019 commitments, meaning that BUR has made a 200%
ROIC or more on at least one asset from every vintage except 2012 and 2013, demonstrating that it can replicate past success. We also note the steady IRR of c.30% since 2015. The rigorous SEC registration process should put any doubts about BUR's accounting to rest, and the company is well funded, as noted above.

YPF-related assets: BUR's investment case is really about consistent high returns,
and we expect BUR to be able to average a 60% ROIC in the long term. However,
the YPF assets are an outlier which we cannot ignore. If BUR loses at trial in June
2021, they will have made $236m on a $21m investment. If they win, it will likely be a multiple of that. The top end of their possible balance sheet recovery range is $5.6bn,or about 3x the market cap and c. 7x the carrying value of $773m. A trial win in June would not conclude the matter, but it would open up several options for BUR and would be a major event for the share price.

What is it worth? We set the YPF assets aside at carrying value ($3.52/share) and
value the rest of the business on a P/B multiple derived from a Gordon Growth Model.
Our valuation of 1,150p ($14.91) implies the YPF assets are not in the current share price.

[mad foetus] 13/10/2020 10:30

I was tagged into that link on Twitter and wasn't sure myself. But it shows there are plenty of these big cases around

[dagoberia] 13/10/2020 10:25

Ah sorry just realised you were asking the question if it was one of ours (re the Daimler emission case)

[dagoberia] 13/10/2020 10:17

Hi DP may i ask how do you know Burford will benefit from this? Tried googling it but other articles came up. Burford seem to be involved in quite a few emission litigations. I think we saw earlier on that Burford was linked to the Daimler - Volvo truck cartel price fixing court case. Saw an other article on Daimler/Mercedes emissions court case but BUR was not mentioned.

[bigbigdave] 13/10/2020 08:04

Cheers Donald, re rating continues 🙂