Burford Capital Share Discussion Threads

[donald pond] 24/8/2021 08:23

Well, this is suddenly very interesting. The potential bad news has been released before the results and share price has taken it in its stride. Could be very good from here

[lazg] 23/8/2021 22:16

Good job syoun. Happy I didn’t notice the price action today...

[syoun2] 23/8/2021 18:54

Had good win on trading today and for once worked as not something I generally do

[syoun2] 23/8/2021 18:53

This feels different. Volume quite low considering the announcements today. Would have been very different a year or less back.
What everyone needs to remember is that the price is not rock bottom but relative to where it should be it’s very cheap

[syoun2] 23/8/2021 18:48

I think you’re right Donald, this feels like a change in sentiment. We still need results for price to rise properly but it seems for now that the market understands what Burford are sitting on.
Need to do some research now on court situation in US.
The fact about changing to US regulated accounting, does that mean volume is hitting close to 50%

[scooper72] 23/8/2021 16:59

Well, looks like there were some people who really saw the drop in the morning as a real opportunity to pick up some stock under £8. It's not easy I guess for many people to get a precise picture of how everything will unfold with a business like this as they don't make a widget that has a fixed cost and a typical consumer customer base. And so perhaps that is what helps to make the volatility a bit extreme. And of course the different views on the business help to make a market. Personally I am also in RBGP and almost pulled out on the earlier ups and downs. But glad I stayed in as the stock value has definitely gone the right direction in the last 6 months or so. I think BUR is one where if one believes they have the brains and muscle to win these legal battles, just ride out the ups and downs and let them do their work

[williamcooper104] 23/8/2021 16:40

To be honest I'm totally blinded by my historic returns here If I didn't have that I'd run a mile; and by not selling I'm breaking a fundamental rule as I simply no longer trust management IMO not adjusting for the carry in the balance sheet carrying values is actually worse than most of what MW alleged It's a shame as the results are not actually terrible - but then if balance sheet values are knowingly incorrectly stated then what else lies under the rock

[williamcooper104] 23/8/2021 16:35

Other than the balance sheet values being incorrect - which is a huge issue - the results are a little disappointing but not terrible; returns are lumpy and covid is delaying matters Though love the spin about the super low realised loss rate of 0.5 percent Of course it's super low, how can it be anything other than super low if cases aren't progressing - yet another bit of meaningless puff The share of profits over an IRR hurdle does mean that delay means higher cash returns - so it's not a case of revenue lost because of covid

[rar100] 23/8/2021 15:40

I surprise myself by reading more positive (to me) bits in the RNS, rather than the negative and looks like the market for this share is doing the same (at time of writing)on more volume than usual but still peanuts as usual. So jam tomorrow as per bloody usual. As someone here mentioned they should change their presentation of accounting figures given out in RNS's or indeed interims/finals so it's more comparable to past years, i.e. you can see easily how they are doing. For a bunch of bankers & lawyers it's a poor presentation. I've bleated through the years they need decent PR, I still do, it's still my worst share after the MW attack, best share before it.
So could be a lot of jam to come but it's been a horrible wait...and still is. Boring to the extreme.

[dgdg1] 23/8/2021 15:26

Really interesting price action today, to me it looks like a positive sign i.e. despite the superficial negative reading of low profits in H1, the market is now looking past that as that was hardly a surprise given covid. The accruals issue is just noise and the payment structure is not much of a surprise either at least to me. But what is interesting is that previously the share price would have languished for weeks or months on an update like this, whereas now there are buyers seeing through all this on day one, which is fundamentally a good sign (I hope) for the share price.

The other thing which I have found interesting is that over the past few days when the market generally was falling, based on previous such episodes Burford's price would also have been falling. Not that it makes sense as their returns are uncorrelated to the economy in general (except perhaps to an extreme covid lockdown scenario where cases get delayed, and even then profits are just delayed rather than lost entirely). Whereas this time the price actually rose while the downturn was ongoing. Which shows there are now enough investors who actually understand the business and have got past the MW nonsense and negativity.

[loglorry1] 23/8/2021 15:15

I think the point is that the compensation structure was never made clear plus another report with painfully little cash actually accruing on the balance sheet. Doesn't smell right to me.

Price is recovering though so well done those that held.

[riverman77] 23/8/2021 15:11

Agree, yet another quiet period and still no sign of any meaningful case wins coming through. I decided a while ago to wait until H1 this year to give things a chance to finally pick up but sorry don't have patience to wait another 6 months - just too much drag on overall portfolio. Have maintained a small position as otherwise would really kick myself if something positive happens on Petersen. The new development today about the compensation packages is another complication which really not sure about so overall relieved to be (largely) out for now. Surprised today's price action so muted as didn't read well to me.

[kaos3] 23/8/2021 15:09

is this a PE fund or a public PLC?

if I wanted PE - I would invest into one - agreeing to their published terms

[williamcooper104] 23/8/2021 15:08

Having some carry arrangement is very important though If public shareholders don't do this then a PE acquirer would split their carry So it hugely reduces the chances of an opportunistic take private

[williamcooper104] 23/8/2021 15:03

Eg a PE fund only gets their carry when they actually wind down and realise the whole fund in cash - so there's perfect alignment with LPs Here there is not as each carry is non recourse to each year - eg one great year they get carry and then on the next year if it's a loss there's no payback of prior year carry, just no carry for that year So the total amounts of carry paid, with no offset for loss years, could get extreme

[williamcooper104] 23/8/2021 15:01

The justification for it is that it's similar to what they would have got if they were externally managed Eg a standard PE fund charges 20 percent over an 8 IRR (leveraged of course), and that goes to the GP which is the people running the fund So 9 percent doesn't sound outrageous - but it's not clear of course how that's calculated - looks like it's 15 over 8 or perhaps 20 over 12. What should also happen is that at least half of the carry should be paid in shares with time locked vesting so as to retain staff and align incentives better to longer term share holders I'm less disappointed on the P&L being poor (there are people who still think this should be valued on a PE though :) - more annoyed about the disclosure debacle on carrying values

[loglorry1] 23/8/2021 14:40

I'm completely out now at 820p. Made a decent profit but as I said before show me the money. More funds deployed and more jam tomorrow. If it wasn't for the divorce case they'd have made a cash loss and they made an accounting loss anyway.

Also I have to say I was pretty shocked by the emergence of the 9% compensation expense although I'm not entirely sure what the 9% is on. They say its on realized gains but that seems like a very hefty sum for compensation. They have few staff so I'm not entirely sure why they should get to pocket 9% of realized gains ahead of equity!

Good luck to all - I may re-enter at some point.

[loglorry1] 23/8/2021 14:30

Sorry you are right. Financially strong not strong financial!

[tradertrev] 23/8/2021 11:53

Small correction to loglorry earlier post - there was no mention of a financial institution's involvement in the huge antitrust matter, it was just described as "a large, financially strong multinational".

[loglorry1] 23/8/2021 11:19

The cash balance isn't net cash. There is debt to come off that. Net debt was £359m at 2020.

Although remuneration is only on cash recoveries it still comes out of equities pockets and AIUI it is not taken into account when computing IRRs on the cases but I might be wrong about that.

[donald pond] 23/8/2021 11:17

Agree Hop and the other key thing is that demand for their services is growing strongly. Any business that can combine strong demand with high ROIC should be highly valued. US market might understand that.

[houseofpain1] 23/8/2021 11:14

Couple of other points to make:

i. on the remuneration point, I think the % has risen in recent years as this has been used more as an incentive, rather than LTIP. Definitely need to understand this a bit better but the fact that it is on cash recoveries only and that no awards were made on YPF sell-downs suggests it is all being done "the right way".

ii. The cash/near cash balance of c$530m is somewhere around 23% of the current market cap which is quite something for a company that MW claimed was "facing a liquidity crunch and potentially insolvent"!

So, as I said, disappointing short-term that today's update is a "jam tomorrow" story but the potential upside here is still growing whilst the share price languishes. I'm as confident as can be (although clearly nothing's certain) that very substantial cash profits will start to flow at some point and that today's share price (or yesterday's) will look very, very low at that point.

[donald pond] 23/8/2021 10:58

Not surprising when you think that in a weak market the share price is back to where it was 2 weeks ago. Seriously, this is an interesting juncture. share price recovering now, if US focuses on increase in commitments those who've sold this morning will quickly regret it

[lomax99] 23/8/2021 10:54

It didn't take long for the pond life to resurface.