Burford Capital Share Discussion Threads

[riverman77] 13/1/2022 12:52

As I've always said it will only get revalued when some big case wins come through. No idea when that will be, and it's obviously been frustrating, but I think patience will be rewarded in the end.

[loglorry1] 13/1/2022 12:34

It's not what value I put on it that counts. It is what the market puts on it. BUR have been in this leading position for some time and so the market has priced that in. One can argue that is why it trades above tangible book value.

You are right the cases could be worth billions (to shareholders). Until we see that happening though the market will discount this to some extent.

[extrader] 13/1/2022 12:13

" Who ya gonna call?"

BUR's successful track record over the years on a number of high-profile contentious litigation cases must make them the 'go-to' firm....what value/'goodwill' do you put on that ?

IMO

[riverman77] 13/1/2022 12:07

The value is in the cases, which could be worth billions (Petersen itself could be worth several billion), but very hard to put a precise figure on this (or when exactly they will settle). That is why it is hard to value, but I am very confident it is undervalued based on the cash that will eventually be generated. There is also a lot of intangible value given their leading market position, which means they are probably uniquely placed to access new cases and price risk.

[al101uk] 13/1/2022 11:46

"BUR is not easy to value" ... "Surely, if it is such good value it would be very easy to just explain why".

Not sure anyone has argued that BUR is easy to value, so not sure how the second part of your post hangs with the first part of your post?

[loglorry1] 13/1/2022 11:33

BUR is not easy to value. The accounts are not simple and there are a lot of non-cash item expenses. To make things worse to arrive at a value you need to predict the average outcomes of multi=year pending cases. It is far from easy.

Since it pays a very small dividend perhaps the best way to think about it is will the market re-rate it. The answer is probably yes if it can show good cash generation from cases settling and fewer big non cash items which seem to create quite a bit drag on returns. So basically I'm taking a punt on that.

It is amazing to me that posters here scream how great the value is but none of them can simply explain why with reference to the numbers. Instead they rely on ratios like ROCE and very long historic growth in book values.

Surely, if it is such good value it would be very easy to just explain why e.g. In the current year X cash is generated from cases settling minus Y expense on G&A, bonuses etc. etc. vs and EV of Z.

[maddox] 13/1/2022 11:14

Hi loglorry,

You appear to be long BUR ...but think it's over-valued? Would you like to articulate your investment thesis - as it's far from clear to me.

[loglorry1] 13/1/2022 09:51

Indeed that is another way to value BUR and I'm not ignoring that point.

However, to make money the market has to agree and currently its not willing to place 4x book on it.

Also one has to accept all these non cash adjustments which apparently don't matter do matter. It's silly to assume they do not. So at the end of the day as I keep saying how much real cash generation is attributed to fully diluted shareholders?

I'm long but I don't have to love the company. I don't even have to like it. I'd rather just see it for what it is warts and all and understand why the market might rerate it or continue to see it as trading above book and not producing much profit for its shareholders.

[tradertrev] 13/1/2022 09:36

log it is a bold statement to say that "BUR is actually expensive on P/TBV" when you haven't stated your view as to what constitutes TBV, what sustainable ROTE, growth rate and COE you assume.
Many people think BUR is expensive on P/B because they think it's a fund. This completely ignores the fact that BUR is a full operating company.
Personally, I think BUR is very cheap on a P/B basis as I am assuming sustainable ROE of 22-25%, growth rate of 5-6% and COE of 10%. Those metrics imply a fair P/B of 4x.
A successful Petersen outcome would contribute additional value on top of this.

[loglorry1] 13/1/2022 09:13

Advfn is full of people like you who insist the market price is wrong. They cite examples of ROCE figures and other ratios.

The problem you have is that to make any money the market has to change its mind.

BUR is actually expensive on P/TBV. It has yet to prove to the market that it can generate excess returns attributable to shareholders from its claims book.

They talk a good game but it's not throwing off cash from claims as fast as they would like you to think and there are plenty of costs incurred before the cash from claims hits the bottom line. There''s of course an excuse currently delays due to covid.

[divmad] 13/1/2022 08:38

I don't look to this site to broaden my understanding of bur. Certainly after your outburst. There are company presentations, company reports and very good external analyses that simply show your post yesterday is way off the mark. Study ROCE, ROE, sga as a % of revenues, for starters. I'm a happy buyer in further weakness. LTH for me for outsized capital growth.

[loglorry1] 12/1/2022 19:52

Sorry Divmad I forgot advfn exists to cheerlead. I stand corrected.

Whoop whoop BUR to the moon. Now we all feel better.

[divmad] 12/1/2022 18:23

Loglorry, I suggest you do your research again.

[extrader] 12/1/2022 18:23

Guys,

My post was marked as O/T and discussed two Irish banks, PTSB and BIRG, not BUR (which I also hold).

ATB

[time_traveller] 12/1/2022 18:11

Greedy lawyers - well I never!

[loglorry1] 12/1/2022 16:41

30%+ IRR is a lovely stat but after the intial very srong run up in share price it hasn't done much since and divis are de-minimus. This is essentially my point. If you really are growing NAV that rapidly the share price should re-rate but it isn't showing much signs of that. There is also a disconnect in cash generation between cash earned by cases settling and actually being attributable to shareholders. Essentially as a lot of other costs and bonuses seem to then come out.

[time_traveller] 12/1/2022 16:20

Sadly, the beta isn't zero, or negative, and boy, compared to a buoyant market, the share price has been absolutely abysmal in the last four months.

[sam55todd] 12/1/2022 16:01

30%+ IRR long-term isn't convincing enough?
(although should be adjusted for average costs to get net return)
they've kind of inflation-proof fuse (as already mentioned - cost-inflation is a different matter)
but at the same time recent waves of bankruptcies under these unprecedented conditions might dent the base all these litigations are run at (it's pointless trying to retrieve assets worth nothing in this new-world).

p.s. equity growth alone over last 4 years should give some hints (but last report hit with -100mil kinda is fine all things considering).

[loglorry1] 12/1/2022 15:54

BUR should have relatively uncorrelated returns to other stock returns which I think will be strained as interest rates rise (especially in the US). It is also relatively inflation proof although I suspect lawyers will want to get paid big salary rises.

The problem I have with BUR is that on a line by line claim view they look like they have a very good business model. How that translates to shareholder returns is a slightly different question.


I don't follow bank equity much but they should do ok in raising rate environment.

[brileyloucan] 12/1/2022 13:51

Hi Log,

Interested to see that you have bought and glad you see value here. However, you clearly don't think it is "just" fair value as otherwise there would be no upside so what do you feel is FV assuming this progresses as expected over the next 12 months (ignoring Petersen)?

I also hold at around the current price (US-listed shares) having built and traded around the position over the last 10 months and feel that it could reasonably be valued today at around 50% upside from here.

Not an amazing investment so far, though have taken some profits along the way.

BL

[loglorry1] 12/1/2022 12:11

I bought a few here. Will add on weakness. I think price is ok down here.

[divmad] 11/1/2022 16:03

A one product business.

[divmad] 11/1/2022 16:02

Oh, I never realised that this was a product business. Silly me.

[porsche1945] 11/1/2022 15:31

Just a thought but why dont you guys just buy something else, a better company?? This is crxp, it never goes anywhere, loads of question marks about the dodgy management, Petersen will NEVER pay out. Buy some Nvidia or Google ffs.