Burford Capital Share Discussion Threads

[williamcooper104] 15/2/2022 13:29

They sold half their position close to the top and then bought back in when the share price was well below NAV So I'll happily do what they do

[lomax99] 15/2/2022 13:24

Well between them Molot and Bogart already own nearly 10% of the SC, so they could hardly be accused of not having 'skin in the game'.

[flare1] 15/2/2022 12:26

The proof of the pudding will be "to wait and see if Bogart and Co buy more shares with their annual bonus".

[three black crows] 15/2/2022 11:14

Donald, Explain your comment on EPS further

[this tea tastes of chicken] 15/2/2022 11:14

I'd prefer to look at 2023 anyway regardless. Some of the European waterfalls will be starting to bear fruit slightly after that as well.

[1aconic] 15/2/2022 10:57

I think I've seen another EPS surge like that somewhere else but I can't remember where. That was justified by counting Petersen chickens before they're properly hatched...

Absolutely possible of course as we all know but wait and see might be more sensible.

Admin costs will have risen quite a bit and will lead realisations by a few years. They're been expanding staff count and also made a point not that long ago that legal salaries in law firms in general have sky rocketed over the last few years - inevitably they'll have to pay more to compete and keep/attract talent.

[houseofpain1] 15/2/2022 10:53

I thought I'd add my quick thoughts. Think I agree with most of what's been said. Clearly disappointing that realisations remain muted but fair enough given COVID disruption. But as we all know, and as the statement confirms, this is not business lost, merely business delayed. So the outlook is unchanged and you could even make an argument that it is improved given that delays can lead to more favourable case economics. Moreover, new business numbers are a real cause for optimism and demonstrate the recovery in legal activity post 2020. The way I'm looking at it is that the new commitments in H2 can presumably be added to the modelling data released at the CMD (which was based I think on the portfolio as at 30 Jun 21) and that therefore the potential recovery from the ongoing portfolio is now decently in excess of the $3.4bn set out in the CMD. So my conclusion from today's update is that we are still in a "jam tomorrow" holding pattern but that the there is meaningfully more jam than we were aware of yesterday.

[donald pond] 15/2/2022 10:37

EPS next year of 594p! WTAF!!!

[lomax99] 15/2/2022 10:23

Numis this morning..BURFORD (TP 1,317p from 1,376p Buy) Trading update: Given the inherent unpredictably of the timing of case conclusions we have never seen value in any single period's results. As Burford announced with their first half results 43% of cases were impacted by Covid-related court delays, and case delays have persisted due to Omicron. Consequently, we now expect H2 2021 to be similar in nature to H1 rather than the recovery we had perviously been forecasting. Burford's 2021 realised gains are expected to be $128m compared to $180m in 2020 and the lack of case activity has resulted in fewer judgements which are the driver of fair value gains. Overall Burford expect to report a net income loss of $70-80m for 2021. As with the H1 results loss rates remain exceptionally low, ($9m for the year, less than 1%, against 2% last year) and therefore the group's IRR is unchanged at 30% and the ROIC adjusts to 93%, modestly down from the 95% recorded in H1 and modestly up on the 92% reported last year. The impact is only a delay, and there is no lost revenue as all cases will reach a conclusion, and no client has discontinued a matter. Importantly, Burford's share of an award is very often linked to the time it takes the case to reach conclusion, and therefore we believe their eventual case revenue will be higher due to these delays. Legal activity recovery, and therefore medium term value creation, is on the way with Burford's own new commitments increasing to $607m from $361m and their own deployments increased to $448m from $252m. Our EPS forecast for 2021 moves to a negative 24.4p from a positive of 35.8p, for 2022 our EPS forecast increases to 594.7p from 548.3p and for 2023 our EPS forecast increases to 54.1p from 52.3p. PE is 1.2x current year earnings 13.0x next year

[brileyloucan] 15/2/2022 09:59

An attempt to explain $70m to $80m FY loss - assume most things continue as per H1, expenses slightly higher as now have bonus accrual rather than catch up. I get to the low end (69.7). Happy to paste as a proper table is someone explains how!

H1 2021 H2 2021 FY 2021

Capital provision income 68.5 59.5 128.0
Asset management income 11.7 11.7 23.4
Services/other income 0.3 0.3 0.6
Total income 80.5 71.5 152.0

Backdating bonus accruals (79.0) 0.0 (79.0)
"normal" op expenses (41.3) (46.0) (87.3)
Operating expenses (120.3) (46.0) (166.3)

Operating (loss) / profit (39.8) 25.5 (14.3)

Finance costs (27.7) (27.7) (55.4)

(Loss) / Profit before tax (67.5) (2.2) (69.7)

[this tea tastes of chicken] 15/2/2022 09:55

Is it [simply] due to the lag in completed cases coming through due to pandemic whilst the appetite for new commitments is on the rise?

[donald pond] 15/2/2022 09:52

You would expect though that as the book increases and the average claim size increases too that economies of scale would kick in. Let's see what the US makes of this. With Petersen in the endgame and covid coming to an end, the market looks forward and the next 12 months are going to be very significant for Bur

[loglorry1] 15/2/2022 09:47

It's the aame old thing where costs are rising as an every bigger claims book which is takinh longer to settle (due to covid) consumes more capital. The problem we investors have is that it could be something a lot worse!

[kaos3] 15/2/2022 09:36

what I find interesting in my non expert mind is the ratio of net assets VS total liabilities over time (am interested what is the constitution of liabilities and duration)

Total liabilities over last few years


(1,118,992) (925,300) (1,028,482) (1,650,813)

Total net assets


-1,532,992 -1,720,800 -1,699,812 -1,598,711

[donald pond] 15/2/2022 09:17

Kaos,It is simply because numbers are now being produced for US institutions who want them in accordance with US standards. In the end, all I want to see are the following: how much are our annual costs, what are our borrowings, how much p&l did we make in management fees, how much in investments, and what is the current NAV of our investments. That would make life much easier.

[tnt99] 15/2/2022 09:00

Jam being made for later

[kaos3] 15/2/2022 08:58

reminds me of the US CPI and similar data - when they are published they are one number - and after attention goes - that number changes and is over time "massaged" closer to the reality with additional info received

"Burford has also previously advised that it will move to reporting under US GAAP beginning with its financial statements for the current fiscal year. Under US GAAP, Burford has determined that the legal finance one-time, non-cash accrual announced in August will be applied to the 2019, 2020 and 2021 periods as opposed to being entirely recognized in 2021."

what is interesting to me is - why now?

[cockerhoop] 15/2/2022 08:54

Loglorry,

Have a look at the interim statement, the first couple of pages are pretty straight forward in showing the income (from 3 sources), operating costs and profit for H1. Obviously the numbers are different for the full year but the process in indicative.

[cockerhoop] 15/2/2022 08:46

Operating costs are massively elevated in 2021 due to the non cash accruals in both asset recovery and legal finance.

[tradertrev] 15/2/2022 08:45

...because the IRR is based on the gross return on completed cases. These has been very little change to the completed case record over the past year. Personally I would expect that, as the pandemic-delayed caseload comes through to the completed case stats, the IRR will get diluted a little. I'm not worried about that.

[kaos3] 15/2/2022 08:45

NO !

I cant get it - as for a simple gardener like myself with a common sense makes no sense.

And can I politely ask - was that a profit warning in "expert doublespeak"?

[loglorry1] 15/2/2022 08:44

Jeeps, "information is being provided....". FFS its not rocket science. Just tell us how you made the loss.

[donald pond] 15/2/2022 08:42

I can only urge people to contact Rob Bailhache at IR, who is excellent, and suggest to him a better way of setting out figures. Though we know two big US and Canadian institutions have recently bought in, and I know others are sniffing around as a couple of them contacted me via LinkedIn after I asked a question at the last call. So I suspect information is being provided in the way US institutions want to see it rather than for U.K. PIs

[loglorry1] 15/2/2022 08:27

As usual I have no idea how they can do 30% IIR on what is now a very large claims book, suffer only 9m in claim losses, and still lose £70m after recieving fund management fees. Can anyone explain ?