Burford Capital Share Discussion Threads

[michaelem] 24/5/2022 21:04

Mr Wilson has invested a substantial part of his Burford earnings $162k per annual report. He is surely expecting a substantial return on his investment. I reckon a great choice.

[ali47fish] 24/5/2022 16:44

the chair buy10000 small amount- what does it mean

[planit2] 24/5/2022 16:40

Thanks for the replies. So the debt is fixed interest set when inflation and rates were lower and the future income at least in part will be inflation adjusted.

I like this share which offers a hedge against my other positions and should perform better than bonds if inflation stays persistently high.

[tradertrev] 24/5/2022 12:07

Long term the business should be pretty well hedged against inflation as claims tend to deal with economic loss, which moves with inflation.
The average duration of cases is stated to be around 2 years, which means the potential for erosion of value is limited on the "in-force" book.

[tradertrev] 24/5/2022 12:03

While all the stocks that benefited from Covid (online retail, testing, vaccines, hygiene plays) have been falling these past few weeks/months, it's weird that a Covid recovery stock like Burford (income clearly impacted or at least delayed) has also been falling.
Hopefully this is starting to be recognised by a few people.

[riverman77] 24/5/2022 10:26

Court judgments typically take inflation into account, while settlements would obviously consider inflation (ultimately both parties have to be happy with any figure in order to reach agreement). Not sure what the fuss is all about. The fall in share price is very obviously due to the wider fall in markets - BUR always tends to fall more than the wider market, even though this is clearly nonsense as earnings have no correlation with what's going on in the economy, and given its low PE rating should be less sensitive to movements in interest rates (unlike the high PE, long duration tech stocks)

[time_traveller] 24/5/2022 09:56

While I would agree there is some negative correlation to inflation, (and with little else to blame, I assume most of the share price drop is due to inflation expectations) ... my thinking is that there is some level of inflation protection, with awards either specifically factored (YPF?), or more generally valued at current prices when the judge (or both parties in the case of settlements) calculates them.
Then there's the time from award to payment. I don't know if there's inflation protection on all those, but in the current high inflation environment, I expect there will be on current and future wins.

[loglorry1] 24/5/2022 08:41

BUR debt is fixed dollar debt hxxps://www.burfordcapital.com/shareholders/bond-information/#:~:text=On%2030%20January%202018%20Burford,Prospectus%20and%20Information%20Booklet%20below.

The claims book is not inflation resistant. You say "most claims will take inflation into account" but this just seems like a wish rather than reality. The expected payout of the claims currently in the book are not inflation undjusted so I don't see how you can make this claim.

10% inflation is unlikely to last so it's more of a one off (hopefully). The stock market is a beuaty contest. There are worse places to be invested if you are inflation averse.

[michaelem] 24/5/2022 08:38

Bonds issued by businesses are generally at fixed rates. All Burford’s bond are at fixed rate, see page 37 of 2021 Annual Report.

[michaelem] 24/5/2022 08:36

Bonds issued by businesses are generally at fixed rates. All Burford’s bond are at fixed rate, see page 37 of 2021 Annual Report.

[planit2] 24/5/2022 07:44

Does anyone know whether any of the funds were raised on a LIBOR+ basis?
Or is the debt all fixed interest?

I am investing here as I believe it is inflation resistant, most claims will take inflation into account. Hopefully the debt is fixed which will help even more.

[kaos3] 23/5/2022 14:45

I cant think. I am not that clever - so I ask.... those who might know better.

You see - there is a curve. Inflation curve. Are they behind it? Are they riding it NOW? As effects will be known years later. The difference is 100s of millions probably

[divmad] 23/5/2022 14:40

Don't you think that Bur management are well aware of the inflation issue, and will be working on fine tuning their compensation arrangements at the outset of new cases?

[kaos3] 23/5/2022 14:21

if the real inflation is 10 % + - and the compensations do not include that part - the ROE will be even more negative in real terms. as it is atm

[kaos3] 23/5/2022 14:01

8 % is economic real compensation for not being able to use the "stuck" capital. not inflation part - which should be in addition imho

I sued and got it - but it was like 6 years and went to the higher court ,,, it was not a normal procedure - as it should be for the fair compensation

[loglorry1] 23/5/2022 13:57

"as I have no experiences - do judgments take into account inflation when they set fair compensation?"

Sort off. The award includes interest usually around 8%. So they court works out the date when the event that causes the claim arose. Then they apply the interest rate to compensate for the time value.. I think it is a fixed rate and has been quite high relative to real rates in the past. This is one of the reasons BUR makes more money if things drag on.

That said it is most probably totally up to the judge to decide and in the case of a settlement obviously to be agreed by both parties. If BUR loose then the increased inflationary costs come to bare.

I don't think BUR is immune to inflation.

The case book is effectively an asset which they have spent money on and which pays out at a future date. The time value of that is not adjusted for inflation and so it is currently be eroded by inflation. I love donalds uber positive approach to this but its not totally justified.

[kaos3] 23/5/2022 13:45

I was thinking about the same - costs up, all remains nominal. which is not so good and it might become an important issue.

as I have no experiences - do judgments take into account inflation when they set fair compensation?

[donald pond] 23/5/2022 13:45

I suspect they will change their terms to compensate. So instead of getting (say) 30% of the claim they may put an escalator that increases it by 1 or 2 % a year. But in theory, any claim should keep pace with inflation from the time it arises, so it may be moot.
This of course is the biggest unknown in the YPF case: will it get 9% a year since it started?

[loglorry1] 23/5/2022 13:36

The cost of funding cases (paying lawyers) will increase with pay inflation to process BURs pipeline of cases. In many US cases each side pays their own fees. I'm not sure awards are going to increase with inflation but they might.

[kaos3] 23/5/2022 12:09

I can not figure out how the BUR business model will prosper in a high inflation environment. As all is nominal and it takes lots of time - long cycle - for the inflation to do its thing.

[donald pond] 23/5/2022 12:05

I think a few institutions may be wondering what stocks might prosper in a stagflationary environment. And one thing for sure, when businesses are slowing down and inflation is squeezing margins, anyone with a sniff of a legal case will be desperate to monetise it. BUR needs to keep its discipline, but the opportunity is as big as ever.

[bramcych] 23/5/2022 11:55

There are many catalysts for a sea change in the share price with a significant and steady increase. Peterson is one however they will undoubtedly announce significant increase in income as wind will show in results and the waterfall funds start to cascade.

[chester9] 23/5/2022 11:34

:) nice Monday 4 weeks to go

[maddox] 19/5/2022 09:39

Hi fueguru,

BUR has about $1.4bn of assets in the US and $1bn in UK/Europe so CEO Chris Bogart states that happy being in both places in what is still a relatively undeveloped market sector. The UK Legal Services Market is huge, £37bn* ranking second globally, and that would alone justify their straddling the UK and US and presenting themselves as a 'native' in both.

The US Listing has allowed them to better match funding to their asset mix and the US Bond market allows access to a much greater scale and competitively priced funding. But there are plenty of London based lender providing third party capital. Litigation Capital Management (LIT) listed here from Australia and only recently completed the move of its Executive Management Function to London.

Regards Maddox

* The CityUK–UK Legal Services 2021

[donald pond] 18/5/2022 22:28

https://twitter.com/sebastianmaril/status/1527036916738277380?s=21&t=6FC3B87JdH4AxJ6yClvq4gLooks like the Argies are struggling to explain their defence in 75 pages!