Burford Capital Share Discussion Threads

[1aconic] 23/2/2021 07:57

Wasn't ALL PBT last year Peterson rather than 50%? 240m PBT, 100m peterson sales, 186m fair value adjustments (may not absolutely all be Peterson) wipes out PBT ex-peterson. Either way, it's definitely the quality of earnings that are the big takeway this year.

[time_traveller] 22/2/2021 17:48

But with a ROIC of 92%, what's not to like?

[pymadams] 22/2/2021 16:07

The half year update for H1 2020 shows about 161m in profit after tax, out of operating profit of 217m (in the section Burford-only results without third-party interests in consolidated entities, as adjusted).
So operating profit increased by circa 25m in the second half and profit after tax under 10m.
A large chunk of profits in 2020 came in the first few months.

Sometimes it feels the story is "look how much we've invested"

[hatfullofsky] 22/2/2021 16:07

@Donald Pond

Yes, most Tech Investors (such as GROW, SYNC) use the same accounting method (rebase on a funding round)

@Riverman

I do agree, great results but the market appear to be only looking at the healing numbers.

[williamcooper104] 22/2/2021 16:05

Yep - much much higher quality of earnings The quality of earnings much more important than the absolute quantum

[riverman77] 22/2/2021 15:54

Because half of profits last year were related to YPF. If you treat this as a one-off, then underlying profits doubled (despite the inevitable covid impact).

[donald pond] 22/2/2021 15:40

Because previous years have included write ups from ongoing cases. That was MWs main criticism, that the hundreds of millions of profit BUR was declaring was mainly the results of their belief that the YPF claim had increased in value. This time the results appear to be entirely or almost entirely actual conclusions

[hatfullofsky] 22/2/2021 15:28

I re-read the update over the weekend :

Burford had the best year in its history for portfolio performance, generating record levels of realized gain and more cash from successes than ever before. Burford ended the year with its highest-ever levels of cash liquidity, and its portfolio of ongoing matters is larger than it has ever been. Burford's concluded case ROIC rose to its highest year-end level in our history. New business, which suffered from the effects of the pandemic in 1H 2020, snapped back in 2H 2020. Notably, Burford's YPF-related assets (comprising the Petersen and Eton Park claims) did not contribute to earnings in 2020, for the first time in five years.

That's all very good and then the report statutory numbers below 2019 !!!!! How can it be the BEST YEAR EVER ...... and be down on the previous year :-)

Profit after tax: $160-170m (2019: $212m)
Operating profit: $240-250m (2019: $265m)
Total income: $340-350m (2019: $357 million) No YPF-related asset

[lazg] 22/2/2021 13:54

If I hadn't already loaded up, I would buy even more.

[lomax99] 22/2/2021 10:17

Normal share price action resumed, happy to add sub £6.

[djderry] 22/2/2021 03:47

Obviously it's just a tweet,but interesting to see that Sebastian Maril,the journalist most closely following the Petersen case is suggesting that,sooner or later,the most likely outcome to the case regarding the expropriation of the YPF assets is an out-of-court settlement.
The tweet,it should be noted,is in the context of the case conference during the week where Judge Preska acceded to defendant's requests to extend the Discovery process by an extra 90 days,(mostly,it seemed to me ,to facilitate getting the Eskenasi's depositions).
The process, including replies and responses is now due to finish by November.
I noted that, although Judge Preska cut off the plaintiff's argument that it was just another delaying tactic by the Republic,she would not take kindly if,in the next conference ( in 30 days,if I remember correctly,)the Republic's representatives were back looking for further extensions.
On another,but related matter,you can be sure that all commentary around the Petersen case will be quickly shut down at the earning's call next month.The defendants attempted,in my view,to use comments made at the last results as part of their case.Burford will be super careful not to give them any further material.

[nigelmoat] 19/2/2021 06:26

DJ Burford Capital Eases Cash Generation Concerns in 2H -- Market Talk1753 GMT - Burford Capital's significant cash inflows in the second half of 2020 have eased concerns over its long-standing cash generation issues, according to Peel Hunt. The finance and asset management firm's cash proceeds in the core business rose to $280 million, up $46 million from the first half of 2020, and $68 million in the second half of 2019. "This answers some of our concerns about the lack of cash generation in the last two years, and means that even after new investments, net core cash flow was positive in the second half," it says. Peel Hunt has an add rating on the stock but raises its target price to 750 pence from 700 pence

[rar100] 18/2/2021 18:09

thanks riverman, yep, hope again...

[riverman77] 18/2/2021 16:10

rar100 - hopefully the FY results in March will include a comment on current trading and with any luck the announcement of some big case wins in Q1. Otherwise will need to wait to the H1 results in Aug/Sep to see if there's been a pick up.

[saltraider] 18/2/2021 15:09

There has been a huge amount of money printed by central banks during the covid-19 pandemic. All that money has to find a home somewhere. Some of it will be soaked up by inflation in the prices of goods and services perhaps. A lot of it is going to find its way into the purchase of assets ... as a store of value. There will be asset price inflation as a result (house prices, share prices, bitcoin ... ...).

IMHO the thing to avoid being in over the next year or two is cash. It will be a good time for the brave to borrow momey to buy assets.

I don't see share prices dropping in a hurry. The extra money has to find a home somewhere.

Burford share price will, of course, probably be perverse and not follow the market. I've put quite a bit into Burford and I've taken a loss but I've been more fortunate elsewhere. I will stick with it for a good while longer because the fundamentals seem excellent and I believe the share price will eventually align with them.

[dekle] 18/2/2021 14:53

Is it about the company or the lack of opportunities to invest in plus COVID affecting court time. The UK have started nightingale courts perhaps this will be expanded here and overseas because the US must have the same problem. In general we have had a great run with stocks for almost a year far beyond my expectations although so far not with BUR. Can we really expect the bull run to continue at such a pace? Is it BUR's turn next? I think even a modest growth with BUR will be ahead of the market this year. Just my opinion or is it hope. This time next year Dekle

[rar100] 18/2/2021 14:39

Does anyone think that when the results come out on March 24th and if they are reasonable given the pandemic that confidence will be restored such that it will re-rate the share price a wee bit north?

A big ask but it's make or break for me then.

I think like Riverman my patience will be exhausted by then, I'll take the loss and put proceeds into Fundsmith which has done well since inception and almost guarantees that slowly I'll recoup some of the loss.

2 years of this is long enough.

[riverman77] 18/2/2021 11:08

Yes H2 was very quiet, as was the case the previous year. Given that profits do seem to be heavily weighted to the first half, and acknowledging the inevitable covid impact, I'm prepared to look through this and wait for the next H1 results. As I've said before that will be my cut off - if we're still not seeing a real pick up in big wins and profits by then I think it will be time to move on (at that point it will be 2 years since the MW attack and you can only wait so long for a recovery).

[cockerhoop] 18/2/2021 09:45

What appears to be missing in the comments on here is how quiet H2 was.

They did $161m PAT in H1 and are guiding $160-$170m for the full year so in the context of new information that can't be seen as anything other than disappointing.

Everyone accepts it's a lumpy business but you can't expect the price to rise in the short term when the short term news isn't great.

[donald pond] 18/2/2021 09:37

I get all that, I just think they need a standardised approach that gives an indication of how much is invested, has that gone up or down, and how much has come back. That should be the headline figure, so something like

Amount invested at par value $3200 (+$600)
at start of period
New investments 400 (-50)
Profits/losses received 250 (+20)
from PF (excluding revaluations)
Costs?
Amount invested at period end $xxxx

Those are just made up figures by the way. And do the same for non-balance sheet. And cover all the detail later on. But do the same thing every time so people get used to comparing like for like.

[tony5000] 18/2/2021 09:32

Looks like PBT may come in at c$200-$210 vs consensus of $260.86 if finance charges are similar to 2019 & 2018 at c$40m. Accept that story & prospects going forward are looking decent but guidance needs to be better IMHO and consensus forecasts need to be achieved or beaten to give increased credibility & a desire to invest IMHO DYOR

[kirkie001] 18/2/2021 09:30

Donald, you're forgetting that these aren't the annual results - it's just a prelim announcement of unaudited and incomplete figures. They haven't attempted to produce the detailed analysis that you're talking about - that comes with the FY results release in a month's time.

[1aconic] 18/2/2021 09:28

Donald: Fully agree reporting is a massive issue. I've spent hundreds of hours in reports and am still finding new things out. Last year's report was a massive improvement and I'm hoping for another big step up this year. Although, changing metrics isn't necessarily a bad thing if they can find the ones that most clearly represent what's actually going on under the surface! I think for a lot of people unrealised gains are a big issue, especially given that they're virtually all YPF which is essentially still a binary result. A clear indication of fund progression might be good too... how much of initial capital has actually been paid back to date would give an idea how long before the waterfall actually starts flowing into BUR's results. You've got to work really hard to dig right into things currently.

[1aconic] 18/2/2021 09:17

Analyst consensus is pretty meaningless for BUR - even BUR themselves can't predict what they'll do over a 12 month period let alone an analyst. Analysts words are a bit better but most people probably don't get that far. You also need to put all published numbers in a hell of a lot of context... So many other factors to consider like the hidden results being generated in the funds, no YPF contribution this year, covid court delays, time lag from investment to realisation (especially considering the massive increase in commitments over the last few years), etc, etc, etc. Not to mention the YPF elephant sitting in the corner as essentiallly a freebie. That aside and ignoring all the staggering growth potential (not just industry growth potential but also by simply investing entirely from balance sheet rather than using funds), even at published earnings it still seems rediculously cheap compared to a lot of other things at the moment.

[donald pond] 18/2/2021 09:15

I also think part of the problem is the way results are reported. Every time it seems slightly different metrics are used so it's hard to compare like with like. If I have time I will write to their IR today with suggestions on how this can be improved. But in short, they should headline by saying all the detail is later on, and the following figures exclude any revaluations during the period. Then, split it into balance sheet and non-balance sheet, have amount invested at start of period as first figure, additional investments, net receipts then amount invested at end of period. For non-balance sheet, a figure showing fees received too. So we can see how deployments have changed and what cash profits have been made. Revaluations can be dealt with later. That would make life much easier imo.