Burford Capital Share Discussion Threads

[maddox] 09/11/2021 11:15

IC and FT have totally lost their credibility. Whilst IC have a few good Analysts the rest are journalists that don't like to let the analysis get in the way of a good story. Muddy Waters is good copy so the journos have no interest in challenging it - and they'll repeat the nonsense over and over every time they cover BUR.

I dread them writing-up BUR - it's usually horribly inaccurate.

For example, Sept 9 IC commenting on the results they decided that the new $79m non-cash accruals arose from a negative revaluation of their case portfolio. In fact, it was the inclusion of an accrual for expenses that would be incurred on a SUCCESSFUL OUTCOME of the fair-value cases (commissions and bonus pool etc). This was a new accounting requirement as a result of the US Listing and adoption of US GAAP accounting standards.

But hey, why miss the opportunity to negatively portray the facts.

IC used to allow 'user comments' below each article - this functionality was removed - I wonder why?

Regards Maddox

[syoun2] 08/11/2021 19:56

I agree with everything you said but still nice for good PR

[devalpha] 08/11/2021 19:17

syoun2....with all due respect, whether the IC are upbeat or not on bur is totally irrelevant. What matters is business progress.Always remember that the IC & FT were very bullish on bur up until Block's report, and then immediately changed tact after reading, and obviously believing in the content of that report.They clearly had no real knowledge of bur's business prior to the report, and were basing their bullishness on the fact that the price was going up!Similarly, they then based their negative views on the fact that the price went down after Block's report.Hardly inspired financial journalism.

[syoun2] 08/11/2021 19:04

There Should be a paragraph or two in IC this week as part of there AIM company review. Let’s hope they’re upbeat

[laughton] 05/11/2021 10:09

Hope so - managed to pick up a few more this morning @ 855p after receipt of divis on other holdings.

Very impressed with presentation - other company boards could do a lot worse than watching and learning how it should be done.

[tnt99] 05/11/2021 09:47

Here we go 10 pounds by christmasBig upside here come on my Reddit fans let's push this one up

[tradertrev] 03/11/2021 14:17

Management here has a long track record of being conservative on any predictive comments that are ever wrung out of them.

[kuk1doh] 03/11/2021 13:41

I’m long on Burford for a few years and intend to stick… happy to be in the black again after yesterday!

It was a good session but still find their presentation of potential financial return causes confusion - evidenced by CEO Bogart trying to correct an analyst’s book value maths on an investors day. Shouldn’t happen. Still I thought the predictive model was very helpful. I presume the model forecast was pitched to be exciting but is still conservative.

My back of an envelope:
Ex YPF there’s $3.4bn cash flow less $1.4bn spent gives $2bn gain, of which $200M has already been recognised in unrealised gains, leaving $1.8bn net new realisation/profit for the P&L. Add $360M fund fees (great to see that number) and then take off the newly disclosed 10% staff take on revenue and we’ve $2.2bn potential income over… let’s call it the next 3 years as many of these are in process for some time. Apply the 50% net after tax 2020 FY margin (admittedly an historically low margin) and we’ve a 3yr rolling average of $360M or $1.60 EPS. 15x multiple (my number) gets to approx $25.

YPF… as far as I can work out, burford balance sheet owns 40% plus earns fees on the funds/3rd party investor… assume $5bn settlement so call it $2.5bn for Burford all in less 10% staff tax… all opex covered by the base non YPF business… deduct unrealised gain on b/s and tax… adds approx $1bn+ to book value… $5/share… $5bn is a big assumption but even then YPF is not the big idea here and I thought they helped investors get to that conclusion yesterday.

Im long for growth prospects… if they can prove they can collect the cash the model suggests and commitments compound at 15% going forward… if scale and bigger family cases grows margin to 65% then there’s potential for the average earnings to grow to $4 around 26/27 and $50 is achievable then

[loglorry1] 03/11/2021 10:04

Agree with most of this and I too think it is cheap but not ridiculously so. It isn't a company that can double it's book value every 2.5 years becuase of G&A, bonuses, tax and interest. It can grow its value quickly though and so its cheap.

[maddox] 03/11/2021 09:41

Yesterday's CMD was clearly aimed at US analysts and institutions - if they liked what they heard - that's where the demand will come from.

It'll take them a few days to crank through their investment process, and then filter through to the market. The very obvious value anomaly will then start to disappear.

[donald pond] 03/11/2021 09:19

As far as Terry is concerned, SSON does take positions in things like Spirax Sarco and Fundsmith itself has always held Kone, which aren't direct to consumers. What he wants is an essential/non-discretionary product that has big barriers to entry and high rates of return. And I think BUR ticks those boxes.

[maddox] 03/11/2021 09:18

Hi Donald,

Just a point of clarification on your Tweet. This Case Outcome Model valuation is at a point-in-time, rather like a B/S valuation - how that translates into P&L profits is the unpredictable element. So, yes the realisation of that value will occur over, on previous average timeframe of 2.3 years or 5 reporting periods. But how you spread that $2.3bn across those periods is going to be lumpy.

Also, case investment and Case Outcome Modelling will continue and generate further potential value over that period. We have a firm with the potential to double in value every c. 2.5 years on a continual basis, with plenty of runway.

Regards Maddox

[williamcooper104] 03/11/2021 09:03

Yep c2 years is the average but after a few years if it's demonstrated that BUR is well on it's way to realising $3.8bn cash then the share price is likely to re-rate in anticipation

[tradertrev] 03/11/2021 08:59

DP - read your tweet - £45 + YPF on top - very punchy! I hope you are right.
I think your timeline for realisation of the profits is a bit optimistic, although admittedly there will be something to add for new business added in the next couple of years. Don't forget, the average duration is the time for half the portfolio to get a result and the early results include most of the losses. I don't think we know the average duration of a win - damn, should have asked that question yesterday!
Regarding Terry Smith, I don't think it passes the small ticket, non-people business aspects of his model.
It's my biggest position by far and I'm very happy to hold for a few more years yet.

[donald pond] 03/11/2021 08:43

New board, new Chairman, new CFO, Bogart now a director, US listing, 2 more years of evidence that the accusation that all the growth was through unrealised write ups was inaccurate. Muddy waters are quite good at identifying frauds but historically they are either correct, and the company folds quickly as soon as the fraud is exposed, or they are wrong, and the company shrugs it off. They were wrong on BUR but the price hasn't recovered yet (though it has tripled in 18 months). And therein lies the opportunity

[this tea tastes of chicken] 03/11/2021 08:34

How would you summarise, What do you believe they have cleared up now that they hadn't pre summer 2019, that is, where are the improvements in governance for investors, insti and private?

[donald pond] 03/11/2021 08:28

There was a time when any bit of news would provoke 4 or 5 analysts reports. BUR is now well under the radar. I think that is going to change btw. If I was Bogart I'd be calling Terry Smith. This is one for SSON IMO. A global leader in a growing area with great ROCE and big barriers to entry. Ticks all the boxes

[donald pond] 02/11/2021 21:13

Can't be bothered to retype this but someone tell me what I'm missing https://twitter.com/donaldpond6/status/1455643845685878785?s=21

[scubadiverr] 02/11/2021 20:46

Patience I think you'll find, unless I've invested in the wrong sector

[syoun2] 02/11/2021 20:30

I agree, great to watch today. I’m sure all of us know that it is about patients here.
Still small volume so price change means little however when you heard who was there, analysts & big fund guys. If one of them take Burford into their funds then things will start to happen.
The rating will only happen with this & positive results in March/April however I’m feeling things are coming together.
I listened in to every result call and investors day now & the Tone today was a good sign for investors.

[williamcooper104] 02/11/2021 19:16

Unlike most other posters here I merely think that BUR is cheap/good value and not dirt/gave away cheap With today's guidance it's easier to play about with DCFs to get to a current share price "fair value"; this really helps as one of the problems has been the difficulty in valuing BUR And separating the equity story from Peterson is crucial as means we won't be just sat waiting for it to resolve

[dancerbrian] 02/11/2021 19:07

The $3.4bn cash return includes return of capital invested so isn't all profit.

Crudely, existing book gives $2bn of gains plus $360m of performance fees. Last average duration was 1.5 years, but with courts still slow the adjudicated cases are probably less than usual. Say average duration is more likely 2-2.5 years. Court cases give biggest gains so back-end loaded in that? So spread over 5 years is $472m revenue a year, if its 4 then $590m. If we allow for some of that book being part-way through you can pick shorter terms and higher figures.

Allow for expenses, carry, debt and even taxes, the former gives something in mid $300s of net profit pa, or mid 200s in GBP. Market cap £1.7bn. But that's conservative, and probably the floor - nothing for future book additions, YPF or courts clearing backlogs.

So its dirt-cheap, but most posters here know that. Does today's info make it clear enough to change that?

[loglorry1] 02/11/2021 18:58

Yep 1.7x-2x book but aren't we close to 1.5x now?

[loglorry1] 02/11/2021 18:56

Yes William I agree with that although it would pay back its EV in 2-3 years and all the cases would be gone. So the rest for free is a strange concept at that point! I'm not suggesting they will do that I'm just saying the intrinsic value of their cases is approx equal to their EV.

It's not shabby at all but I'm just pointing out a different perspective.