I noticed the RNS today about the potential issue of Bonds by Burford & would value thoughts on this development. The share price is down a little today & under the new Stocko risk ratings the company is listed as a 'momentum trap'. I'm a long term holder, so keen to hear from Bears & Bulls.
Many thanks
Totally agree with posts 1 to 3. Fab post bestace. Just noted daily & weekly charts starting to look weaker. Possible dip/buying opportunity? Can't help but think that unless it blows up big time this is gonna go & go. Massive risk to upside. As ever, 100% risk to downside. Look up Juridica if you don't know their story. My biggest holding at approx 12% pf.
From the nature of its business, Burford Capital (LON:BUR) is a unique company and conventional investment measures and gauges really do not apply. This is one where one needs to have an ear to the ground on developments in the individual investments they make, that is the individual cases they are pursuing as well as the portfolios of cases they are supporting. The upside risk can be massive, as can be seen from their having, only a few months ago, effectively sold 10% of their investment in the Petersen/YPF case before a New York court and recovered their full investment, such that they are now on a free ride with an upside potential from this one case alone of close to the present market cap. The Marsans/Aerolíneas case before ICSID, the World Bank tribunal, seems to be more complicated and has become particularly unpleasant locally in Argentina but it may be in a similar league in value as the Petersen case and award ought to be quite soon on that one. One of their "bouquet" investments is of about £30m for a batch of BT's legal cases and on this one I have seen speculation of potential recoveries of up to five times their investment. So Burford Capital (LON:BUR) is very atypical as an investment and requires, imo, a very different approach.
I agree that Burford Capital (LON:BUR) by the nature of its business is a special case, which may be why many investors didn't jump in with both feet. I note though that back in 2009 Neil Woodford, (when with Invesco Perpetual) spotted the opportunity and snapped up £36 million shares at 100p giving it 45% of the company.
By far my best preforming company and having top sliced one I will hold long term. Ian
Re. Burford Capital (LON:BUR) I am an investor and I agree with the general comments that the standard valuation metrics do not generally apply to this company.
I see this as the management's ability to identify, analyse and back litigation cases where the upside risk (gains) is disproportionately larger than the downside risk (loss of the capital invested). They mitigate the risk by taking a portfolio approach.
Economic theory says that extraordinary returns will attract new competitors and Burford will not have their way forever.. But until then I will stay with the ride.
"Economic theory says that extraordinary returns will attract new competitors and Burford will not have their way forever."
That maybe so but have Burford Capital (LON:BUR) not just bought out their biggest rival, Gerchen Keller, in the USA? So their moat to me is even wider. Juridica is another rival but they don't seem to be faring very well.
Some excellent posts above, I quite agree I don't think Stockopedia does measure Burford Capital (LON:BUR) very well, some is to with the taken of Gerchen Keller, believe they already contributed $25m profit within 2 weeks of takeover. My concerns are losing one or both of the 2 large cases, mentioned by Jane, if they win both upside could be massive.
Fully agreed that Burford is not a conventional stock. The reason I invest, as others have alluded to, is that it operates in a huge growth area with no real competition whatsoever. Litigation/arbitration funding is hugely on the up, with it becoming increasingly accepted across a number of jurisdictions. Singapore changed its law not long ago to expressly allow it, and HK is in the process of doing so; both are huge disputes markets. I also just saw this morning that the Paris bar council has also just approved it. Just my two cents.
Kidznet, this video presentation by the CEO might be of interest:
https://www.sharesmagazine.co.uk/video/christopher-p-bogart-ceo-of-burford-capital-bur-2
RNS this morning
Burford Capital Limited ("Burford"), a leading global finance firm focused on law, is pleased to announce that its shares will be traded from today on SETS (Stock Exchange Trading System), the London Stock Exchange's flagship electronic order book.
Does this mean they are coming off AIM?
Hi dfhscgfsd, they are not coming off AIM. I will let someone else explain better, but SETS is essentially what it says in the RNS; an electronic order book. I think that BUR being admitted to it is a good thing as it shows the stock to be highly liquid, though I could be wrong on that. Hopefully that means the spread will come down.
Have a read here: http://www.lseg.com/areas-expertise/our-markets/london-stock-exchange/equities-markets/trading-services/domestic-trading-services/sets.
You'll also find an excel sheet on that page with all the stocks listed on SETS; it is all shares you have heard of - FTSE 100 etc.
It appears I can't get the link to work, sorry. Google "sets london stock exchange" and it is the first hit.
Thanks Jane. I sat through the video presentation and I am pretty impressed by the CEO and what he presented. Three points stand out in my mind.
- 90% of civil litigation cases settle and provide a positive cash flow
- From the remainder, wins / losses, the outcome is significantly asymmetrical in favour of Burford
- So far, they only capture a "tiny" percentage of the addressable market. He didn't qualify what "tiny" meant, but I would guess less than 3% .
Will be looking for an opportunity to top up.
I've been looking round for an explanation also without success. I did think that them moving to SETS might reduce the recent volatility in the share price, but perhaps it has instead opened it up more to the high frequency traders and speculators to play with?
In the absence of any news I'm treating this as unwelcome noise.
Looks like a stop hunt. Someone sold 25000 for 725 at 14:50:34 which seems to have triggered anyone with a 15% trailing stoploss from its recent peak at about 837. That took the price down to 720 at which point an AT guy took out all the bids to 710 and triggered a few more stops. When the stops finished triggering at 690, the traders piled back in again.
I hold the 6.125% bonds due 2024, not sure I will be tempted by the 5% offering.
I have been using the recent pullback in the share price to start to build the equity position I should have built some time ago!
Big recovery today and well justified. I noticed a late purchase just before the bell yesterday totalling 100,000 shares. Fund managers must be moving back in.
I spotted this interesting tidbit on LSE.co.uk today, anyone have any thoughts on this?;
"Litigation funding has enjoyed a long period without heavy regulation. The main reason is because pre-settlement funders advance cash to plaintiffs waiting for a litigation payout. This allowed them to charge payback rates that would be considered usurious if the cash advances were loans. However, they are structured in such a way that ensures this is not the case. This has meant litigation funders in the U.S. could avoid state banking and credit regulations.
Litigation funding expert Victoria Shannon Sahani believes this could all be about to change. Eleven states have adopted laws regulating some aspects of the business of extending cash advances to plaintiffs awaiting settlement payouts. The Consumer Financial Protection Bureau has also started investigating the industry. In the past several months, the federal agency has claimed authority over three litigation funders.
It’s not yet clear exactly how deeply and broadly the CFPB wants to regulate the litigation funding industry but regilation in some form is coming
--taken on may 8th 2017-
http://www.legalreader.com/litigation-financing/"
If of interest - the Irish Supreme Court decided earlier this week to maintain the ban on 3rd party funding. Case can be found here - http://www.bailii.org/ie/cases/IESC/2017/S27.html.
Doesn't seem to have had too much impact on the share price, which I don't think is that surprising.
I think the main issue to remain aware of is the good point made by ls2g08 above. Regulation is coming in the US and it will be on a state level (rather than federal) so there could well be some inconsistency in the approach taken by different US states.
