peterHK Posted July 25, 2019 Share Posted July 25, 2019 https://www.burfordcapital.com/wp-content/uploads/2019/07/2019.07.25-Burford-Capital-1H19-Interim-Report-WEB-FINAL-PUBLIC.pdf H1 results are out and either they were as expected (revenue up, cash realizations up on Petersen sale etc.), and mgmt. Q&A in the report was exceptionally good and transparent including commentary on the company's AIM status (they'd rather uplist to NYSE/NASDAQ than LSE main board) OR they realized a bunch of non cash gains and they're an accounting fraud and evil and terrible and the shares are down 6% because the market is figuring out they're a fraud and "stock price bro" proves it. Which one you believe depends on whether you're already a bull or bear. It’s not black and white like that and no one here has even accused them of being fraudulent. They reported FV gains as 50% of “income” once again, Petersen represented 98MM of realized gains with proceeds received down from last 1H. Not too sure how this could be viewed as a good report. You make my point for me. Link to comment Share on other sites More sharing options...
Normax59 Posted July 25, 2019 Share Posted July 25, 2019 Earnings for a company like this will be lumpy and volatile. Marking illiquid or non realized gains to market is never perfect. Somehow hitting a few home runs is a bad thing? These concerns, and the subsequent stock decline just seem like stupid, fabricated, "Wall Street" issues. How many unrealized gains since 2013 do you think has actually been realized? Link to comment Share on other sites More sharing options...
Guest Schwab711 Posted July 25, 2019 Share Posted July 25, 2019 https://www.burfordcapital.com/wp-content/uploads/2019/07/2019.07.25-Burford-Capital-1H19-Interim-Report-WEB-FINAL-PUBLIC.pdf H1 results are out and either they were as expected (revenue up, cash realizations up on Petersen sale etc.), and mgmt. Q&A in the report was exceptionally good and transparent including commentary on the company's AIM status (they'd rather uplist to NYSE/NASDAQ than LSE main board) OR they realized a bunch of non cash gains and they're an accounting fraud and evil and terrible and the shares are down 6% because the market is figuring out they're a fraud and "stock price bro" proves it. Which one you believe depends on whether you're already a bull or bear. It’s not black and white like that and no one here has even accused them of being fraudulent. They reported FV gains as 50% of “income” once again, Petersen represented 98MM of realized gains with proceeds received down from last 1H. Not too sure how this could be viewed as a good report. I think Petersen was only $20m of realized and $122.5m of unrealized on the income statement. On a cash accounting basis, Petersen was a $98m realized gain or so. This is only for non-IFRS ROIC/IRR tables. It actually was a decent period for realizations but I think the market appreciates the accounting more vs even 6 months ago. BUR announcing that they do FV accounting just like public PE funds puts to rest the idea that Petersen somehow wasn't marked to FV on the balance sheet. Some large firms (including Jeffries research) had assumed this wasn't the case because BUR has been misleading about the topic. If anyone read the COKE short by Upslope Capital, I think we have a similar issue here. I think a large number of shareholders realized they don't know what they own, which caused the drop in price. Link to comment Share on other sites More sharing options...
uncoveringvalue Posted July 25, 2019 Share Posted July 25, 2019 https://www.burfordcapital.com/wp-content/uploads/2019/07/2019.07.25-Burford-Capital-1H19-Interim-Report-WEB-FINAL-PUBLIC.pdf H1 results are out and either they were as expected (revenue up, cash realizations up on Petersen sale etc.), and mgmt. Q&A in the report was exceptionally good and transparent including commentary on the company's AIM status (they'd rather uplist to NYSE/NASDAQ than LSE main board) OR they realized a bunch of non cash gains and they're an accounting fraud and evil and terrible and the shares are down 6% because the market is figuring out they're a fraud and "stock price bro" proves it. Which one you believe depends on whether you're already a bull or bear. It’s not black and white like that and no one here has even accused them of being fraudulent. They reported FV gains as 50% of “income” once again, Petersen represented 98MM of realized gains with proceeds received down from last 1H. Not too sure how this could be viewed as a good report. I think Petersen was only $20m of realized and $122.5m of unrealized on the income statement. On a cash accounting basis, Petersen was a $98m realized gain or so. This is only for non-IFRS ROIC/IRR tables. It actually was a decent period for realizations but I think the market appreciates the accounting more vs even 6 months ago. BUR announcing that they do FV accounting just like public PE funds puts to rest the idea that Petersen somehow wasn't marked to FV on the balance sheet. Some large firms (including Jeffries research) had assumed this wasn't the case because BUR has been misleading about the topic. If anyone read the COKE short by Upslope Capital, I think we have a similar issue here. I think a large number of shareholders realized they don't know what they own, which caused the drop in price. I think I understand where the $98m is coming from - $100m sale less 10% of $18m investment. But could you please explain how you are coming up with the $20m and $122.5m figures? Would be much appreciated. Link to comment Share on other sites More sharing options...
Normax59 Posted July 25, 2019 Share Posted July 25, 2019 https://www.burfordcapital.com/wp-content/uploads/2019/07/2019.07.25-Burford-Capital-1H19-Interim-Report-WEB-FINAL-PUBLIC.pdf H1 results are out and either they were as expected (revenue up, cash realizations up on Petersen sale etc.), and mgmt. Q&A in the report was exceptionally good and transparent including commentary on the company's AIM status (they'd rather uplist to NYSE/NASDAQ than LSE main board) OR they realized a bunch of non cash gains and they're an accounting fraud and evil and terrible and the shares are down 6% because the market is figuring out they're a fraud and "stock price bro" proves it. Which one you believe depends on whether you're already a bull or bear. It’s not black and white like that and no one here has even accused them of being fraudulent. They reported FV gains as 50% of “income” once again, Petersen represented 98MM of realized gains with proceeds received down from last 1H. Not too sure how this could be viewed as a good report. I think Petersen was only $20m of realized and $122.5m of unrealized on the income statement. On a cash accounting basis, Petersen was a $98m realized gain or so. This is only for non-IFRS ROIC/IRR tables. It actually was a decent period for realizations but I think the market appreciates the accounting more vs even 6 months ago. BUR announcing that they do FV accounting just like public PE funds puts to rest the idea that Petersen somehow wasn't marked to FV on the balance sheet. Some large firms (including Jeffries research) had assumed this wasn't the case because BUR has been misleading about the topic. If anyone read the COKE short by Upslope Capital, I think we have a similar issue here. I think a large number of shareholders realized they don't know what they own, which caused the drop in price. I think I understand where the $98m is coming from - $100m sale less 10% of $18m investment. But could you please explain how you are coming up with the $20m and $122.5m figures? Would be much appreciated. 10% of 200 (1000MM-800MM) and 61.25% of 200MM Link to comment Share on other sites More sharing options...
Normax59 Posted August 2, 2019 Share Posted August 2, 2019 Petersen was $98MM of the $134MM realized gains for the half, they would have done reverse entries on any of the unrealized gains from the previous period and recognized them as realized this half. More importantly if Burford did the fair-value write ups from 400-440-800 then the unrealized gain for Petersen in the half is ($122.5-$78MM) = $44.5MM. On the core balance sheet (ex. third parties) unrealized gains for the half were $134MM. Ex. Petersen investment fair-value write ups on a net basis were $89.5MM, with net recoveries ex. Petersen for the half coming in at $2.7MM I'm not too sure where they would have found this extra $89.5MM to write up and this is without considering if the other $22MM in realized gains for the period came from the realization of previously unrealized gains. On a gross basis ex. third parties fair-value write ups were $212MM at a minimum if Petersen was written up from 400-440-800 and there were no other realizations. If the other $22MM is the realization of previously unrealized gains then unrealized gains as a % of investments would be 42.5% on the low end, and if they weren't then unrealized gains stands at 43.8% on the high end. Link to comment Share on other sites More sharing options...
orion Posted August 6, 2019 Share Posted August 6, 2019 Any news out why BUR is down this much? Link to comment Share on other sites More sharing options...
Foreign Tuffett Posted August 6, 2019 Share Posted August 6, 2019 Any news out why BUR is down this much? BoJo's tough Brexit talk? Link to comment Share on other sites More sharing options...
_JJ_ Posted August 6, 2019 Share Posted August 6, 2019 Any news out why BUR is down this much? See attached my humble guess... Link to comment Share on other sites More sharing options...
Gregmal Posted August 6, 2019 Share Posted August 6, 2019 Muddy Waters Short Link to comment Share on other sites More sharing options...
peterHK Posted August 6, 2019 Share Posted August 6, 2019 Muddy Waters Short Is that based on their twitter feed where they haven't disclosed the position? Link to comment Share on other sites More sharing options...
Gregmal Posted August 6, 2019 Share Posted August 6, 2019 Muddy Waters Short Is that based on their twitter feed where they haven't disclosed the position? The tape dont lie. This one just got really interesting. Not entirely surprised given the accounting complexities, AIM listing, and general lack of liquidity that this became an easy target for a short raid. Link to comment Share on other sites More sharing options...
peterHK Posted August 6, 2019 Share Posted August 6, 2019 Muddy Waters Short Is that based on their twitter feed where they haven't disclosed the position? The tape dont lie. This one just got really interesting. Not entirely surprised given the accounting complexities, AIM listing, and general lack of liquidity that this became an easy target for a short raid. Tape don't lie is the equivalent of "stock price bro" which isn't an argument, it's the comeback of someone who has no argument. The market THINKS MW is short, but I don't see how Burford has a liquidity crisis, or a solvency crisis unless MW has found something literally nobody else knows about. Link to comment Share on other sites More sharing options...
Gregmal Posted August 6, 2019 Share Posted August 6, 2019 Muddy Waters Short Is that based on their twitter feed where they haven't disclosed the position? The tape dont lie. This one just got really interesting. Not entirely surprised given the accounting complexities, AIM listing, and general lack of liquidity that this became an easy target for a short raid. Tape don't lie is the equivalent of "stock price bro" which isn't an argument, it's the comeback of someone who has no argument. The market THINKS MW is short, but I don't see how Burford has a liquidity crisis, or a solvency crisis unless MW has found something literally nobody else knows about. Ok. Just a coincidence and just your everyday 20% decline... got it. Link to comment Share on other sites More sharing options...
peterHK Posted August 6, 2019 Share Posted August 6, 2019 Muddy Waters Short Is that based on their twitter feed where they haven't disclosed the position? The tape dont lie. This one just got really interesting. Not entirely surprised given the accounting complexities, AIM listing, and general lack of liquidity that this became an easy target for a short raid. Tape don't lie is the equivalent of "stock price bro" which isn't an argument, it's the comeback of someone who has no argument. The market THINKS MW is short, but I don't see how Burford has a liquidity crisis, or a solvency crisis unless MW has found something literally nobody else knows about. Ok. Just a coincidence and just your everyday 20% decline... got it. Do you read? I said the market THINKS MW is short. That is vastly different from MW actually being short. Link to comment Share on other sites More sharing options...
Gregmal Posted August 6, 2019 Share Posted August 6, 2019 Muddy Waters Short Is that based on their twitter feed where they haven't disclosed the position? The tape dont lie. This one just got really interesting. Not entirely surprised given the accounting complexities, AIM listing, and general lack of liquidity that this became an easy target for a short raid. Tape don't lie is the equivalent of "stock price bro" which isn't an argument, it's the comeback of someone who has no argument. The market THINKS MW is short, but I don't see how Burford has a liquidity crisis, or a solvency crisis unless MW has found something literally nobody else knows about. Ok. Just a coincidence and just your everyday 20% decline... got it. Do you read? I said the market THINKS MW is short. That is vastly different from MW actually being short. Did you? People asked why the decline. Thats why... Today, in relation to "why is Burford declining" the answer is Muddy Waters short..... Link to comment Share on other sites More sharing options...
SnarkyPuppy Posted August 6, 2019 Share Posted August 6, 2019 Potentially better short targets than a group of experienced litigators? And insolvent...? You might not like the accounting or the proportion of BV represented by Peterson - but insolvent? Link to comment Share on other sites More sharing options...
writser Posted August 6, 2019 Share Posted August 6, 2019 One look at the man, and Gregmal declares “he is fat”! This is a great business, at the very least, as a short term investment. [..] The fat man probably joined a Weight Watchers program. Link to comment Share on other sites More sharing options...
Jerry Capital Posted August 6, 2019 Share Posted August 6, 2019 It's happened before that the market has got it wrong. If anyone can confirm that would be great. In the meantime remember Element Financial dropped 40% in a similar situation. Link to comment Share on other sites More sharing options...
Normax59 Posted August 6, 2019 Share Posted August 6, 2019 I'm about as bearish as you can get on Burford, if it is them I'm interested to see how he gets to potential insolvency. They haven't generated much excess cash but they have generated some. They aren't converting unrealized gains to realized nearly as fast as they should but I still can't get to insolvency. Link to comment Share on other sites More sharing options...
Jerry Capital Posted August 6, 2019 Share Posted August 6, 2019 Thanks Normax. I would tend to agree with that I am not sure even if you were bearish if you would describe your short thesis as a "liquidity crunch". I think there is a good case to be made that the company is too expensive 15+ based on book value (non cash write ups, large single victories) but I don't think I'd describe it as a liquditiy short... Maybe I am wrong! Link to comment Share on other sites More sharing options...
Normax59 Posted August 6, 2019 Share Posted August 6, 2019 There would need to be information that no one knows about (not saying that it is but it would need to be accounting fraud) as someone mentioned. I can't see liquidity crunch, they clearly have no issue with getting capital from the markets. Link to comment Share on other sites More sharing options...
Normax59 Posted August 6, 2019 Share Posted August 6, 2019 They reported $232MM of cash in the latest report, and have another 11% of Petersen they could sell for $100MM if needed, I can't see how its them safe for accounting issues. Link to comment Share on other sites More sharing options...
Gregmal Posted August 6, 2019 Share Posted August 6, 2019 Any thesis would have to be based around the accounting. The teasing has no mention of anything directly or indirectly relating to BUR in a way one could guess. Someone already knows, and gave it away via the price action. Same thing happened with HLF. Curious to see how the other names respond. LIT went down a bit too. Still a great, market neutral business to be in. Link to comment Share on other sites More sharing options...
Normax59 Posted August 6, 2019 Share Posted August 6, 2019 Any thesis would have to be based around the accounting. The teasing has no mention of anything directly or indirectly relating to BUR in a way one could guess. Someone already knows, and gave it away via the price action. Same thing happened with HLF. Curious to see how the other names respond. LIT went down a bit too. Still a great, market neutral business to be in. It was simply the London reference. Their earliest debt comes due in 2022. Link to comment Share on other sites More sharing options...
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