BUR.L - Burford Capital

[Gregmal]

FYI, Muddy Waters had been covering its short before the report was even released, according to regulatory disclosures.

 

I imagine that they covered even more during the panic selling yesterday.

 

It's a complete joke how the SEC and other securities regulators don't investigate what appears to be pretty blatant market manipulation. Also a joke how much credence so many market participants give to these guys. Outside of a handful of highly-publicized wins, Muddy Waters' performance has really been crap.

 

How is this any different than guys who are long, pitch an idea at the Sohn conference, and then sell on the pop?

 

There's a difference between expressing an opinion about a company and accusing one of fraud, unethical and even criminal behaviour with little more than conspiracy theories and deliberate misinterpretation of facts. Not to mention that fear and panic generates far greater movements in the market than does optimism.

 

I just find it wholly ironic that a lot of these guys accuse their targets of unethical and shady behaviour when they engage in said behaviour in broad daylight.

 

I think I may try looking at big announcements of these large short companies and investigating and thinking of buying after their short is announced.  With Muddy Waters for instance the big red flag was the fact that they included 2018 and 20191H returns in the IRR.  Anyone (including MW) who spends a day looking at the stock knew that most of those investments were only partially complete and the way 2018 and 2019 IRRs were presented was dishonest.  The same thing happened with Citron and Jumia.  There are lots of reasons to be short JMIA, but again some of the facts contained in their report were blatant misrepresentations. 

 

If you really think a company is problematic, you put out a short piece that acknowledges all the facts and wait for the long term to play out.  This is how MW and Citron and others built their reputations, but now they are simply leaching off their glow of their former good calls, building reports that look damning but are really nothingburgers, and capturing a quick buck when the stock overreacts after announcement.

 

Ive been following a lot of these guys for ages and seen hundreds of these short bombs. Out of all of them, only TWO, have gone down in a straight line and never recovered. One was a heavily, heavily illiquid Chinese reverse merger, and the other, a couple hours after the report they found the CEO trying to board a plane out of the country. Both crushed, then halted, then delisted to doughnutville. Every other company, think of all the poo-poo STMP, HIIQ, HLF, OPK, etc.... They all get crushed and then dead cat bounce, issue a rebuttal, rally a bit, then the short seller issues a statement and they level off.... AND they're all still around and trading. People just get sucked into the moment.

[Spekulatius]

Well, alive and trading doesn’t mean much. Julia is probably a zero ultimately and ST!P trades at a fraction of whatnot used to be a d may not come back in my lifetime. It remains to be seen how BUR turns out. It is unlikely to go out of business quickly, but it could wither away.

 

Einhorn could do similar hit pieces and get a quick return, but I think nowadays the stocks he shorts do better than his longs

[Gregmal]

Perhaps I should clarify as I didn't intend to come off endorsing buying every one of these shit shows on a trade. I guess my point was that this was the first time Ive owned something that got hit like this, and it helped that Ive seen enough; done enough studying and observing, to confidently stay calm and execute according to the playbook when the situation occurred.

 

Who knows how Burdford ends up longer term, but Im highly confident MW report has no bearing on BUR's future. The facts surrounding it indicate this was a stunt. If he felt like this was a future zero, he would have held it longer than a couple days, or at the very least, have said so.

[SnarkyPuppy]

Would he be required to report ownership of options?

[LaGrandeBelleza]

https://www.shareprophets.com/views/44154/breaking-gotham-city-set-to-issue-burford-short-dossier-this-weekend

 

Shit's about to get real

[Foreign Tuffett]

https://www.shareprophets.com/views/44154/breaking-gotham-city-set-to-issue-burford-short-dossier-this-weekend

 

Shit's about to get real

 

So Gotham City Research, which hasn't published any reports on its website in over 10 months, and hasn't even tweeted since late March, is now going to publish a short report on Burford only 3 or 4 days after Muddy Waters'?

 

https://twitter.com/GothamResearch

https://www.gothamcityresearch.com/research

 

Assuming this report actually appears this weekend, I think it's safe to assume that Muddy Waters and Gotham City are working together. At the very least they had to have communicated about release dates.

 

[cameronfen]

https://www.shareprophets.com/views/44154/breaking-gotham-city-set-to-issue-burford-short-dossier-this-weekend

 

Shit's about to get real

 

So Gotham City Research, which hasn't published any reports on its website in over 10 months, and hasn't even tweeted since late March, is now going to publish a short report on Burford only 3 or 4 days after Muddy Waters'?

 

https://twitter.com/GothamResearch

https://www.gothamcityresearch.com/research

 

Assuming this report actually appears this weekend, I think it's safe to assume that Muddy Waters and Gotham City are working together. At the very least they had to have communicated about release dates.

 

I think it's highly likely the whole idea is to cause a temporary liquidity crisis at Woodford.  If they are working together which is highly likely, and considering the MW is already closing out their short, I can't believe the new information is significantly worse than MW's accusation.  Maybe now is the time to short Woodford's other large positions or ready up to look at them as attractive entry positions. 

[_JJ_]

https://www.shareprophets.com/views/44154/breaking-gotham-city-set-to-issue-burford-short-dossier-this-weekend

 

Shit's about to get real

 

So Gotham City Research, which hasn't published any reports on its website in over 10 months, and hasn't even tweeted since late March, is now going to publish a short report on Burford only 3 or 4 days after Muddy Waters'?

 

https://twitter.com/GothamResearch

https://www.gothamcityresearch.com/research

 

Assuming this report actually appears this weekend, I think it's safe to assume that Muddy Waters and Gotham City are working together. At the very least they had to have communicated about release dates.

 

Muddy Waters short position was down to 0.12% on August 7th from 0.71% on August 5th and 0.57% on August 6th. I think they fully covered it by now. If Muddy would have known there was another short report about to be released why would they have covered (the majority of) their short position?

 

 

[Gregmal]

LOL Certainly not doing much to extinguish the deliberate and coordinated market manipulation claims.

 

Lets at least hope there is some new information here, good or bad. Expecting basically the same stuff, regurgitated and manipulated into more scare rhetoric. Maybe they will in fact have the nuts to speak with conviction, rather than parse everything with "maybe" and "potentially" and beat around the bush on fraud and insolvency...

 

I will point out as well, that on the call, one thing that stuck out a couple times is that they definitely do seem a little inexperienced. In fact in relation to the question about the CFO/CEO relationship, they even kind of acknowledged "hey, we kind of grew a lot faster than maybe we expected. our focus was always on getting the work done and we didn't really care about titles. Elizabeth happened to be responsible for a lot of the traditional CFO work. So investors pressed us to bring in people and fill specific titles. And then now, people come back and attack us for giving people titles based on the work they do." Paraphrasing again

 

 

 

[SnarkyPuppy]

https://www.shareprophets.com/views/44154/breaking-gotham-city-set-to-issue-burford-short-dossier-this-weekend

 

Shit's about to get real

 

Is there any legitimacy to this publication?

[LaGrandeBelleza]

https://www.shareprophets.com/views/44154/breaking-gotham-city-set-to-issue-burford-short-dossier-this-weekend

 

Shit's about to get real

 

So Gotham City Research, which hasn't published any reports on its website in over 10 months, and hasn't even tweeted since late March, is now going to publish a short report on Burford only 3 or 4 days after Muddy Waters'?

 

https://twitter.com/GothamResearch

https://www.gothamcityresearch.com/research

 

Assuming this report actually appears this weekend, I think it's safe to assume that Muddy Waters and Gotham City are working together. At the very least they had to have communicated about release dates.

 

I think it's highly likely the whole idea is to cause a temporary liquidity crisis at Woodford.  If they are working together which is highly likely, and considering the MW is already closing out their short, I can't believe the new information is significantly worse than MW's accusation.  Maybe now is the time to short Woodford's other large positions or ready up to look at them as attractive entry positions.

 

It's weird because Gotham doesn't seem to be holding any short position at all.

 

https://www.shareprophets.com/views/44154/breaking-gotham-city-set-to-issue-burford-short-dossier-this-weekend

 

Shit's about to get real

 

Is there any legitimacy to this publication?

 

It's the same guys that came up with the MW rumour before they disclosed it

[cameronfen]

https://www.shareprophets.com/views/44154/breaking-gotham-city-set-to-issue-burford-short-dossier-this-weekend

 

Shit's about to get real

 

So Gotham City Research, which hasn't published any reports on its website in over 10 months, and hasn't even tweeted since late March, is now going to publish a short report on Burford only 3 or 4 days after Muddy Waters'?

 

https://twitter.com/GothamResearch

https://www.gothamcityresearch.com/research

 

Assuming this report actually appears this weekend, I think it's safe to assume that Muddy Waters and Gotham City are working together. At the very least they had to have communicated about release dates.

 

I think it's highly likely the whole idea is to cause a temporary liquidity crisis at Woodford.  If they are working together which is highly likely, and considering the MW is already closing out their short, I can't believe the new information is significantly worse than MW's accusation.  Maybe now is the time to short Woodford's other large positions or ready up to look at them as attractive entry positions.

 

It's weird because Gotham doesn't seem to be holding any short position at all.

 

 

Correct me if I'm wrong but I don't think you have to make public short disclosures until your short makes up .5% of the share capital.  At least that's what it says here:  https://www.fca.org.uk/markets/short-selling/notification-and-disclosure-net-short-positions

[SnarkyPuppy]

https://www.shareprophets.com/views/44154/breaking-gotham-city-set-to-issue-burford-short-dossier-this-weekend

 

Shit's about to get real

 

So Gotham City Research, which hasn't published any reports on its website in over 10 months, and hasn't even tweeted since late March, is now going to publish a short report on Burford only 3 or 4 days after Muddy Waters'?

 

https://twitter.com/GothamResearch

https://www.gothamcityresearch.com/research

 

Assuming this report actually appears this weekend, I think it's safe to assume that Muddy Waters and Gotham City are working together. At the very least they had to have communicated about release dates.

 

I think it's highly likely the whole idea is to cause a temporary liquidity crisis at Woodford.  If they are working together which is highly likely, and considering the MW is already closing out their short, I can't believe the new information is significantly worse than MW's accusation.  Maybe now is the time to short Woodford's other large positions or ready up to look at them as attractive entry positions.

 

It's weird because Gotham doesn't seem to be holding any short position at all.

 

 

Correct me if I'm wrong but I don't think you have to make public short disclosures until your short makes up .5% of the share capital.  At least that's what it says here:  https://www.fca.org.uk/markets/short-selling/notification-and-disclosure-net-short-positions

 

On phone so can only read briefly - but again does this include derivatives (options)?  Regardless with respect to Gotham the rumor report says they have no position

[cameronfen]

https://www.shareprophets.com/views/44154/breaking-gotham-city-set-to-issue-burford-short-dossier-this-weekend

 

Shit's about to get real

 

So Gotham City Research, which hasn't published any reports on its website in over 10 months, and hasn't even tweeted since late March, is now going to publish a short report on Burford only 3 or 4 days after Muddy Waters'?

 

https://twitter.com/GothamResearch

https://www.gothamcityresearch.com/research

 

Assuming this report actually appears this weekend, I think it's safe to assume that Muddy Waters and Gotham City are working together. At the very least they had to have communicated about release dates.

 

I think it's highly likely the whole idea is to cause a temporary liquidity crisis at Woodford.  If they are working together which is highly likely, and considering the MW is already closing out their short, I can't believe the new information is significantly worse than MW's accusation.  Maybe now is the time to short Woodford's other large positions or ready up to look at them as attractive entry positions.

 

It's weird because Gotham doesn't seem to be holding any short position at all.

 

 

Correct me if I'm wrong but I don't think you have to make public short disclosures until your short makes up .5% of the share capital.  At least that's what it says here:  https://www.fca.org.uk/markets/short-selling/notification-and-disclosure-net-short-positions

 

On phone so can only read briefly - but again does this include derivatives (options)?  Regardless with respect to Gotham the rumor report says they have no position

 

I am having trouble accessing the shareprophets page even after creating an account just 411 to anyone in case what I'm saying contradicts the rumor report. 

[LaGrandeBelleza]

https://www.scribd.com/document/421488101/2019-08-11-Dear-Burford-Capital-Short-Sellers-Are-Important-Players-in-Fulfilling-Justice-FINAL?source=post_page-----4d88d48e6fe6----------------------

 

Gotham is out, pretty much nothing new. They focus on valuation and criticise the capital structure of the company.

[SnarkyPuppy]

https://www.scribd.com/document/421488101/2019-08-11-Dear-Burford-Capital-Short-Sellers-Are-Important-Players-in-Fulfilling-Justice-FINAL?source=post_page-----4d88d48e6fe6----------------------

 

Gotham is out, pretty much nothing new. They focus on valuation and criticise the capital structure of the company.

 

Failing to understand the point of this letter.  Does this guy think he's actually batman? 

[SoonParted]

https://www.scribd.com/document/421488101/2019-08-11-Dear-Burford-Capital-Short-Sellers-Are-Important-Players-in-Fulfilling-Justice-FINAL?source=post_page-----4d88d48e6fe6----------------------

 

Gotham is out, pretty much nothing new. They focus on valuation and criticise the capital structure of the company.

 

Failing to understand the point of this letter.  Does this guy think he's actually batman?

 

"Holy book value, Batman!  There's an unsupported IRR on the loose!"

[Gregmal]

Well, to be honest I agree with the majority of what Gotham wrote. It doesnt really have much to do with Burford as it does a general approach to the markets, something that, if taken seriously, could actually provide helpful to Burford and its shareholders.

 

Specifically in terms of their Burford observations:

 

1

a. agree

b. dont think so

c. will have to see, but this assumption would have to be largely predicated upon one's views of 1b.

 

2. I thought there was plenty of public scrutiny about Burford already, but nevertheless, if one thinks a business is interesting, I dont see it hurting to give it as much exposure as possible. Even if terrible exposure, such as this past week, if the investment has merits, I guarantee you a ton of experienced investors who had never looked at this space and BUR specifically, just did.

 

3

a. I see where he's coming from but at the same time there are limited ways to even respond to that. Further, lawyers are bound by extremely high ethics standards. That is not to say they all follow them, but their behaviors are extremely prone to unreasonable scrutiny do to oversight by various bar associations.

b. agree

c. agree

d. agree

 

4. dont agree or disagree. Its opinion and relies largely on the way in which its managed, and the size of the obligations

 

5. 100% agree

 

6. for the most part, agree.

 

I would also point out, the insinuation that Gotham has no "relation"(using that term loosely) to Muddy Waters is complete bullshit.

[Foreign Tuffett]

I agree with SnarkyPuppy that the Gotham City Research "report" is largely pointless. It also has at least one significant material error: Acacia Research (ACTG) is in the business of IP licensing (aka, it's what is commonly known as a "patent troll"). It is not a litigation finance company.

 

Here's the relevant segment of the Gotham City Research Report:

 

"Regarding litigation finance, 2 years before I founded Gotham City Research, I wrote a private research note about Acacia Research (“ACTG”), a litigation finance company listed on NASDAQ, boasting a multi-billion dollar value.

 

In that short research note dated November 2010, I wrote that ACTG may provide a good short-selling opportunity. As beginner’s luck would have it, ACTG shares indeed peaked soon after, and shares since declined over 90%. With this existing familiarity of the industry, we researched Burford Capital (“BUR”) very closely in 2018. My familiarity with litigation finance – coupled with great research by my team – helped us come to hold informed and nuanced opinions about BUR."

 

Here's a relevant quote from Acacia's website:

"On the heels of the financial market and NASDAQ meltdown in 2000, Acacia refocused its corporate strategy concentrating exclusively on technology backed by strong patents. Under the leadership of Paul Ryan and Chip Harris, the architects of Acacia’s new strategic vision, and after successfully licensing its own technologies, Acacia sought to build an independent patent licensing business, mimicking the in-house efforts of successful patent licensing companies like IBM and Qualcomm.

 

https://acaciaresearch.com/template_files/1173/history.php

 

This is easy enough to verify by perusing Acacia's 10-K for the FY ended 12/31/10. The only material assets on its balance sheet were cash and patents, exactly what we'd expect for patent troll.

 

Here's another quote from the same 10-K:

 

"Currently, on a consolidated basis, our operating subsidiaries own or control the rights to over 171 patent portfolios, with future patent expiration dates ranging from 2011 to 2029, and covering technologies used in a wide variety of industries..."

 

Again, this is exactly what we'd expect to find in the 10-K of a patent troll.

 

 

All that said, why the eagerness to link Acacia to Burford? While I don't know for sure, I suspect it's somehow related to Katharine Wolanyk, a Burford Managing Director, joining Acacia's board in 1/2019.

 

https://acaciaresearch.com/prviewer/release_only/id/3583844

 

Is this relevant to the Burford investment thesis? No, I don't think anything related to Acacia has any relevance to the Burford investment thesis, whether long or short. 

[Guest Schwab711]

I think there's a misconception that Burford has large corporate litigation clients and that encompasses a lot of BUR's cases and investment dollars because BUR's "Additions" seems high. I think people believe investment turnover and reinvestment is much higher than it actually is.

 

In the 1H 2019, BUR invested $40.4m in to their core balance sheet litigation investments (just $6.3m was spent on new cases). In 2018, BUR invested $128m. Both figures include new cases and continued investment in ongoing cases. The additions are high in 2018 and 2019 because BUR trades stocks where an acquisition was announced prior to close and then litigates appraisal rights of the sale. That is roughly 70%-80% of additions.

 

BUR invested $17m in asset recovery investments in 1H 2019.

 

BUR raised money opportunistically but they really don't have anywhere to invest it. I often hear about the asset management part of the business but in the 1H 2019, BUR invested $70m on behalf on their investors. Most of the AUM is just committed capital. BUR hasn't come anywhere near deploying that much capital and it's hard to figure how they will be able to.

 

Competition is already starting to hurt BUR's future returns. At +/- $100m invested annually, BUR will have difficulty paying overhead annually if we assume 2.6 year average maturity and any realistic normalized portfolio ROIC.

 

Edit: I didn't mean to write fraud to suggest that "I know BUR commits criminal fraud" in an earlier post. I only meant fraud in the sense that BUR's management seem like con artists to me. I should have been much clearer.

[Normax59]

I think there's a misconception that Burford has large corporate litigation clients and that encompasses a lot of BUR's cases and investment dollars because BUR's "Additions" seems high. I think people believe investment turnover and reinvestment is much higher than it actually is.

 

In the 1H 2019, BUR invested $40.4m in to their core balance sheet litigation investments (just $6.3m was spent on new cases). In 2018, BUR invested $128m. Both figures include new cases and continued investment in ongoing cases. The additions are high in 2018 and 2019 because BUR trades stocks with announced acquisition prior to close and then litigates appraisal rights of the sale. That is roughly 70%-80% of additions.

 

BUR invested $17m in asset recovery investments in 1H 2019.

 

BUR raised money opportunistically but they really don't have anywhere to invest it. I often hear about the asset management part of the business but in the 1H 2019, BUR invested $70m on behalf on their investors. Most of the AUM is just committed capital. BUR hasn't come anywhere near deploying that much capital and it's hard to figure how they will be able to.

 

Competition is already starting to hurt BUR's future returns. At +/- $100m invested annually, BUR will have difficulty paying overhead annually if we assume 2.6 year average maturity and any realistic normalized portfolio ROIC.

 

Edit: I didn't mean to write fraud to suggest that "I know BUR commits criminal fraud" in an earlier post. I only meant fraud in the sense that BUR's management seem like con artists to me. I should have been much clearer.

 

It's too bad I can't hit like on a post here.

 

https://courtconnect.courts.delaware.gov/public/ck_public_qry_main.cp_main_idx

 

GKC STRATEGIC VALUE MASTER FUND, L.P.

BCIM STRATEGIC VALUE MASTER FUND, L.P.

 

2019-0565 - BCIM STRATEGIC VALUE VS. MPM HOLDINGS - ACTIVE

2019-0363 - BCIM STRATEGIC MASTER FUND VS. NEXEO SOLUTIONS,INC - ACTIVE

2019-0558 - BCIM STRATEGIC VALUE MASTER FUND, LP VS. HFF, INC. - ACTIVE

2017-0714 - GKC STRATEGIC VS. KATE SPADE & CO - CLOSED

2018-0291 - GKC STRATEGIC VALUE VS. REGAL ENTERTAINMENT - ACTIVE

2017-0769 - GKC STRATEGIC VALUE FUND VS. BAKER HUGHES INC.I - CLOSED

2018-0226 - GKC STRATEGIC VALUE MASTER FUND VS. CAPITAL BANK - CLOSED

[Foreign Tuffett]

I think there's a misconception that Burford has large corporate litigation clients and that encompasses a lot of BUR's cases and investment dollars because BUR's "Additions" seems high. I think people believe investment turnover and reinvestment is much higher than it actually is.

 

In the 1H 2019, BUR invested $40.4m in to their core balance sheet litigation investments (just $6.3m was spent on new cases). In 2018, BUR invested $128m. Both figures include new cases and continued investment in ongoing cases. The additions are high in 2018 and 2019 because BUR trades stocks where an acquisition was announced prior to close and then litigates appraisal rights of the sale. That is roughly 70%-80% of additions.

 

BUR invested $17m in asset recovery investments in 1H 2019.

 

BUR raised money opportunistically but they really don't have anywhere to invest it. I often hear about the asset management part of the business but in the 1H 2019, BUR invested $70m on behalf on their investors. Most of the AUM is just committed capital. BUR hasn't come anywhere near deploying that much capital and it's hard to figure how they will be able to.

 

Competition is already starting to hurt BUR's future returns. At +/- $100m invested annually, BUR will have difficulty paying overhead annually if we assume 2.6 year average maturity and any realistic normalized portfolio ROIC.

 

Edit: I didn't mean to write fraud to suggest that "I know BUR commits criminal fraud" in an earlier post. I only meant fraud in the sense that BUR's management seem like con artists to me. I should have been much clearer.

 

One the recent call (around the 52 minute mark) they referenced a $770 million in existing commitments figure for balance sheet investments, with less than 50% of that amount to be drawn/used over the next 12 months. I don't know where you are getting $100 million, but management is suggesting more like ~3X that figure.

[Foreign Tuffett]

 

https://courtconnect.courts.delaware.gov/public/ck_public_qry_main.cp_main_idx

 

GKC STRATEGIC VALUE MASTER FUND, L.P.

BCIM STRATEGIC VALUE MASTER FUND, L.P.

 

2019-0565 - BCIM STRATEGIC VALUE VS. MPM HOLDINGS - ACTIVE

2019-0363 - BCIM STRATEGIC MASTER FUND VS. NEXEO SOLUTIONS,INC - ACTIVE

2019-0558 - BCIM STRATEGIC VALUE MASTER FUND, LP VS. HFF, INC. - ACTIVE

2017-0714 - GKC STRATEGIC VS. KATE SPADE & CO - CLOSED

2018-0291 - GKC STRATEGIC VALUE VS. REGAL ENTERTAINMENT - ACTIVE

2017-0769 - GKC STRATEGIC VALUE FUND VS. BAKER HUGHES INC.I - CLOSED

2018-0226 - GKC STRATEGIC VALUE MASTER FUND VS. CAPITAL BANK - CLOSED

 

What is all this?

[Foreign Tuffett]

I think there's a misconception that Burford has large corporate litigation clients and that encompasses a lot of BUR's cases and investment dollars because BUR's "Additions" seems high. I think people believe investment turnover and reinvestment is much higher than it actually is.

 

In the 1H 2019, BUR invested $40.4m in to their core balance sheet litigation investments (just $6.3m was spent on new cases). In 2018, BUR invested $128m. Both figures include new cases and continued investment in ongoing cases. The additions are high in 2018 and 2019 because BUR trades stocks where an acquisition was announced prior to close and then litigates appraisal rights of the sale. That is roughly 70%-80% of additions.

 

BUR invested $17m in asset recovery investments in 1H 2019.

 

BUR raised money opportunistically but they really don't have anywhere to invest it. I often hear about the asset management part of the business but in the 1H 2019, BUR invested $70m on behalf on their investors. Most of the AUM is just committed capital. BUR hasn't come anywhere near deploying that much capital and it's hard to figure how they will be able to.

 

Competition is already starting to hurt BUR's future returns. At +/- $100m invested annually, BUR will have difficulty paying overhead annually if we assume 2.6 year average maturity and any realistic normalized portfolio ROIC.

 

Edit: I didn't mean to write fraud to suggest that "I know BUR commits criminal fraud" in an earlier post. I only meant fraud in the sense that BUR's management seem like con artists to me. I should have been much clearer.

 

One the recent call (around the 52 minute mark) they referenced a $770 million in existing commitments figure for balance sheet investments, with less than 50% of that amount to be drawn/used over the next 12 months. I don't know where you are getting $100 million, but management is suggesting more like ~3X that figure.

 

Also, Muddy Waters (MW) is of the opinion that Burford is "arguably insolvent" due to their debt and ongoing funding commitments. You seem to think basically the opposite: they won't be able to find enough claims to fund. Interesting that two bearish takes on this company can hold such diametrically opposed opinions about this.

 

Finally, why do you think Burford's management "seem like con artists"? 

[Guest Schwab711]

I think there's a misconception that Burford has large corporate litigation clients and that encompasses a lot of BUR's cases and investment dollars because BUR's "Additions" seems high. I think people believe investment turnover and reinvestment is much higher than it actually is.

 

In the 1H 2019, BUR invested $40.4m in to their core balance sheet litigation investments (just $6.3m was spent on new cases). In 2018, BUR invested $128m. Both figures include new cases and continued investment in ongoing cases. The additions are high in 2018 and 2019 because BUR trades stocks where an acquisition was announced prior to close and then litigates appraisal rights of the sale. That is roughly 70%-80% of additions.

 

BUR invested $17m in asset recovery investments in 1H 2019.

 

BUR raised money opportunistically but they really don't have anywhere to invest it. I often hear about the asset management part of the business but in the 1H 2019, BUR invested $70m on behalf on their investors. Most of the AUM is just committed capital. BUR hasn't come anywhere near deploying that much capital and it's hard to figure how they will be able to.

 

Competition is already starting to hurt BUR's future returns. At +/- $100m invested annually, BUR will have difficulty paying overhead annually if we assume 2.6 year average maturity and any realistic normalized portfolio ROIC.

 

Edit: I didn't mean to write fraud to suggest that "I know BUR commits criminal fraud" in an earlier post. I only meant fraud in the sense that BUR's management seem like con artists to me. I should have been much clearer.

 

One the recent call (around the 52 minute mark) they referenced a $770 million in existing commitments figure for balance sheet investments, with less than 50% of that amount to be drawn/used over the next 12 months. I don't know where you are getting $100 million, but management is suggesting more like ~3X that figure.

 

First two pics shows the core litigation portfolio on the balance sheet. Total invested dollars increased $40.4m in 1H 2019. You can see all these numbers I cited in these tables or by comparing the Investment Data filings.

 

Look at 1H 2019 investment commitments vs the actual individual investment data they reported. In the past, "commitments" don't always turn in to actual investments with commitments.