BUR.L - Burford Capital

[bjakes00]

They appear to use this attorney / client privilege argument whenever it’s convenient for them to do so.

 

Unfortunately, whilst Burford may turn out to be a fantastic business in the long run, there are just too many areas (far more than a normal operating company) where management has discretion to tweak things and hide it under the veil of attorney work privilege or whatever they want to call it.

 

I just don’t have a good answer to “why should I trust management?” In this case. There are too many things they are doing that require an unacceptable level of trust.

 

 

[Guest cherzeca]

accounting for investments is different than accounting for PPE, right?  you have to mark to market, just like KKR and Blackstone do with their PE investments that are still in portfolio. 

 

I like the opportunity to invest here at a discount to prior price precisely because no one, not MW not you not me not the guy behind the lamp post can seriously assess the appropriateness of these carrying values.  not saying there is a margin of safety, just a little margin, now that there is a half off sale

[LaGrandeBelleza]

 

These are pretty valid remarks and I've to admit the initial MW report was - at least partially - tendentious. Nonetheless some of the fundamental questions regarding the business, its valuation and specially the way management presents metrics and information to investors remain questionable, I wouldn't consider their principals crooks but the fact is that they've somewhat been misleading investors perhaps not on purpose, that's yet to be seen.

 

After attending the special call and reading into the transcript some questions remain open to me:

 

1. AIM changes nothing in terms of governance vs the main market according to the company, although an uplisting is clearly necessary. Why do they remain the only company to adscribe to the Guernsey governance code tho?

2. Why does the question about their compensation remain unanswered?

3. Why do they refuse to further discuss mark-ups on their BS of Petersen when there have been recent transactions of tranches for this case? Shouldn't it be marked up precisely using these market inputs?

 

Those are good questions, but I believe they addressed #3 during the call. From my notes: While there is active litigation ongoing, revealing the "fair value" mark would constitute revealing "attorney work product"

 

I actually think this is an acceptable answer. It isn't difficult to imagine a sort of reflexivity-type feedback loop occurring, with Burford's marks being introduced into ongoing cases. Obviously Burford wants to avoid this.

 

Yes, the thing is I fail to understand such logic. I don't come from a law background so perhaps my understanding of the matter is poor but what kind of information are you giving to the other side by disclosing your mark-up? They would obtain your implicit probability of winning the case but that's just your best estimation, also considering the company is supposedly so cautious while marking up cases it shouldn't reflect the full probability even if they are being optimistic about the outcome. Or they could simply bluff in order to influence a settlement with the other side. How would they ever know? Wouldn't the other side be running their own estimates with the available information too?

 

Moreover, since a market price has been established by allegedly 40 sophisticated parties hasn't the implicit probability already been disclosed by the transaction that they've openly & publicly announced?

 

To wrap it up if such sale of a tranche of Petersen has taken place shouldn't that very same valuation in fact be reflected on Burford's books?

 

Something doesn't seem consistent to me.

[Spekulatius]

So what will the impact of an Argentine sovereign default on the Peterson case, if any?

[LaGrandeBelleza]

So what will the impact of an Argentine sovereign default on the Peterson case, if any?

 

Petersen should be discounted at the probability of Argentina's default at least imo

 

Just look at what happened to Elliot

[Gregmal]

https://www.voxmarkets.co.uk/rns/announcement/0ff07516-cb13-4f05-9bae-72798570cae5

 

 

Good news all around IMO. Very impressive that they are listening to shareholders like this. Personally, I did not expect them to move this quickly with these things.

[Liberty]

Scuttleblurb writeup on the Muddy Waters report  (sub required):

 

https://www.scuttleblurb.com/bur3/

[Spekulatius]

Scuttleblurb writeup on the Muddy Waters report  (sub required):

 

https://www.scuttleblurb.com/bur3/

 

I am not sure why this deserves a post here. If yourself not a subscriber, you can’t read/ listen to it, and if you are, you get a notification anyways.

[Foreign Tuffett]

Scuttleblurb writeup on the Muddy Waters report  (sub required):

 

https://www.scuttleblurb.com/bur3/

 

I am not sure why this deserves a post here. If yourself not a subscriber, you can’t read/ listen to it, and if you are, you get a notification anyways.

 

Completely agree with Spekulatius about this.

 

[coc]

accounting for investments is different than accounting for PPE, right?  you have to mark to market, just like KKR and Blackstone do with their PE investments that are still in portfolio. 

 

I like the opportunity to invest here at a discount to prior price precisely because no one, not MW not you not me not the guy behind the lamp post can seriously assess the appropriateness of these carrying values.  not saying there is a margin of safety, just a little margin, now that there is a half off sale

 

"I like the opportunity to invest here at a discount to prior price precisely because no one, not MW not you not me not the guy behind the lamp post can seriously assess the appropriateness of these carrying values. "

 

Can you explain that statement? I'm reading it as "I like the opportunity to invest in something I cannot possibly value, nor can anyone else." But that doesn't make sense, so I must be mis-reading it.

[Liberty]

Scuttleblurb writeup on the Muddy Waters report  (sub required):

 

https://www.scuttleblurb.com/bur3/

 

I am not sure why this deserves a post here. If yourself not a subscriber, you can’t read/ listen to it, and if you are, you get a notification anyways.

 

So non-subscribers interested on info about this company knows it exist and can consider subscribing. I've gotten many direct messages thanking me for pointing out SB. They don't exactly have the WSJ brand recognition...

 

It's one of the very best sources of analysis on the entire web. It's worth posting about. Many wouldn't know this writeup (and the two others on BUR) even existed otherwise. In an industry where many here use services that cost thousands per month (for access to bad research, mostly), this isn't exactly expensive. Not to mention that a single good investment insight is worth many thousands to most here...

 

Good thing it's non-zero sum. Those that get something out of it are happy, and those that just skip over it haven't lost anything...

[SnarkyPuppy]

Scuttleblurb writeup on the Muddy Waters report  (sub required):

 

https://www.scuttleblurb.com/bur3/

 

I am not sure why this deserves a post here. If yourself not a subscriber, you can’t read/ listen to it, and if you are, you get a notification anyways.

 

So non-subscribers interested on info about this company knows it exist and can consider subscribing. I've gotten many direct messages thanking me for pointing out SB. They don't exactly have the WSJ brand recognition...

 

It's one of the very best sources of analysis on the entire web. It's worth posting about. Many wouldn't know this writeup (and the two others on BUR) even existed otherwise. In an industry where many here use services that cost thousands per month (for access to bad research, mostly), this isn't exactly expensive. Not to mention that a single good investment insight is worth many thousands to most here...

 

Good thing it's non-zero sum. Those that get something out of it are happy, and those that just skip over it haven't lost anything...

 

Have to agree w/ Liberty here.  SB posts are top notch & what's the cost of having to gloss over Liberty's comment if you're not interested?

[Gregmal]

Scuttleblurb writeup on the Muddy Waters report  (sub required):

 

https://www.scuttleblurb.com/bur3/

 

I am not sure why this deserves a post here. If yourself not a subscriber, you can’t read/ listen to it, and if you are, you get a notification anyways.

 

So non-subscribers interested on info about this company knows it exist and can consider subscribing. I've gotten many direct messages thanking me for pointing out SB. They don't exactly have the WSJ brand recognition...

 

It's one of the very best sources of analysis on the entire web. It's worth posting about. Many wouldn't know this writeup (and the two others on BUR) even existed otherwise. In an industry where many here use services that cost thousands per month (for access to bad research, mostly), this isn't exactly expensive. Not to mention that a single good investment insight is worth many thousands to most here...

 

Good thing it's non-zero sum. Those that get something out of it are happy, and those that just skip over it haven't lost anything...

 

True dat.

 

I don't think anyone should be discouraged from posting anything if they find it helpful in their investment process. I had never heard of this resource and am surprised to hear how useful others find it. I am intrigued now.

 

Plus, the cost is loose change... bargain compared to what guys like Tilson charge for basically regurgitating pitches they hear from their friends...

[Liberty]

True dat.

 

I don't think anyone should be discouraged from posting anything if they find it helpful in their investment process. I had never heard of this resource and am surprised to hear how useful others find it. I am intrigued now.

 

Plus, the cost is loose change... bargain compared to what guys like Tilson charge for basically regurgitating pitches they hear from their friends...

 

If you want to learn more, he has a bunch of sample posts available for free that give an idea of the depth of his analysis. What I like is that he takes the time to understand industry dynamics and management and competitive advantages and company history and competitors and stuff like that, and he often ends up negative or ambivalent on things he spent a lot of time on, he's not just trying to sell you on stocks and pretend everything is the next multi-bagger. It's not just one more "here's the financials regurgitated, let's slap a multiple on it, along with some superlatives about how great this is" like a bunch of writeups you see out there.

 

https://www.scuttleblurb.com/category/sampleposts/

 

IMO he's getting better over time too.

[Gregmal]

True dat.

 

I don't think anyone should be discouraged from posting anything if they find it helpful in their investment process. I had never heard of this resource and am surprised to hear how useful others find it. I am intrigued now.

 

Plus, the cost is loose change... bargain compared to what guys like Tilson charge for basically regurgitating pitches they hear from their friends...

 

If you want to learn more, he has a bunch of sample posts available for free that give an idea of the depth of his analysis. What I like is that he takes the time to understand industry dynamics and management and competitive advantages and company history and competitors and stuff like that, and he often ends up negative or ambivalent on things he spent a lot of time on, he's not just trying to sell you on stocks and pretend everything is the next multi-bagger. It's not just one more "here's the financials regurgitated, let's slap a multiple on it, along with some superlatives about how great this is" like a bunch of writeups you see out there.

 

https://www.scuttleblurb.com/category/sampleposts/

 

IMO he's getting better over time too.

 

I just signed up and thought the Burford analysis was excellent. Thanks for posting this.

[Mondegreen]

Apologies if this has already been posted, but Jonathan Molot has purchased £8.6M of stock at an average price of £9.18 per share in the last two weeks.

 

While I agree he sold a lot more (£81M) in 2018, this is hardly an insignificant amount of money.

 

Source: https://finance.yahoo.com/quote/BUR.L/insider-transactions/

 

Mondegreen

[bjakes00]

I’m intrigued why the CEO hasn’t been buying more? Great that the CIO is, but interesting that the dynamic CEO and ex-CFO duo haven’t been loading up if their case is so rock solid.

[SnarkyPuppy]

Apologies if this has already been posted, but Jonathan Molot has purchased £8.6M of stock at an average price of £9.18 per share in the last two weeks.

 

While I agree he sold a lot more (£81M) in 2018, this is hardly an insignificant amount of money.

 

Source: https://finance.yahoo.com/quote/BUR.L/insider-transactions/

 

Mondegreen

 

Meh.  $8mm on $81mm of net worth is very different (less significant) than $80k on $800k of net worth.  Insignificant IMO if the goal is to show resounding confidence in the both the business, accounting, and current valuation. 

 

Said another way, this guy can lose $8mm tomorrow and it doesn't impact his life in quite literally any way. 

[Liberty]

I just signed up and thought the Burford analysis was excellent. Thanks for posting this.

 

Glad you liked it.

[5xEBITDA]

Apologies if this has already been posted, but Jonathan Molot has purchased £8.6M of stock at an average price of £9.18 per share in the last two weeks.

 

While I agree he sold a lot more (£81M) in 2018, this is hardly an insignificant amount of money.

 

Source: https://finance.yahoo.com/quote/BUR.L/insider-transactions/

 

Mondegreen

 

Meh.  $8mm on $81mm of net worth is very different (less significant) than $80k on $800k of net worth.  Insignificant IMO if the goal is to show resounding confidence in the both the business, accounting, and current valuation. 

 

Said another way, this guy can lose $8mm tomorrow and it doesn't impact his life in quite literally any way.

 

Losing 10% of your net worth wouldn't impact your life in any way? I'm not sure how many guys you know with 8-9 figure net worths, but they don't spend $ like they have an endless stream. These are people who care about having a balanced personal portfolio, and frankly putting 10% of your net worth into a single public company is a lot.

[Gregmal]

Apologies if this has already been posted, but Jonathan Molot has purchased £8.6M of stock at an average price of £9.18 per share in the last two weeks.

 

While I agree he sold a lot more (£81M) in 2018, this is hardly an insignificant amount of money.

 

Source: https://finance.yahoo.com/quote/BUR.L/insider-transactions/

 

Mondegreen

 

Meh.  $8mm on $81mm of net worth is very different (less significant) than $80k on $800k of net worth.  Insignificant IMO if the goal is to show resounding confidence in the both the business, accounting, and current valuation. 

 

Said another way, this guy can lose $8mm tomorrow and it doesn't impact his life in quite literally any way.

 

Losing 10% of your net worth wouldn't impact your life in any way? I'm not sure how many guys you know with 8-9 figure net worths, but they don't spend $ like they have an endless stream. These are people who care about having a balanced personal portfolio, and frankly putting 10% of your net worth into a single public company is a lot.

 

That and it fails to understand what it is like for someone who has built a business from the ground up, and taken a portion of the reward for being successful with that, off the table. Why wouldn't anyone at some point take the opportunity to diversify their assets if indeed they are heavily concentrated in a single venture? So no duh the guy isn't going to take a same amount he already took off the table, and reinvest ALL of it, when 1) he still holds a substantial position in the shares, and 2) even at todays prices, it is still up substantially from not terribly long ago...This is a case where investors just fail to understand or take into consideration what it is like as a business owner/entreprenuer in real life.

[Foreign Tuffett]

Apologies if this has already been posted, but Jonathan Molot has purchased £8.6M of stock at an average price of £9.18 per share in the last two weeks.

 

While I agree he sold a lot more (£81M) in 2018, this is hardly an insignificant amount of money.

 

Source: https://finance.yahoo.com/quote/BUR.L/insider-transactions/

 

Mondegreen

 

Meh.  $8mm on $81mm of net worth is very different (less significant) than $80k on $800k of net worth.  Insignificant IMO if the goal is to show resounding confidence in the both the business, accounting, and current valuation. 

 

Said another way, this guy can lose $8mm tomorrow and it doesn't impact his life in quite literally any way.

 

Losing 10% of your net worth wouldn't impact your life in any way? I'm not sure how many guys you know with 8-9 figure net worths, but they don't spend $ like they have an endless stream. These are people who care about having a balanced personal portfolio, and frankly putting 10% of your net worth into a single public company is a lot.

 

Exactly. I'm not sure when the standard for meaningful insider buying became "If he didn't sell a kidney and refinance his house to buy more shares it's meaningless!"

 

Gregmal makes a good point too.

[SnarkyPuppy]

Apologies if this has already been posted, but Jonathan Molot has purchased £8.6M of stock at an average price of £9.18 per share in the last two weeks.

 

While I agree he sold a lot more (£81M) in 2018, this is hardly an insignificant amount of money.

 

Source: https://finance.yahoo.com/quote/BUR.L/insider-transactions/

 

Mondegreen

 

Meh.  $8mm on $81mm of net worth is very different (less significant) than $80k on $800k of net worth.  Insignificant IMO if the goal is to show resounding confidence in the both the business, accounting, and current valuation. 

 

Said another way, this guy can lose $8mm tomorrow and it doesn't impact his life in quite literally any way.

 

Losing 10% of your net worth wouldn't impact your life in any way? I'm not sure how many guys you know with 8-9 figure net worths, but they don't spend $ like they have an endless stream. These are people who care about having a balanced personal portfolio, and frankly putting 10% of your net worth into a single public company is a lot.

 

That and it fails to understand what it is like for someone who has built a business from the ground up, and taken a portion of the reward for being successful with that, off the table. Why wouldn't anyone at some point take the opportunity to diversify their assets if indeed they are heavily concentrated in a single venture? So no duh the guy isn't going to take a same amount he already took off the table, and reinvest ALL of it, when 1) he still holds a substantial position in the shares, and 2) even at todays prices, it is still up substantially from not terribly long ago...This is a case where investors just fail to understand or take into consideration what it is like as a business owner/entreprenuer in real life.

 

You're misunderstanding the point, but I didn't articulate the point clearly either. 

 

The guy can do whatever he wants.  For me (personally) to think this is investable I would need to see a very significant investment by the team closest to the books/operations.  I don't consider putting $8mm when you have likely $50mm+ net worth to be a very significant investment (i.e. it goes to 0 and he still has $42mm net worth).  He can do whatever he wants with his money - but in my opinion it doesn't cross the threshold of an amount needed to show true conviction and resounding confidence. 

 

Ironically, earlier in this thread, we had some posters push back on what was being perceived as excessive focus on small details which later proved to be a money saving exercise. 

 

Exactly. I'm not sure when the standard for meaningful insider buying became "If he didn't sell a kidney and refinance his house to buy more shares it's meaningless!"

There is no standard.  You choose your own - I'm communicating mine. 

 

That and it fails to understand what it is like for someone who has built a business from the ground up, and taken a portion of the reward for being successful with that, off the table. Why wouldn't anyone at some point take the opportunity to diversify their assets if indeed they are heavily concentrated in a single venture?

So only someone in his shoes can truly understand his perspective.  I'm assuming you're in a similar situation then.  Also I can think of a few famous investors that others on this board may be aware of that stayed heavily concentrated in what they built...

[writser]

Exactly. I'm not sure when the standard for meaningful insider buying became "If he didn't sell a kidney and refinance his house to buy more shares it's meaningless!"

 

Gregmal makes a good point too.

 

In 2018 the founders together sold 1/3 of their stake, or ~8m shares at 1350p for ~110m gbp. That datapoint was not important enough to be included in the legendary 215 slides pitch and was basically discarded by the bulls in this topic. The two founders combined had, after the Muddy Waters report, presumably ~16m shares valued at ~130m gbp and at least 110m gbp in cash (I think we can assume they structured their sale tax-efficiently). Together they bought back ~1m shares for 8m gbp, increasing their combined position by ~6% and reinvesting just 6% of the cash they received last year. In terms of what they sold last year (and in terms of their net worth) it's basically chump change.

 

Yes, it is a positive sign and a statement from management. Yes, an insider buying is probably more significant than an insider selling. But these guys didn't exactly load up the truck and I think it is biased to be very optimistic about the buys while basically ignoring the insider sales as good diversification. The insider sales were much, much, much larger.

[Gregmal]

Exactly. I'm not sure when the standard for meaningful insider buying became "If he didn't sell a kidney and refinance his house to buy more shares it's meaningless!"

 

Gregmal makes a good point too.

 

In 2018 the founders together sold 1/3 of their stake, or ~8m shares at 1350p for ~110m gbp. That datapoint was not important enough to be included in the legendary 215 slides pitch and was basically discarded by the bulls in this topic. The two founders combined had, after the Muddy Waters report, presumably ~16m shares valued at ~130m gbp and at least 110m gbp in cash (I think we can assume they structured their sale tax-efficiently). Together they bought back ~1m shares for 8m gbp, increasing their combined position by ~6% and reinvesting just 6% of the cash they received last year. In terms of what they sold last year (and in terms of their net worth) it's basically chump change.

 

Yes, it is a positive sign and a statement from management. Yes, an insider buying is probably more significant than an insider selling. But these guys didn't exactly load up the truck and I think it is biased to be very optimistic about the buys while basically ignoring the insider sales as good diversification. The insider sales were much, much, much larger.

 

Anyone placing too much weight on it as either a positive or negative is missing the boat. Its a minor positive in terms of confidence, but certainly nothing thesis altering. Look at Phil Frosts insider buying on OPK. This shit is never as important as it seems.