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Burford Capital Limited (BUR)

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simoan
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Re: Burford Capital Limited (BUR)

#242772

Postby simoan » August 8th, 2019, 3:50 pm

Alaric wrote:
simoan wrote:Here's the rebuttal. Not read it all yet:


Those who have read it seem to believe in it.

If they take their own case against Muddy Waters for market manipulation, how would they report that?

I thought it was a strong rebuttal. However, the share price reaction would tell me many people are still unconvinced. Maybe in time the price will head back to £10 when confidence fuly returns, but IMO the damage has been done.

It will be interesting to see whether Burford go after Muddy Waters in the courts. I imagine it would be very difficult to prove market manipulation and I'd rather they just got on with business to prove MW wrong.

All the best, Si

simoan
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Re: Burford Capital Limited (BUR)

#242774

Postby simoan » August 8th, 2019, 4:02 pm

Dod101 wrote:Not so long ago I tried reading their Annual Report with reams and reams of explanations, but I had no idea that financing court cases could be so complicated and gave up and decided that I did not want to buy the shares so left it. A bit like Buffett, if I cannot understand what a business is doing then I am not going to invest in it, certainly one which is fundamentally as straightforward as Burford's ought to be.

The only thing that complicates the issue is having to meet the requirements of IFRS accounting. To their credit, Burford have stated this many times including again today in the rebuttal. I take the point about only investing in things you understand but the reality is that that would restrict most investors to a very limited pool of potential shares.

I don't believe there are many PI's who have a hope in hell of understanding the accounts of most FTSE100 companies. Just in the last couple of days we have seen large insurance companies release results in four separate parts and I guarantee no-one fully understands them, let alone the inner workings and accountancy practices of the large oil companies or investment banks. Do you completely understand how HSBC really makes its money? If we're being honest, we are all just making best guesses, aren't we? And investing in Burford is no different.

All the best, Si

jackdaww
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Re: Burford Capital Limited (BUR)

#242777

Postby jackdaww » August 8th, 2019, 4:06 pm

a simple company with simple accounts ?

greggs anyone?

:D

ps burford up to nearly 800 at 1615.

Bouleversee
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Re: Burford Capital Limited (BUR)

#242778

Postby Bouleversee » August 8th, 2019, 4:19 pm

simoan wrote:
Dod101 wrote:Not so long ago I tried reading their Annual Report with reams and reams of explanations, but I had no idea that financing court cases could be so complicated and gave up and decided that I did not want to buy the shares so left it. A bit like Buffett, if I cannot understand what a business is doing then I am not going to invest in it, certainly one which is fundamentally as straightforward as Burford's ought to be.

The only thing that complicates the issue is having to meet the requirements of IFRS accounting. To their credit, Burford have stated this many times including again today in the rebuttal. I take the point about only investing in things you understand but the reality is that that would restrict most investors to a very limited pool of potential shares.

I don't believe there are many PI's who have a hope in hell of understanding the accounts of most FTSE100 companies. Just in the last couple of days we have seen large insurance companies release results in four separate parts and I guarantee no-one fully understands them, let alone the inner workings and accountancy practices of the large oil companies or investment banks. Do you completely understand how HSBC really makes its money? If we're being honest, we are all just making best guesses, aren't we? And investing in Burford is no different.

All the best, Si[/quote)

I have given up even trying to understand them. Muddy Waters seems a very good name for a company dedicated to making money by filtering the sewage until clear water emerges but largely consuming most of it themselves and only leaving the dregs for others. This short video was a real eye opener: https://cube.investments/cube-midcap-re ... -2019-bur/. Quite entertaining if one isn't invested in them. I still don't like shorting though as it enables manipulation of share prices and extreme volatility in my view and is making the stockmarket a no-go territory for PIs unless they choose to invest in the companies engaged in this sort of activity.

Dod101
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Re: Burford Capital Limited (BUR)

#242783

Postby Dod101 » August 8th, 2019, 4:34 pm

Thanks PD. I have no axe to grind either way and am simply an interested bystander.

Dod

simoan
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Re: Burford Capital Limited (BUR)

#242784

Postby simoan » August 8th, 2019, 4:36 pm

Well the CEO and CIO have shown some conviction: https://www.investegate.co.uk/burford-c ... td%20Alert

I make that over £3m invested between them today.

All the best, Si

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Re: Burford Capital Limited (BUR)

#242786

Postby Bouleversee » August 8th, 2019, 4:44 pm

jackdaww wrote:a simple company with simple accounts ?

greggs anyone?

:D

ps burford up to nearly 800 at 1615.


You mean they don't include the sausage rolls that have been made but not yet bought in their profits? Good for them, but it might only be a question of time. Seriously, they have done very well for me and I am still trying to decide when to sell and take a good profit before it disappears for once. However, just as I was poised to do so after their results, prices started falling, including Greggs. Do you have any reservations about their accounts, Jackdaww?

langley59
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Re: Burford Capital Limited (BUR)

#242789

Postby langley59 » August 8th, 2019, 4:52 pm

simoan wrote:I also did not do enough due diligence because I only found out yesterday that the CFO is not a qualified accountant and is married to the CEO, both of which I am particularly unhappy about.


Ditto. IMO the CFO does not come over very well on the conference call, she should be all over every number and in control of the discussion with the analysts but sounds quite hesitant and unclear on the detail on some questions. A CFO who had had a long career preparing financials and answering to superiors on the details would probably come over better.

Reminds me of the non accountant CFO Lehman had just at the point in its history when it needed a highly confident knowledgeable person to handle the analysts.

PinkDalek
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Re: Burford Capital Limited (BUR)

#242791

Postby PinkDalek » August 8th, 2019, 5:02 pm

langley59 wrote:
simoan wrote:I also did not do enough due diligence because I only found out yesterday that the CFO is not a qualified accountant and is married to the CEO, both of which I am particularly unhappy about.


Ditto.


Repeating myself on the ditto but the rebuttal includes:

The relationship between Burford's CEO and CFO is longstanding, disclosed and well-known.

IMO the CFO does not come over very well on the conference call, she should be all over every number and in control of the discussion with the analysts but sounds quite hesitant and unclear on the detail on some questions. A CFO who had had a long career preparing financials and answering to superiors on the details would probably come over better. ...


Agreed to a certain extent but some people are better than others in that type of place. I know I'd be hesitant but, there again, I'm not a CFO!

There are some good questions being asked.

I liked the Nantucket rebuttal re the business address. Made sense to me and a stupid slip to have been made but that wasn't under Burford's control.

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Re: Burford Capital Limited (BUR)

#242809

Postby jackdaww » August 8th, 2019, 6:14 pm

Bouleversee wrote:
jackdaww wrote:a simple company with simple accounts ?

greggs anyone?

:D

ps burford up to nearly 800 at 1615.


You mean they don't include the sausage rolls that have been made but not yet bought in their profits? Good for them, but it might only be a question of time. Seriously, they have done very well for me and I am still trying to decide when to sell and take a good profit before it disappears for once. However, just as I was poised to do so after their results, prices started falling, including Greggs. Do you have any reservations about their accounts, Jackdaww?


========================

no reservations at all , not that i know much about any accounts.

but its a pretty simple business , so unless theyre doing a patval , i see no risks there.

thats probably why the shares are not cheap .

:)

monabri
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Re: Burford Capital Limited (BUR)

#242820

Postby monabri » August 8th, 2019, 6:47 pm

"As outlined in previous announcements, Mr Bogart and Mr Molot can confirm that they have purchased shares following release of Burford's response to the Muddy Waters report. Mr Bogart purchased 123,747 ordinary shares of nil par value in Burford ("Ordinary Shares") and Mr Molot purchased 350,643 Ordinary Shares, in each case on the market at a price of 663.77 pence per share."

I'm not sure what this means (nil par value)...can anyone please provide guidance.

I don't own shares but I'd be miffed by the actions taken by "Dirty Waters".

PinkDalek
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Re: Burford Capital Limited (BUR)

#242836

Postby PinkDalek » August 8th, 2019, 7:49 pm

monabri wrote:I'm not sure what this means (nil par value)...can anyone please provide guidance.


Burford Capital Limited is not incorporated in the United Kingdom. Rather it is incorporated and registered in Guernsey.

The ordinary shares do not have a nominal share capital, unlike what we expect to see in UK companies. NPV is common in some of the states in the States and in Europe.

If you look at https://www.londonstockexchange.com/exc ... XAMSM.html you’ll see confirmation that the quoted ordinary shares are of NPV.

If you wade through the 2018 Annual Report, you’ll see at note 24 https://www.burfordcapital.com/wp-conte ... 19-WEB.pdf the number of ordinary share issued by that year end and at what price. The share capital therefore represents the amounts received for the shares at the relevant dates (less associated costs). As there’s no nominal value, there’s no share premium reflected as such.

Their bonds though are, I think, issued by Burford Capital PLC, a UK subsidiary of Burford Capital Limited.

Edit: This random webpage probably explains better than I can https://www.accountingcoach.com/blog/no-par-value-stock

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Re: Burford Capital Limited (BUR)

#242867

Postby widowandorphan3 » August 8th, 2019, 10:42 pm

Someone mentioned Greggs as a simple to understand business. I'm sure that's true, but PatVal is a not dissimilar business, and we saw what happened there. A simple business of selling buns (or cakes) can get quite complicated if people want it to.

I'll declare now that I don't know very much about Burford but as a reasonably keen follower of business and the markets I find it a remarkable (and frankly scary) story, of how a reasonably large company can lose so much value, so quickly.

Burford strikes me that it's by nature a very complicated business, in quite a risky industry. It also achieves its revenues in large lumps, and there's no real guarantee that more large lumps will follow. In most businesses, previous sales tend to lead to more revenues - the customer needs more widgets of a particular design so he can make more cars, a consumer runs out of Diet Coke and he only drinks Diet Coke, whatever.

But Burford's cases (and thus revenues) AIUI are largely unrelated to each other. Sure, they can use data and judgement and experience from previous cases to inform the future ones they take on, but that's about it.

And cash is as we know very important; Enron reported very strong revenues and earnings almost to the very end (and I think Lehman too), but its detractors noticed early (and very profitably, for them) that it had very poor cashflow, and indeed IMS it was one of the only large US companies that didn't make quarterly cashflow statements, knowing these would not look good to Mr Market. But the data was there, if you dug deep enough, albeit on a less regular basis than usual. Indeed, mad though it sounds, much of Enron's fraud was hidden in plain sight, in arcane accounts that it seems its own managers didn't really understand, let alone nearly all outsiders. And though in that case there was fraud, it isn't entirely clear that anyone there apart from literally 3 or 4 people thought they were doing anything wrong; they were bending rules, not breaking them, and isn't that what everyone does?

The Enron example is mentioned by MW in its report, especially in reference to Burford's 'non-cash accounting profits', though I have no way of knowing if the comparison is fair or not.

I appreciate the need for 'non-cash accounting profits' in accounts, but such things are little use when it comes to the realities of needing cash to pay wages, taxes, dividends and everything else. We all know from our personal accounts that we can dress up our spreadsheets however we like, but if we don't have cash to pay the gas bill and mortgage, we are quickly bust.

We had the example only recently whereby Aston Martin plc booked the sale of intellectual property of £19m in 2018; it didn't actually receive the cash, and indeed the sale has since fallen through/AM doesn't think they'll get the cash (not sure which, exactly) and a provision has had to be made in the most recent accounts. One of several reasons I think why the company's shares have been a total disaster for anyone unfortunate to have them, having lost 74% since IPO just in October. The man in the street might reasonably ask: how can you book a sale on cash you haven't received in your bank account?

Cash management is probably the most fundamental requirement of any business (or household, as I sometimes need to remind people in my life 8-) ). MW claims that Burford's voracious need for it is why it needs to raise more, so often, and is why MW states it faces a liquidity crunch, which I think is a posh way of saying that it risks running out of money...

I recall that the likes of Buffett pay little attention to reported profits, and everything onto cashflow, and he likes to see reported profits in plain old cash. Terry Smith has a similar focus, looking closely at cash-conversion for the companies he owns in his fund. Sales are vanity, profit is sanity, but cash is reality.

Avoiding 'complicated' businesses is far from easy - I own directly or indirectly interests in plenty of companies which are complex; as someone has observed, how exactly does HSBC or whatnot make money? And we have to trust accounts within reason, and the people who work at companies on our behalf. And Burford does seem to come down to trust, at the end of the day - for me, there are plenty more straightforward companies to invest in - I like to think!

WaO

AsleepInYorkshire
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Re: Burford Capital Limited (BUR)

#242871

Postby AsleepInYorkshire » August 8th, 2019, 10:54 pm

monabri wrote:"As outlined in previous announcements, Mr Bogart and Mr Molot can confirm that they have purchased shares following release of Burford's response to the Muddy Waters report. Mr Bogart purchased 123,747 ordinary shares of nil par value in Burford ("Ordinary Shares") and Mr Molot purchased 350,643 Ordinary Shares, in each case on the market at a price of 663.77 pence per share."

I'm not sure what this means (nil par value)...can anyone please provide guidance.

I don't own shares but I'd be miffed by the actions taken by "Dirty Waters".

The company is not responsible for any payment or liability relating to the shares price/value.

Why would a stock have no par value?
https://www.investopedia.com/ask/answer ... par-value/

AiY

Dod101
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Re: Burford Capital Limited (BUR)

#242926

Postby Dod101 » August 9th, 2019, 8:51 am

PinkDalek wrote:If you wade through the 2018 Annual Report, you’ll see at note 24 https://www.burfordcapital.com/wp-conte ... 19-WEB.pdf the number of ordinary share issued by that year end and at what price. The share capital therefore represents the amounts received for the shares at the relevant dates (less associated costs). As there’s no nominal value, there’s no share premium reflected as such.


And if you wade through the first 50 or so pages of close type, how much wiser are you at the end than before you read t? I tried again to read these pages last evening and did not learn a lot. I picked up though what is now regarded as very poor corporate governance. The entire Board has been in place since the company was founded more than 10 years ago and consists of mostly, elderly white males, as the report says. The chairman is 85 for heaven's sake. The Report says something to the effect that that is fine though. As long as the Board is effective that does not matter. A bit of a closed shop.

The lack of other disclosures such as a Remuneration Report may be down to its incorporation in Guernsey rather than its quote on Aim. I would not know. And of course its ferocious rebuttal of the allegations by Muddy Waters is not surprising since Burford is chock full of lawyers, but by the same token it would suggest that Muddy Waters must be very sure of their facts.

Will watch developments with interest.

Dod

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Re: Burford Capital Limited (BUR)

#242935

Postby simoan » August 9th, 2019, 9:11 am

Dod101 wrote:I picked up though what is now regarded as very poor corporate governance. The entire Board has been in place since the company was founded more than 10 years ago and consists of mostly, elderly white males, as the report says. The chairman is 85 for heaven's sake. The Report says something to the effect that that is fine though. As long as the Board is effective that does not matter. A bit of a closed shop.

Yes, I agree. I'm not happy with the corporate governance. I believe that is the major thing that would have to change if they wanted a full LSE listing and is the reason they are still on AIM, nothing to do with level of financial reporting as the silly article you referenced in The Times yesterday asserted. Personally, if anything good is to come out of this, it will be that the institutional shareholders will probably now push for change in the governance of the company.

Dod101 wrote:The lack of other disclosures such as a Remuneration Report may be down to its incorporation in Guernsey rather than its quote on Aim. I would not know. And of course its ferocious rebuttal of the allegations by Muddy Waters is not surprising since Burford is chock full of lawyers, but by the same token it would suggest that Muddy Waters must be very sure of their facts.

I don't see how you can say Muddy Waters can be sure of their facts? The company issued a comprehensive rebuttal that clearly showed most of their points raised were either knowingly misleading or grossly factually incorrect. The rebuttal also made clear that MW was clever in using the word "arguably" with regard to its claim of insolvency in order to avoid an instant court case, since the company is clearly nowhere close to insolvent.

MW are very clever and they know what they're doing. They know if they throw enough dirt 99% will miss the target and they only need 1% to stick to make the exercise worthwhile. However, on this occasion I don't think they've managed it and the case for market manipulation looks fairly strong to my non-legal eye. I think it's unfortunate they chose litigation experts as a target and they will probably end up in court with their trousers pulled down on this one.

All the best, Si

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Re: Burford Capital Limited (BUR)

#242942

Postby Alaric » August 9th, 2019, 9:23 am

simoan wrote: They know if they throw enough dirt 99% will miss the target and they only need 1% to stick to make the exercise worthwhile.


What is apparent is that Burford are booking profits from litigation that's still in progress and where the outcome is uncertain. I know that accounting rules permit this and that's why accounts can sometimes be regarded as a work of fiction in terms of establishing whether a business really is making money.

The rules apparently require them to "mark to market" cases in progress. That shouldn't stop them from putting a contingency reserve against the expected receipts to defer profit until actual settlement.

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Re: Burford Capital Limited (BUR)

#242945

Postby JoyofBrex8889 » August 9th, 2019, 9:24 am

No demonstrable intent to deceive.

Used publically available information, including the company filings.

No way this will result in successful action for market abuse.

Muddy Waters are to be commended on their effort to further price discovery.

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Re: Burford Capital Limited (BUR)

#242959

Postby Dod101 » August 9th, 2019, 10:02 am

simoan wrote:
Dod101 wrote:The lack of other disclosures such as a Remuneration Report may be down to its incorporation in Guernsey rather than its quote on Aim. I would not know. And of course its ferocious rebuttal of the allegations by Muddy Waters is not surprising since Burford is chock full of lawyers, but by the same token it would suggest that Muddy Waters must be very sure of their facts.

I don't see how you can say Muddy Waters can be sure of their facts? The company issued a comprehensive rebuttal that clearly showed most of their points raised were either knowingly misleading or grossly factually incorrect. The rebuttal also made clear that MW was clever in using the word "arguably" with regard to its claim of insolvency in order to avoid an instant court case, since the company is clearly nowhere close to insolvent.


I am not saying that MW 'can be sure of their facts'. I said that 'it would suggest that MW must be very sure of their facts'. Or if you like I am speculating that MW must be very sure of their facts by using 'suggest' in much the same way that MW used the word 'arguably'.

I do not know if MW are certain of their facts or not but my point is that to take on a company chock full of lawyers, they must have known what the reaction would be, and would have been prepared for that, deciding to go ahead anyway.

Dod

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Re: Burford Capital Limited (BUR)

#242963

Postby JoyofBrex8889 » August 9th, 2019, 10:08 am

Their short position was disclosed publically before the alleged trash and cash so no foul. Muddy Waters have played a blinder. Well done them. A well executed attack.

And shame on Burford. Their questionable corporate governance is really what opened the door to this raid. It is all too simple to create fear, uncertainty, doubt when the company has what appear to me fairly obvious deficiencies in its internal governance arrangements.
Last edited by JoyofBrex8889 on August 9th, 2019, 10:21 am, edited 2 times in total.


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