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Burford Capital Limited (BUR)

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Dod101
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Re: Burford Capital Limited (BUR)

#244436

Postby Dod101 » August 15th, 2019, 10:04 am

And this discussion to me illustrates the point. In the 50 or so closely printed pages in their Annual Report purporting to explain what they do and how they do it, I am not really much wiser than the very broad idea that they finance litigation cases and share in the results if they won. I would not invest on that understanding.

Dod

yorkshirelad1
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Re: Burford Capital Limited (BUR)

#244448

Postby yorkshirelad1 » August 15th, 2019, 10:33 am

Dod101 wrote:And this discussion to me illustrates the point. In the 50 or so closely printed pages in their Annual Report purporting to explain what they do and how they do it, I am not really much wiser than the very broad idea that they finance litigation cases and share in the results if they won. I would not invest on that understanding.

Dod


I always try to understand what I am investing in, or looking at it the other way, bear in mind "don't invest in something you don't understand". As someone else has said, we'd probably stick to things like Unilever (marg) if that was always the case. On the offchance, I went to a UKSA presentation (v ery nice!) lunch in Manchester with Burford on their roadshow. I thought to myself that I didn't really understand at all what they were doing, but should keep away. I had a bit of spare cash in my ISA, so decided to have a bit of a flutter, so bought some Burford at £3. I sold some later on at £19 and then £16; I've got a few left. It doesn't always work like that, but it's nice to turn a profit and it was a bit of a flutter. Sometimes you have to live a little and go against your instincts.....

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Re: Burford Capital Limited (BUR)

#244474

Postby Gan020 » August 15th, 2019, 11:37 am

Sorry I haven't read the thread but maybe this will be of assistance. I sold my BUR bonds above par recently. I am not buying them back. Looking at the governance arrangements below I was foolish to buy them in the first place and also fortunate with the timing of the last tranche I sold.

1. 4 accountants in 4 years
2. no no-exec directors
3. wife of CEO is FD
4. FD is not a qualified accountant (as she doesn't put her qualification initials in any RNS). She is however an FCA. To a casual observer maybe this looks like Fellow of Chartered Accoutants or something but no. CFA is a "Chartered Financial Analyst" which is nothing to do with being an accoutant.
5. The company refuses to move to the main market
6. The company remains comfortable without a qualified accountant at the helm.

PinkDalek
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Re: Burford Capital Limited (BUR)

#244486

Postby PinkDalek » August 15th, 2019, 11:55 am

Some seemingly valid points above and I accept you haven't read the thread!

2. no no-exec directors


The Board comprises four independent non-executive Directors ... https://www.burfordcapital.com/investors/corporate-governance/board-of-directors/

Gan020 wrote:... 4. FD is not a qualified accountant (as she doesn't put her qualification initials in any RNS). She is however an FCA. To a casual observer maybe this looks like Fellow of Chartered Accoutants or something but no. CFA is a "Chartered Financial Analyst" which is nothing to do with being an accoutant. ...


She is described as the Chief Financial Officer. She is not a main board director nor a Finance Director.

Additionally, I've yet to see anywhere where she is misdescribed as an FCA (for Fellow of the Institute of Chartered Accountants in England and Wales). Other than in your post.

Dod101
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Re: Burford Capital Limited (BUR)

#244492

Postby Dod101 » August 15th, 2019, 12:01 pm

yorkshirelad1 wrote:I always try to understand what I am investing in, or looking at it the other way, bear in mind "don't invest in something you don't understand". As someone else has said, we'd probably stick to things like Unilever (marg) if that was always the case. On the offchance, I went to a UKSA presentation (v ery nice!) lunch in Manchester with Burford on their roadshow. I thought to myself that I didn't really understand at all what they were doing, but should keep away. I had a bit of spare cash in my ISA, so decided to have a bit of a flutter, so bought some Burford at £3. I sold some later on at £19 and then £16; I've got a few left. It doesn't always work like that, but it's nice to turn a profit and it was a bit of a flutter. Sometimes you have to live a little and go against your instincts.....


We all need a bit of good fortune, so well done and even better to get out again. That is usually the hard part.

Dod

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Re: Burford Capital Limited (BUR)

#244496

Postby Alaric » August 15th, 2019, 12:09 pm

I was having a browse around their website.

https://www.burfordcapital.com/what-we- ... law-firms/

This caught my eye.
Our investment is non-recourse, meaning we are compensated only if the litigation is successful.


Readers of the Accounts need to have this in mind. Revenues and profits are being declared before Burford are "compensated".

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Re: Burford Capital Limited (BUR)

#244500

Postby TheMotorcycleBoy » August 15th, 2019, 12:15 pm

Arrgh!!

I just sold the whole lot out. So I lost just short of a 1k on BUR. "Fortunately" made about 250 last year selling in profit.

2 lessons for me

1. learn more about the underlying business prior to the buy
2. consider AIM shares as "quick profit or quick loss" shares, and if I'm up +30% on what looks like momentum then sale half the holding.

Matt

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Re: Burford Capital Limited (BUR)

#244507

Postby simoan » August 15th, 2019, 12:25 pm

TheMotorcycleBoy wrote:Arrgh!!

I just sold the whole lot out. So I lost just short of a 1k on BUR. "Fortunately" made about 250 last year selling in profit.

2 lessons for me

1. learn more about the underlying business prior to the buy
2. consider AIM shares as "quick profit or quick loss" shares, and if I'm up +30% on what looks like momentum then sale half the holding.

Matt

Sorry Matt, but your rule 2 is rubbish. There are many good companies on AIM and there are many fully listed LSE companies with accounting treatments that are every bit as bad, or worse, than those used by Burford.

All the best, Si
Last edited by simoan on August 15th, 2019, 12:29 pm, edited 1 time in total.

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Re: Burford Capital Limited (BUR)

#244508

Postby Gan020 » August 15th, 2019, 12:25 pm

PinkDalek wrote:Some seemingly valid points above and I accept you haven't read the thread!

2. no no-exec directors


The Board comprises four independent non-executive Directors ... https://www.burfordcapital.com/investors/corporate-governance/board-of-directors/

Gan020 wrote:... 4. FD is not a qualified accountant (as she doesn't put her qualification initials in any RNS). She is however an FCA. To a casual observer maybe this looks like Fellow of Chartered Accoutants or something but no. CFA is a "Chartered Financial Analyst" which is nothing to do with being an accoutant. ...


She is described as the Chief Financial Officer. She is not a main board director nor a Finance Director.

Additionally, I've yet to see anywhere where she is misdescribed as an FCA (for Fellow of the Institute of Chartered Accountants in England and Wales). Other than in your post.


Ok, my apologies. I trust you appreciate there was no intent to mislead. I am puzzled about the 4 non-exec directors since last time I looked I didn't find them. But now I'm even more surprised as it appears the Board only has 4 non-execs and no employees as Board members.

Again I didn't intend to mislead about the FCA thing. I just got a bit over-enthusiastic with my words.

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Re: Burford Capital Limited (BUR)

#244510

Postby PinkDalek » August 15th, 2019, 12:31 pm

Gan020 wrote:Ok, my apologies. I trust you appreciate there was no intent to mislead. I am puzzled about the 4 non-exec directors since last time I looked I didn't find them. But now I'm even more surprised as it appears the Board only has 4 non-execs and no employees as Board members.

Again I didn't intend to mislead about the FCA thing. I just got a bit over-enthusiastic with my words.


No problem!

I'll try and dig out the paperwork later, which explains why the main board directors are not those you might expect. It may have been in the prospectus or later in the recent attack.

Dod101
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Re: Burford Capital Limited (BUR)

#244515

Postby Dod101 » August 15th, 2019, 12:48 pm

orporate governance
Burford is composed of its publicly traded parent
company, Burford Capital Limited, and a number
of wholly-owned subsidiaries in various jurisdictions
through which it conducts its operations and makes
its investments. Burford Capital LLC is the principal
operating entity in the US and Burford Capital
(UK) Limited is the principal operating entity in the
UK. Those two entities provide various corporate
and investment advisory services to other Group
companies. Burford Capital Limited, the public
parent, does not have any employees itself.
Burford Capital Limited has a single class of ordinary
shares which are traded on the AIM market of the
London Stock Exchange. Subsidiaries have issued
bonds traded on the Main Market of the London
Stock Exchange.
Burford Capital Limited is governed by its fourmember Board of Directors. All four directors are
independent non-executives, and all four have
been directors since Burford’s inception.
■ Sir Peter Middleton GCB, Chairman: Sir Peter
Middleton was until 2013 UK Chairman of Marsh &
McLennan Companies and Chairman of Mercer
Ltd. He was previously Permanent Secretary at
HM Treasury and Group Chairman and Chief
Executive of Barclays Bank PLC. Sir Peter remains
active in a number of other business ventures
which are set forth on our web site.
■ Hugh Steven Wilson, Deputy Chairman:
Mr. Wilson was a senior partner with Latham &
Watkins, where he was Global Co-Chair of the
Mergers and Acquisitions Practice Group and
former Chairman of both the National Litigation
Department and the National Mergers and
Acquisitions Litigation Practice Group. He is
the former Managing Partner of Tennenbaum
Capital Partners. He has served as a director of
other US entities as set forth on our web site.
■ David Lowe OBE, Director: David Lowe was until
recently Senior Jurat of the Guernsey Royal
Court. He was previously the Chief Executive
of Bucktrout & Company Limited and a former
director of Lazard and Barclays Capital in
Guernsey.
■ Charles Parkinson, Director: Charles Parkinson
is President of the States of Guernsey Trading
Supervisory Board and formerly the Minister
of Treasury and Resources for the States of
Guernsey. He is a past Partner/Director of PKF
Guernsey, accountants and fiduciaries, and is a
barrister and an accountant.
The Board holds an in-person meeting every quarter
during which it reviews thoroughly all aspects
of the business’ strategy and performance; the
directors spend at least one evening and one full
day together for each meeting, and every director
attended all such meetings held in 2018. Burford’s
Chief Executive Officer and Chief Investment Officer
participated in the entirety of each board meeting
(other than the closed session discussed below),
joined as appropriate by other senior members of
management. The Board reviews its performance
and director compensation annually and regularly
discusses succession planning and management
oversight. The Board meets in closed session without
management present at each of its meetings.
The Board also operates through three committees
composed entirely of independent directors, Audit
(Parkinson (Chair) and Lowe), Investment (Lowe
(Chair) and Parkinson) and Remuneration (Wilson
(Chair), Middleton, Lowe and Parkinson), all of
which meet throughout the year as required. The
Remuneration Committee reviews and approves
compensation and LTIP awards for all staff. The
Audit Committee plays an active role, not only
in overseeing the audit process and managing
non-audit services to ensure the continued
independence of the auditors, but also in
addressing investment valuations, an area of key
judgement for the business.
No members of management sit on the Board; while
atypical for a UK business, we believe this structure
maximises independent oversight of the business.
As a result, the Board is smaller than many. The
Board composition is also dictated by the provisions
of Burford’s Articles, which limit the proportion of
US persons that can be directors, thus making it
impossible to add executives to the Board without
expanding its size considerably, which we consider
undesirable for both cost and functional reasons.
Sir Peter Middleton also chairs the Board of Burford
Capital Holdings (UK) Limited, a significant Burford
subsidiary, to ensure non-executive oversight.
We suggest that a number of the precepts of current
corporate governance need to be considered
in the relatively unique context of Burford. We
have built a large and complex business quite
rapidly; Burford only came into existence in late
2009. Moreover, our business, and the industry
in which we operate, has seen seismic changes
during the decade of our existence on a regular
basis. We believe that there is enormous value in a
board at this stage of our existence that is deeply
experienced in the business and has lived through
its growth and history.

With apologies for the format but the above contains details of the four non executive directors, taken from the Annual Report to 31 December 2018. I hope this is allowed but if it offends the rules of this site please delete it, mods.

You will see that it also contains their justification for having only four elderly white gentlemen on the Board. The Chairman is I think 85 and you could answer their comments by saying it is a bit of a closed shop in that all four have been the only directors since the company was founded. There cannot be any independent questioning of what is going on so the governance is on the face of it very poor.

Dod

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Re: Burford Capital Limited (BUR)

#244516

Postby TheMotorcycleBoy » August 15th, 2019, 12:51 pm

simoan wrote:
TheMotorcycleBoy wrote:Arrgh!!

I just sold the whole lot out. So I lost just short of a 1k on BUR. "Fortunately" made about 250 last year selling in profit.

2 lessons for me

1. learn more about the underlying business prior to the buy
2. consider AIM shares as "quick profit or quick loss" shares, and if I'm up +30% on what looks like momentum then sale half the holding.

Matt

Sorry Matt, but your rule 2 is rubbish. There are many good companies on AIM and there are many fully listed LSE companies with accounting treatments that are every bit as bad, or worse, than those used by Burford.

All the best, Si

Ok, fair comment on the "quick profit or quick loss" shares bit.

Other AIMs we have are AMS, BVXP, TUNE, KETL and CAML (bit of exposure to mining there).

But I think given their inherent volatility, then I think the "I'm up +30% on what looks like momentum then sale half the holding" is a bloody good call. I remember me and Mel staring at our BUR a few months back when it was about 30% up. Should have sold a wedge then. At least we'd have clawed more back.

But, I suppose, each share is different. Maybe dividend yield should also have been considered. If that was the case with BUR, then it should have been a nobrainer for us to have taken some off the table.

Matt

Dod101
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Re: Burford Capital Limited (BUR)

#244518

Postby Dod101 » August 15th, 2019, 12:58 pm

The fact is Matt that as I said in response to yorkshirelad1, the most difficult bit with investing is knowing when to sell. If you are in trading mode then set a target and sell if the share reaches it, no ifs or buts to quote our PM.

Dod

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Re: Burford Capital Limited (BUR)

#244525

Postby simoan » August 15th, 2019, 1:31 pm

TheMotorcycleBoy wrote:Other AIMs we have are AMS, BVXP, TUNE, KETL and CAML (bit of exposure to mining there).

But I think given their inherent volatility, then I think the "I'm up +30% on what looks like momentum then sale half the holding" is a bloody good call. I remember me and Mel staring at our BUR a few months back when it was about 30% up. Should have sold a wedge then. At least we'd have clawed more back.

But, I suppose, each share is different. Maybe dividend yield should also have been considered. If that was the case with BUR, then it should have been a nobrainer for us to have taken some off the table.

Matt

Small cap shares are generally more volatile than larger caps purely down to liquidity, whether listed on AIM or not, it makes no difference. If you can't handle volatility then stick to FTSE 100 shares or an Allshare index tracker ETF.

Small caps have had a bad year with FTSE Small -0.75% and AIM100 -1% as I write. I would consider it a bad year for me also due to the under performance of small caps to which I am heavily weighted in my SIPP, but I'm still up 9% and beating the AS by 3.9% so you need to look at the bigger picture. I'm currently 31% in cash and so rubbing my hands together at the prospect of some value pickings this autumn. :)

Anyway, apologies for moving away from the subject of this thread... I'm out of Burford FWIW

All the best, Si

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Re: Burford Capital Limited (BUR)

#244553

Postby langley59 » August 15th, 2019, 4:11 pm

Very helpful RNS from Burford announcing changes to its listing, board and CFO, share price bouncing:

https://www.investegate.co.uk/burford-c ... td%20Alert

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Re: Burford Capital Limited (BUR)

#244558

Postby simoan » August 15th, 2019, 4:31 pm

langley59 wrote:Very helpful RNS from Burford announcing changes to its listing, board and CFO, share price bouncing:

https://www.investegate.co.uk/burford-c ... td%20Alert

This is interesting. So despite their protestations to the contrary, this confirms that MW made valid points about corporate governance. I'd never have invested in the first place had I known the CEO and CFO were married, forget the fair value accounting!

This doesn't really change anything though. IMO the whole AIM vs LSE/NYSE listing issue is a red herring. Even if it were fully listed they would still use the same IFRS accounting method using fair value adjustment. A good learning experience. I'm glad to be out.

All the best, Si

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Re: Burford Capital Limited (BUR)

#244609

Postby Bouleversee » August 15th, 2019, 7:56 pm

I am not a holder but in the circumstances, I thought it was a pretty good piece of PR. The message has clearly got home and instead of pretending everything is hunky-dory they are addressing the problems and taking appropriate action. So far, so good.

I hadn't realised, however, that companies could be registered on overseas exchanges as well as AIM. Intriguing.

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Re: Burford Capital Limited (BUR)

#244664

Postby TheMotorcycleBoy » August 16th, 2019, 6:34 am

Bouleversee wrote:I am not a holder but in the circumstances, I thought it was a pretty good piece of PR. The message has clearly got home and instead of pretending everything is hunky-dory they are addressing the problems and taking appropriate action. So far, so good.

I hadn't realised, however, that companies could be registered on overseas exchanges as well as AIM. Intriguing.

I guess that's all it was though, i.e. PR.

It seems to be the management thought "Yikes, unless we say something soon, we're sunk". Their big concern being the continuation of financing opportunities via their bond issues I assume.

Unfortunately, as an ex-shareholder, I suppose their PR doesn't change their accounting style overnight. So presumably they will attract lower rating from the market for the foreseeable?

Matt

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Re: Burford Capital Limited (BUR)

#244665

Postby TheMotorcycleBoy » August 16th, 2019, 6:40 am

Gan020 wrote:Sorry I haven't read the thread but maybe this will be of assistance. I sold my BUR bonds above par recently. I am not buying them back. Looking at the governance arrangements below I was foolish to buy them in the first place and also fortunate with the timing of the last tranche I sold.

1. 4 accountants in 4 years
2. no no-exec directors
3. wife of CEO is FD
4. FD is not a qualified accountant (as she doesn't put her qualification initials in any RNS). She is however an FCA. To a casual observer maybe this looks like Fellow of Chartered Accoutants or something but no. CFA is a "Chartered Financial Analyst" which is nothing to do with being an accoutant.
5. The company refuses to move to the main market
6. The company remains comfortable without a qualified accountant at the helm.

Thanks for this Gan,

It's a useful set of criteria - and I should review my other AIMs in respect of these.

Regards point 2. "no no-exec directors" how many non-execs dirs should firms have? i.e. in general and in AIM.

And point 5. "refuses to move to the main market", how did you assess that? Was it purely based on their market capitalisation being greater than many of the firms in the FTSE 350 and so on?

thanks Matt

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Re: Burford Capital Limited (BUR)

#244675

Postby Dod101 » August 16th, 2019, 8:07 am

TheMotorcycleBoy wrote:
Gan020 wrote:Sorry I haven't read the thread but maybe this will be of assistance. I sold my BUR bonds above par recently. I am not buying them back. Looking at the governance arrangements below I was foolish to buy them in the first place and also fortunate with the timing of the last tranche I sold.

1. 4 accountants in 4 years
2. no no-exec directors
3. wife of CEO is FD
4. FD is not a qualified accountant (as she doesn't put her qualification initials in any RNS). She is however an FCA. To a casual observer maybe this looks like Fellow of Chartered Accoutants or something but no. CFA is a "Chartered Financial Analyst" which is nothing to do with being an accoutant.
5. The company refuses to move to the main market
6. The company remains comfortable without a qualified accountant at the helm.

Thanks for this Gan,

It's a useful set of criteria - and I should review my other AIMs in respect of these.

Regards point 2. "no no-exec directors" how many non-execs dirs should firms have? i.e. in general and in AIM.

And point 5. "refuses to move to the main market", how did you assess that? Was it purely based on their market capitalisation being greater than many of the firms in the FTSE 350 and so on?


Note that the substance is inaccurate as noted earlier in the thread. The criteria might well stand though. Burford claim that all four existing directors are non Execs but the point of this is that they should have sufficient non execs to provide a broad range of skills/viewpoints and more importantly, they should not be in situ for more than a maximum of 9 years otherwise they are deemed no longer independent. In fact most well run companies will rotate their non execs every few years, say one or two being replaced each year. As to how many, I do not think there is a hard and fast rule, but another important point is that there is supposed to be a gender mix, and maybe even a racial mix. In that, I have some sympathy for the Burford view, that the best person for the job is more important than say their gender.

To some extent the 'refuses to move to the main market' has been overtaken by their recent press release where they point out that in certain circumstances they may consider a move to the main market.

Dod


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