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Burford Capital Limited (BUR)

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simoan
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Re: Burford Capital Limited (BUR)

#245737

Postby simoan » August 20th, 2019, 12:53 pm

TheMotorcycleBoy wrote:PS Like many here, I'm out of BUR. Just reviewing existing investments and my future criteria, to try to minimise the chance of this kind of thing happening to me again.

To be clear, nothing that has "happened" is because the CFO is not a trained accountant. No-one is saying that the IFRS standards used by the company have not been used according to the rules. It's just that the rules allow the company to book profit based on their estimate of the value of open legal cases. All that has "happened" is that many people (me included) did not do their research properly and were unaware of, or ignored, information which was already in the public domain.

Nothing in the Muddy Waters dossier should have come as a surprise to anyone, as they only used information available to all to make their case. All in all, it wasn't a particularly strong case but it was enough to call into question how to value the shares of Burford Capital. I thought I had a decent handle on that but when there's no operating cashflow and the EPS and NAV is open to interpretation, how do you value such a company? I have no idea, so I sold.

All the best, Si

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Re: Burford Capital Limited (BUR)

#245742

Postby TheMotorcycleBoy » August 20th, 2019, 1:07 pm

simoan wrote:
TheMotorcycleBoy wrote:PS Like many here, I'm out of BUR. Just reviewing existing investments and my future criteria, to try to minimise the chance of this kind of thing happening to me again.

To be clear, nothing that has "happened" is because the CFO is not a trained accountant. No-one is saying that the IFRS standards used by the company have not been used according to the rules. It's just that the rules allow the company to book profit based on their estimate of the value of open legal cases. All that has "happened" is that many people (me included) did not do their research properly and were unaware of, or ignored, information which was already in the public domain.

Nothing in the Muddy Waters dossier should have come as a surprise to anyone, as they only used information available to all to make their case. All in all, it wasn't a particularly strong case but it was enough to call into question how to value the shares of Burford Capital. I thought I had a decent handle on that


All the best, Si[/quote]
I beg to disagree Si.

I went over the "MW is short BUR" .pdf, cross reffed to the relevant reports, googled etc. And after about 2 hours I could not find out how Carson had discovered what he did.

If you're interested I spouted off a little about it here:
viewtopic.php?p=244867#p244867 (how did he link 7.4 to Napo? back in 2011-2013?)

Perhaps folk like you and I could've done more research, but Carson wired up anonymous figures in prehistoric (+5 years old) reports to client names and court cases presumably in very recent analysis. Just consider the volume of news per day, and realise how fast data gets buried. Carson either has "an advantage", or he's thrown lots of resources at this.

My honest opinion,

Matt

EDIT:
but when there's no operating cashflow and the EPS and NAV is open to interpretation, how do you value such a company? I have no idea, so I sold.

Totally agree! Good riddance to bad rubbish!
Last edited by TheMotorcycleBoy on August 20th, 2019, 1:20 pm, edited 1 time in total.

TheMotorcycleBoy
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Re: Burford Capital Limited (BUR)

#245746

Postby TheMotorcycleBoy » August 20th, 2019, 1:17 pm

Gan020 wrote:
TheMotorcycleBoy wrote:Sorry you missed my point. I was asking you if I should, when reviewing my existing AIM shares, try to ensure that their CFO is a Chartered Accountant.


Hi Matt,

My apologies. I cannot imagine buying shares in any company whether on the main market or the LSE who doesn't have a Chartered Accountant as CFO or FD or whatever title you want for the main finance person responsible to the Board.

I am shocked that any Board will even contemplate running a business without a Chartered Accountant responsible for finance.


Thanks for getting back to me Gan,

It would be interesting to know if there are any other quoted companies doing this. There can't be many (if any!)

Central Asia Metals (CAML). I hold about £2k of book value in here. This is the spiel for their CFO:

https://www.centralasiametals.com/wp-co ... report.pdf (page 42)

Gavin Ferrar Chief Financial Officer
Gavin holds post-graduate degrees in geology and finance and has been involved in the mining sector for over 20 years. His career in industry began at Anglo American in the New Mining Business Division. He spent 10 years in the investment banking sector focusing on equity and debt financing for mining clients of Barclays Capital and Investec. Since 2011, he has worked with junior mining companies arranging finance and providing corporate advisory services before joining the Company in June 2014 as Business Development Director. He was appointed CFO on 16 April 2018. Gavin continues to serve as the Business Development Director for the Company.

One of their non-execs (page43) is a CA:

David Swan Non-Executive Director
David is a chartered accountant. He has extensive experience across the natural resources sector. He also has wide experience geographically in Europe, Asia and Africa and on international as well as UK stock exchanges. He also serves as chief financial officer of Scotgold Resources Limited, and as a non-executive director of Sunrise Resources Plc. David joined the Company in June 2014.

My salvation being, that mining is an easier to comprehend business, and that at least the CFO and CEO aren't actually married!! :lol:

Matt

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Re: Burford Capital Limited (BUR)

#245749

Postby simoan » August 20th, 2019, 1:24 pm

TheMotorcycleBoy wrote:I beg to disagree Si.

I went over the "MW is short BUR" .pdf, cross reffed to the relevant reports, googled etc. And after about 2 hours I could not find out how Carson had discovered what he did.

If you're interested I spouted off a little about it here:
viewtopic.php?p=244867#p244867 (how did he link 7.4 to Napo? back in 2011-2013?)

Carson Block is a lawyer. I'm sure he probably has access to more detailed information on legal cases than some of us, but that is all. There's no point getting too hung up on a single legal case which was one of the weaker parts of the dossier and pretty much irrelevant to the overall investment case.

TheMotorcycleBoy wrote:Perhaps folk like you and I could've done more research...

Please don't use "could", always use "should" - there's a big difference. Accept there's no-one to blame but yourself and move on.

All the best, Si

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Re: Burford Capital Limited (BUR)

#245762

Postby PinkDalek » August 20th, 2019, 2:45 pm

TheMotorcycleBoy wrote: https://www.centralasiametals.com/wp-co ... report.pdf (page 42)

[One of their non-execs (page43) is a CA:

David Swan Non-Executive Director
David is a chartered accountant. ...


Lower caseitis!

As the guy is Australian https://beta.companieshouse.gov.uk/company/05559627/officers, he may be a member of Chartered Accountants Australia & New Zealand.

From your extracts, the CFO there is not a chartered accountant (of any sort) but a non exec Director is.

Same as for Burford Capital.

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Re: Burford Capital Limited (BUR)

#245781

Postby dealtn » August 20th, 2019, 3:52 pm

Gan020 wrote:
It would be interesting to know if there are any other quoted companies doing this. There can't be many (if any!)


William Chalmers just took on the role of CFO at Lloyds. You might consider it equivalent, or maybe superior, but he qualified in Economics, and Law, not accountancy.

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Re: Burford Capital Limited (BUR)

#248709

Postby PinkDalek » September 2nd, 2019, 3:07 pm

Burford Capital chronology of Napo investment
Released 09:00 02-Sep-2019

https://www.londonstockexchange.com/exchange/news/market-news/market-news-detail/BUR/14209740.html

In response to investor inquiries, Burford Capital Limited ("Burford Capital" or "Burford" or "the Company"), the leading global finance and investment management firm focused on law, has today posted a chronology of its Napo investment on the investor relations section of its website.

The document can be found at http://www.burfordcapital.com/investors.

Burford also notes that it plans to provide a further presentation on other accounting and disclosure matters and will inform investors via RNS when that presentation is available.


The document should be here https://www.burfordcapital.com/wp-content/uploads/2019/09/2019.09.02-Burford-Capital-Chronology-of-Napo-Investment-Website-FINAL.pdf. It commences and concludes with:

Burford has received a number of investor inquiries about the Napo investment after it was highlighted – inaccurately and misleadingly – in recent commentary. We thus provide here a detailed chronology of events. ...

So, after seven pages of detailed explanation, we trust the answer is now clear: we accounted for Napo appropriately and conservatively; we made no effort to inflate its value; Invesco had nothing to do with our position; and even if one thinks we should have adjusted the concluded investment table earlier, there was no meaningful impact from not doing so.

I haven't read the seven pages.

Dod101
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Re: Burford Capital Limited (BUR)

#248712

Postby Dod101 » September 2nd, 2019, 3:32 pm

PinkDalek wrote:Burford Capital chronology of Napo investment
Released 09:00 02-Sep-2019

https://www.londonstockexchange.com/exchange/news/market-news/market-news-detail/BUR/14209740.html

In response to investor inquiries, Burford Capital Limited ("Burford Capital" or "Burford" or "the Company"), the leading global finance and investment management firm focused on law, has today posted a chronology of its Napo investment on the investor relations section of its website.

The document can be found at http://www.burfordcapital.com/investors.

Burford also notes that it plans to provide a further presentation on other accounting and disclosure matters and will inform investors via RNS when that presentation is available.


The document should be here https://www.burfordcapital.com/wp-content/uploads/2019/09/2019.09.02-Burford-Capital-Chronology-of-Napo-Investment-Website-FINAL.pdf. It commences and concludes with:

Burford has received a number of investor inquiries about the Napo investment after it was highlighted – inaccurately and misleadingly – in recent commentary. We thus provide here a detailed chronology of events. ...

So, after seven pages of detailed explanation, we trust the answer is now clear: we accounted for Napo appropriately and conservatively; we made no effort to inflate its value; Invesco had nothing to do with our position; and even if one thinks we should have adjusted the concluded investment table earlier, there was no meaningful impact from not doing so.

I haven't read the seven pages.


Thanks for that PD. It may be worth your while reading the seven pages and for anyone seriously interested in Burford to do the same because they provide a detailed insight into the way matters sometimes will work for Burford. It is quite complicated but not difficult to read and understand because it is written in clear enough English. It sounds high risk but then the rewards are also high. In fact, these seven pages have given me a slightly better understanding of how Burford works than the 50 pages in their Annual Report. I doubt that I will invest but you never know. I will certainly wait until the current matters settle down.

Dod

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Re: Burford Capital Limited (BUR)

#250677

Postby Laughton » September 10th, 2019, 10:04 am

Very detailed bit of research rebutting Muddy Waters report (it's long so you need time to get through it all):-

http://caro-kann-capital.com/pdf/2019_0 ... apital.pdf

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Re: Burford Capital Limited (BUR)

#262854

Postby PinkDalek » November 7th, 2019, 6:48 pm

Merely to note, some 3 months after this Topic commenced, Burford are currently trading at about 55% above the closing low of 605p back on 7 August 2019.

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Re: Burford Capital Limited (BUR)

#262866

Postby Dod101 » November 7th, 2019, 7:53 pm

PinkDalek wrote:Merely to note, some 3 months after this Topic commenced, Burford are currently trading at about 55% above the closing low of 605p back on 7 August 2019.


And still a very long way from the £15 or so that they were at before the kerfuffle

Dod

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Re: Burford Capital Limited (BUR)

#262904

Postby TheMotorcycleBoy » November 8th, 2019, 6:05 am

Dod101 wrote:
PinkDalek wrote:Merely to note, some 3 months after this Topic commenced, Burford are currently trading at about 55% above the closing low of 605p back on 7 August 2019.


And still a very long way from the £15 or so that they were at before the kerfuffle

Dod

And even further away from the £20 they've peaked at in the past.

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Re: Burford Capital Limited (BUR)

#262907

Postby Dod101 » November 8th, 2019, 7:16 am

Maybe a bit like the tobaccos, Burford was subject to irrational exuberance and to that extent MuddyWaters has done everyone a good turn. The current PE ratio according to AJ Bell is only about 6 with a very modest yield. I really do not know a lot about them having never followed them but these do not look very inspiring do they?

I will leave them to others I think.

Dod

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Re: Burford Capital Limited (BUR)

#262909

Postby TheMotorcycleBoy » November 8th, 2019, 7:19 am

Dod101 wrote:Maybe a bit like the tobaccos, Burford was subject to irrational exuberance and to that extent MuddyWaters has done everyone a good turn. The current PE ratio according to AJ Bell is only about 6 with a very modest yield. I really do not know a lot about them having never followed them but these do not look very inspiring do they?

I will leave them to others I think.

Dod

The lesson I have hopefully learnt is not to invest into firms whose businesses I don't really understand too well.

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Re: Burford Capital Limited (BUR)

#262914

Postby Dod101 » November 8th, 2019, 7:31 am

TheMotorcycleBoy wrote:The lesson I have hopefully learnt is not to invest into firms whose businesses I don't really understand too well.


That is true of course, and the other lesson is not to get caught up in market fever. We all need the ability to stand back. If we miss a great opportunity, do not worry, another will be along before long, but if we lose well we are simply handicapping ourselves before we can gain anything.

Dod

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Re: Burford Capital Limited (BUR)

#262919

Postby Alaric » November 8th, 2019, 8:07 am

Dod101 wrote: The current PE ratio according to AJ Bell is only about 6 with a very modest yield.


That report highlighted that Burford was reporting earnings in anticipation of receiving any cash. It didn't however compound potential problems by distributing such phantoms as dividends.

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Re: Burford Capital Limited (BUR)

#262923

Postby scrumpyjack » November 8th, 2019, 8:23 am

Yes I too would not touch BC as there is far too much scope in this type of business to arrive at whatever 'profit' figure the directors want.

The other point is the very poor quality of earnings. A few wins in the law courts does not make a sustainable business. There are very few barriers to entry and lots of other firms are into the same thing. Any sharp lawyer with some financial backing, can do this!

One would not want to pay a lot for future earnings streams when they are built on these foundations.

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Re: Burford Capital Limited (BUR)

#262935

Postby Dod101 » November 8th, 2019, 8:39 am

scrumpyjack wrote:Yes I too would not touch BC as there is far too much scope in this type of business to arrive at whatever 'profit' figure the directors want.

The other point is the very poor quality of earnings. A few wins in the law courts does not make a sustainable business. There are very few barriers to entry and lots of other firms are into the same thing. Any sharp lawyer with some financial backing, can do this!

One would not want to pay a lot for future earnings streams when they are built on these foundations.


Of course Burford can and does argue quite forcefully against this proposition. They say that firms like them need contacts, experience, funding whilst cases carry on, the ability to judge the chances of success and so on. They will also claim worldwide exposure so that they are not reliant on one market, and other economies of scale. In their particular case, corporate governance was lacking, maybe still is, and things were altogether too cosy, leading to the sort of things that scrumpyjack writes of. I too would not invest in them.

Dod

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Re: Burford Capital Limited (BUR)

#262961

Postby PinkDalek » November 8th, 2019, 10:11 am

TheMotorcycleBoy wrote:
Dod101 wrote:
PinkDalek wrote:Merely to note, some 3 months after this Topic commenced, Burford are currently trading at about 55% above the closing low of 605p back on 7 August 2019.


And still a very long way from the £15 or so that they were at before the kerfuffle

Dod

And even further away from the £20 they've peaked at in the past.


No-one is suggesting there hasn't been a re-rating and I'm unaware of anyone here mentioning they bought at £20 or £15. Conversely yorkshirelad1 reported having bought at £3 back in the day!

I was merely pointing out that maybe, just maybe, people understandably panicked and sold out too soon. I don't hold a record of what the lowest price was on 7 August but have a feeling it may have been 400p.

Dod101 wrote:
scrumpyjack wrote:[A few wins in the law courts does not make a sustainable business. There are very few barriers to entry and lots of other firms are into the same thing. Any sharp lawyer with some financial backing, can do this!

One would not want to pay a lot for future earnings streams when they are built on these foundations.


Of course Burford can and does argue quite forcefully against this proposition. ...


Indeed they have but I'm unsure I understand scrumpyjack's point. It seems to me he is indicating that Burford are litigation lawyers, with loads of competitors, as against being a specialty finance provider which does not control litigation related decision making from Google's cache.

In any event, I'm continuing to hold and willing to see how this one plays out but then, as before, I'm happy to gamble in my AIM based ISA, as even if I lose the lot, it won't impact on our lifestyle.

Looking forward to seeing those contributors on here coming up with further AIM related Share Ideas on this board (in a new Topic of course).

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Re: Burford Capital Limited (BUR)

#262968

Postby TheMotorcycleBoy » November 8th, 2019, 10:37 am

PinkDalek wrote:
TheMotorcycleBoy wrote:
Dod101 wrote:
And still a very long way from the £15 or so that they were at before the kerfuffle

Dod

And even further away from the £20 they've peaked at in the past.


No-one is suggesting there hasn't been a re-rating and I'm unaware of anyone here mentioning they bought at £20 or £15. Conversely yorkshirelad1 reported having bought at £3 back in the day!

No worries PD :D

Unfortunately Mel and I bought BUR at between 13.50 - 14.50 IIRC. So not at the peak, but it was still nasty! But that's private investing, so it's just one of those things.

PS We do have some other AIMs (TUNE, AMS, BVXP, CAML, KETL). But they have somewhat more understandable businesses (I think!) than BUR.

Matt


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