Burford Capital Limited (BUR)

[jackdaww]

54% down on the morning??????? What is going on?

Seriously?

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

the bear raid seems to have worked sensationally.

now approaching 450 .

graham neary at cube investments seems to imply this is not as bad a MW paints it ...

https://cube.investments/cube-midcap-re ... -2019-bur/

[Dod101]

There is a very wide buy/sell spread but even so it is now quoted at 450, down nearly 60%. Is it going to survive? I have never seen anything like this before. Invesco and Woodford are the biggest holders it would seem.

Dod

[PinkDalek]

Seriously?

Link to the share price chart

http://tools.morningstar.co.uk/uk/stock ... E%24%24ALL

My seriously was not re the share price. It was to the What is going on?.

Sorry if that was not blindingly obvious.

[Dod101]

I have no financial interest but even for a shorted share that is some drop. The only think blindingly obvious to me is that the price is dropping like a stone. I cannot believe that but as we all know capital does matter. The price is very volatile and has now recovered somewhat. It has now only halved this morning.

Dod

[jackdaww]

SP risen from 400 to 550 .

some are making a killing .

my plan to move more into IT's is becoming more interesting .

[jackdaww]

SP risen from 400 to 550 .

some are making a killing .

my plan to move more into IT's is becoming more interesting .

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

now up to 600.

would the shorters see this as a buy back in point ?

[monabri]

There's an article on this over at TMF.

https://www.fool.co.uk/investing/2019/0 ... ashing-60/

And a more upbeat one from as far back as 27 July 19

https://www.fool.co.uk/investing/2017/0 ... l-limited/

Held in Edinburgh IT at 4% ( explains today's fall in EDIN)

[gbjbaanb]

Seriously?

Link to the share price chart

http://tools.morningstar.co.uk/uk/stock ... E%24%24ALL

My seriously was not re the share price. It was to the What is going on?.

Sorry if that was not blindingly obvious.

I can only think that people are looking at this, thinking "accounting issues" and making comparisons to Patisserie Valerie or Carillion or other names with dodgy accounting practices. Seems the drop is justified if you think the company is going to announce they're completely bust, or have to re-issue their accounts to show they make no profit at all. (looking at the cashflow numbers, that does seem correct)

[PinkDalek]

I can only think that people are looking at this, thinking "accounting issues" and making comparisons ...

I've been out much of today and haven't looked at the hundreds of pages of trades in any detail. What I have seen is many of those are described as being an Automatic Trade below, maybe stop losses being triggered or automatic purchases at that level

https://www.londonstockexchange.com/exc ... XAMSM.html

People may be thinking of other recent accounting issues but I don't recall (may well be wrong though) the two you mention being subjected to such a shorting article demolition job. I do recall Gotham City's 74 page document regarding what was then Quindell:

https://www.sharesoc.org/blog/company-n ... -shorters/

Edit: Latest RNS from Burford below:

Released 15:30 07-Aug-2019
REPORT'S CRITICISMS WITHOUT MERIT AND
BURFORD PRINCIPALS TO PURCHASE SHARES
https://www.londonstockexchange.com/exc ... 80508.html

I've yet to read it.

[gbjbaanb]

I think nobody got the chance to short those companies before they said "whoops, accounting is like hard, we're bust, sorry about that". In this case, MW is doing their best to make money and everyone is thinking they might be bust also (and automatic trading is helping that along), but as Neary said, its just valued like it should always have been.

I'm buying their bonds though, I doubt the shares will rise by that much now.

[simoan]

Are you tempted to add further (I did notice you doubled on the more recent Woodford news, when I was looking for a thread on here, but it was on a long Investment Trusts and Unit Trusts thread, so I started afresh)?

No, I'm not interested in adding. This is now just a gamble. Sometimes you have to admit you have made a mistake and it does look like profits are maybe exaggerated by aggressive accounting. 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. They will need a really good rebuttal to the accusations and the response from the company thus far has been weak - threatening legal action is a bit pathetic tbh.

I made a thankfully small mistake in doubling a very small position which I intended to build - this is at least the beauty of not going all in on day one. You take it on the chin and go again. I had spare cash and was looking for some uncorrelated assets to invest in, so I need to question my reasoning. You have to feel for Woodford though, just when he probably thought it couldn't rain any harder...

All the best, Si

[PinkDalek]

No, I'm not interested in adding. This is now just a gamble. Sometimes you have to admit you have made a mistake and it does look like profits are maybe exaggerated by aggressive accounting. ...

Thanks for your frank reply. I now feel the same as you, having attempted to understand recent accounts, without much success, but continued to hold despite my gut instincts. My hindsight bias is, of course, enhanced by what we've all now seen.

When I asked the question, btw, it was the evening before the shooting (my preferred term, one has to retain some humour, however puerile) dossier was released and I was and remain genuinely interested in your opinions both here and on other websites.

[johnhemming]

I looked at this because of the l. The point about the CFO (points) are interesting as this is the hardest sort of thing to account for as it involves speculative assessments of investments that are very volatile (either win or lose, no real middle ground).

It is potentially prone to optimism bias.

[jackdaww]

some good posts here .

i have sold most of mine , at around 600.

moral - be cautious on companies churning out brilliant results when accounting and visibility is open to question.

this risk was actually clearly pointed out in the IC report last week , but they still said buy!

i have not lost a great deal on my original purchases , but its galling that a few weeks ago i was sitting on a 3 bagger .

[simoan]

some good posts here .
moral - be cautious on companies churning out brilliant results when accounting and visibility is open to question.

this risk was actually clearly pointed out in the IC report last week , but they still said buy!

Yes, but all company accounts are a matter of opinion, aren't they? You only have to look at the way most companies make adjustments to profits on a regular basis. I can't remember the last time I saw an adjusted number where I didn't disagree with at least one of the adjustments. How many companies do yo know where the statutory and adjusted numbers are close, or the same, on a regular basis? It's a very small number, right? It certainly is amongst my holdings!

Are these adjustments always fair? Just because the accounting rules allow them does not mean they are right, and this can lead to a basis for mistaken valuation and a flawed investment thesis. That is all that has happened with Burford. I was attracted in by the ROIC but that now looks to be a mirage. I wouldn't normally touch a company with negative operating cashflow (which is the case with most blue sky type companies) but broke my rule in the case of Burford because at least it appeared to be a profitable company and the cashflow profile seemed consistent with the nature of the business as it grew its portfolio of case investments.

It is not fraud, it just looks like it pushed the boundaries of what the accounting rules permit to near the limit and the returns were not as good as they made out, so we have seen a retraction in book value of the investments. That seems fair enough. A lot of the Muddy Waters research is hot air and hyperbole trying to make an OK case look far better than it is in order to create as much mayhem as possible - that's par for the course. IMO that reduces the credibility of the research, but they don't care as long as they make their money. However, it does make some decent points that the company need to answer.

All the best, Si

[simoan]

Here's the rebuttal. Not read it all yet: https://www.investegate.co.uk/burford-c ... 45314390I/

All the best, Si

[Alaric]

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?

[PinkDalek]

Here's the rebuttal. Not read it all yet: https://www.investegate.co.uk/burford-c ... 45314390I/

That was an entertaining read.

I'm soon to listen to the webcast set for 3:00pm today (dreadful holding music):

8 August 2019

INVESTOR AND ANALYST CALL REGISTRATION AND PARTICIPATION DETAILS

https://www.londonstockexchange.com/exc ... 82133.html

[Dod101]

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 other thing is that until this week this company was not a tiddler and would easily have qualified for the main stock exchange. According to The Times today the reason that it remained on AIM was because the reporting requirements are much less onerous there. That is surely not a good sign.

Dod

[PinkDalek]

... The other thing is that until this week this company was not a tiddler and would easily have qualified for the main stock exchange. According to The Times today the reason that it remained on AIM was because the reporting requirements are much less onerous there. That is surely not a good sign.

I haven't read The Times article but have been informed of it and have seen plenty of informed comment here and there.

Presumably you've read the Burford response but what they say on that issue is:

Burford's governance is robust and serves the business well - Burford has been listening to investors and is actively considering their feedback. Burford has already raised and addressed in its 2019 interim report (at pages 13-14) or previously the governance points made in the report. Board succession and structure is an active topic of discussion at board meetings and the Company has been consulting, and intends to continue to consult, with shareholders as well. It is also simply wrong to say that Burford's investment disclosure requirements would be greater if Burford were listed on the Main Market; Burford's disclosures would be identical to what they are now. However, Burford has already indicated that it is actively considering a second listing, most likely on either NASDAQ or the New York Stock Exchange. Burford has a highly experienced board composed of non-executive directors with significant litigation and financial experience, but Burford does expect to refresh its board in the relatively near term. The relationship between Burford's CEO and CFO is longstanding, disclosed and well-known.

From https://www.investegate.co.uk/burford-capital-ltd/rns/response-to-short-attack/201908081245314390I/