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Https://x.com/elonmusk/status/1787654457339342932?s=61&t=YCTHncpjYnur-vSNrbInQw
Does anyone remember the writeup in Value Investor Club of Brurford with the price target of £32-38, excerpted at the end of March?
It is now available to read in full here (as 45 days have passed since publication) Registration required but it is free.
https://valueinvestorsclub.com/idea/BURFORD_CAPITAL_LTD/5322640630/messages/218415#description
The author as far as I can see is anonymous, but appears to know their stuff.
It's interesting that the casual reference made to Burford staff visiting Buenos Aires has since been confirmed by the Argentine Government!
https://audiencias.mininterior.gob.ar/buscar?q=molot
A trip to Miami in October would work 🤣
BBH / Rider my view is we can’t assume anything apart from an agreement with Argentina to settle will improve the SP an awful lot and will bury once and for all doubts on the metrics BUR uses for predicting a fair ROI..
Hi Rider75,
You're right, I think somewhere Chris spoke of the benefits of having extra funds to deploy, either on 'larger' cases or on cases with a favourable risk:reward profile. Maybe somewhat higher risk, but materially higher upside, so a 'sexier' element of the portfolio.
ATB
About 30m bill payers will receive something if successful - the maths says about c£25 each after Burford collect c£120m (£30m + £90m)
Sorry I was not accurate
You should not assume that this claim is currently priced in th SP as 0.
Of course it an additional question how the whole other business is appraised, and to what extent could being succesful in this particular mega deal boost the approach and picture of BUR.
RIDER75,
Nice to see someone is checking …
Current SP. 12.50 + 8.93 = 21.43 pounds
Seems correct to me
Your calculation is flawed and oversimplistic. Assuming that the potential payout is priced as 0 today, and after getting somehow ths specific ammount , you simply add that to the recent sp....
Seb's latest, overnight :
.".Bainbridge Fund wants Judge Preska to compel Argentina to transfer the ownership of all YPF shares expropriated by the Republic in 2012. Bainbridge is one of multiple holdouts with favorable judgment that haven’t yet received payment. Bainbridge is also trying to attach Central Bank assets..."
This tweet already appears to have received 101.6K views...!
A few analysts/investors ....and maybe a lot of Argentinians?
Hmmm...
Bluewiley,
adding to your post.
I think the 28 usd is hopeful but not realistic.
We might get 40% of that with a haircut.
That works out at 11.20 usd or 8.93 pounds.
That would bring us up to 21.43 pounds.
I prefer to calculate on the low side rather than dreamland.
Cont..
Right now, Burford is the only funder with that scale. CEOs, CFOs, and General Counsels like collecting bonuses. If that means giving up some future economics to Burford, which is playing the justice-turns-slowly game, so be it. With these dynamics, I think demand will grow. Ultimately, shareholder returns will come down to Burford's case-selection abilities, which historically have been outstanding. Since inception, only 8% of deployments have gone to adjudication and lost, resulting in a ~85% loss of capital to those line items. In contrast, 73% of deployments reached a settlement returning an average of 58% (23% IRR), and the remaining 19% reached a winning adjudication returning an average of 247% (49% IRR). Time will tell if these high returns continue, but there is a lot of upside potential that is not being priced into shares today. The CEO seems to agree with his recent $5M purchase.
Exciting times ahead … 💥
Burford (BUR) - As the ancient Greeks said, "The wheels of justice turn slowly, but grind exceedingly fine." As a litigation financer, Burford has funded a large portfolio of legal cases that are working their way through the legal process. Their largest "holding" is a judgement against Argentina related to the YPF case, for which Burford is in charge of pursuing the payout. If Burford were to collect the full $6.2B (not including post-judgement interest accruing at ~5% per year), this windfall would be worth $28 per share. To be clear, especially given Argentina's history in cases of this type, it is my expectation that Burford will take a haircut in a negotiated settlement. Interestingly, Burford's CIO Jonothan Molot appears
on the visitor logs for senior Argentinian officials (link)... at least they are talking.
While the YPF judgment is a massive asset for Burford, it is far from the only case that should start gaining more traction in the near term. Despite receiving $242M of proceeds from $135M of pre-2020 vintage deployments in 2023, Burford still has ~$782M of deployments remaining in that vintage that we should start seeing flow through the P&L in the form of realizations as courts are now fully re-opened and cases delayed by the pandemic conclude.
Similar to the inevitable growth of KKR, excluding a change of law limiting litigation finance, I believe that Burford should continue to grow because of corporate manager incentives. They are solving two problems, particularly for public companies. First, legal cases are a drain on current year P&L. Thus, if a CEO or CFO wants to preserve this year's earnings, they can have Burford pay the legal expenses, resulting in "found money?" It is easy to see a CEO hugging the General Counsel and CFO when they tell him/her that they found the money to "save" the year simply by partnering with Burford.
The second problem is that the market does not generally attribute value to pending legal cases, and GAAP accounting does not help. However, if you sell a portion of the potential outcome to Burford for cash, the market does value that. Want to
"strengthen" your balance sheet, at least optically, for the market or lenders? Sell a part of your case to Burford. One Fortune 50 company partnered with Burford last year for a $325M commitment to their case.
Wonder if the electricity consumers/customers would get a few quid back?
I forgot to add that the permission to proceed was granted yesterday ..
https://www.marketscreener.com/news/latest/992-million-UK-lawsuit-against-European-power-cable-groups-gets-go-ahead-46623573/
Hat tip to SommersetLad
This is interesting as it gives an insight to a straight forward risk reward model by Burford. We will find your case but we want our investment back plus 3 x the value of the investment … simples
Section 23
The PCR entered into a financing agreement with BC Investments Ltd ("Burford"), a subsidiary of Burford Capital, dated 20 June 2018 (the "LFA").
The LFA has been varied from time to time to take account of developments in case law on litigation funding.
Pursuant to the LFA as varied, Burford has committed to provide up to an aggregate maximum amount of £30,715,000 to fund the costs of the Collective Proceedings, subject to the Collective Proceedings reaching various procedural stages. That figure includes £10 million of adverse costs cover in addition to after the event insurance cover which the PCR has obtained. In return for its investment in funding the action, if the Collective Proceedings are successful and an award of damages is made to the Class, Burford would be entitled to receive both repayment of all sums invested in the case pursuant to the LFA and an amount equal to three times the capital invested out of the damages and costs awarded to the Class. The payment structure is set out in Schedule 3 to the LFA as varied as follows:
1
"Allocation of Proceeds and Costs Awards
Its certainly getting v interesting… not ypf related but a good find by somersetlad on blue board ref another case.. I’ll start a new post
Hi BlueWiley,
This may also be BUR Boffin Boys-related...
Interesting article - referenced by Seb - in Clarin, the largest newspaper in Argentina and the second most circulated in the Spanish-speaking world.
https://www.clarin.com/opinion/coletazo-populista-vilo-ypf_0_R2UyhPN6Eg.html
"Another populist blow that has YPF on edge"
Goldman Sachs has an 18% stake in Clarin.
I wonder whether BUR is co-ordinating strategy with Wall Street ?
Clarin initially supported the Kirchners, then fell out with them over their attempts to muzzle the press.
Its editorial stance is centrist/right-wing and it subscribes to the politics of 'developmentalism', the notion that the performance of a nation's economy is the central source of legitimacy that a regime may claim. Per wiki " the notion of developmentalism has resurfaced more recently in the developed world – notably in the economic planks of 'unorthodox' policy makers such as Donald Trump and Bernie Sanders in the United States..."
The article re-caps the YPF saga and places the blame squarely on the Kirchners. In so doing, it appears to be supporting Milei in his battles with Congress, by seeking to neutralize opposition to his plans.
Article mentions the litigation threat to YPF's current ambitions
.."The execution, if it proceeds, could open a Pandora's box where the uncertainties about YPF's new shareholding structure would compromise the company's strategic plans and projects that are fundamental for the intensive development of Vaca Muerta..." and concludes
.."The current administration and management of YPF have made explicit plans to internationalise the oil market, intensify the exploitation of non-conventional resources and respect the company's management autonomy in a context of increased competition with other market players.
It would be regrettable if this whole process of investment to boost the economy were to be frustrated or slowed down by a ruling in a case in which YPF was the victim of populist mismanagement..."
Full article elsewhere.
GLA
ExTrader - I like this from your post on blue board.. The Burford Bofffin Boys earning there $ here !!
Kirchner's use of YPF jets - referenced in the submission - whether for personal or 'Government' business could prove to be their undoing.
interesting geopolitics in action :
- denmark sells 24 f-16s to argentina for $ 300m;
- denmark gifts 19 f-16s to ukraine;
- having decommissioned its entire f-16 fleet, denmark replaces them with f-35s;
- although the f-16s are 'obsolete' , they're good enough to have shot-down (apparently in dog-fights, not missiles, at least 2 chinese/****stani (?)sourced russian jets...)
- the uk has a veto on sales of jets (like the f-16)that use british martin-baker ejector seats, so must have ok'd the sale to argentina (perhaps after american arm-twisting);
- the west (esp us , who has spare parts sales)can give milei something for the local electorate...and incidentally thwart the alternative being tabled, buying from the chinese).
machiavelli or bismarck ?
gla and atb
In case of PDVSA, the fact, that the VZ government, then the oppositon politicians financed many official cost through the company, made it possible to the american judge to male the decision on this " alter ego " thing, then initiaze the auction of CITGO. (And this we experienced even 20 fold rise of one of the creditors, who sueffered an expropriation in the past. And instead of persuing a small fraction of their claim, there is chance to full payment ).
Seb tweets
https://twitter.com/business/status/1785333561458864203
(1) Bloomberg
@business
Javier Milei notches a congressional win after Argentina’s lower house approves the privatization of some public companies and other key chapters of his omnibus reform bill
.....
(2) Seb : YPF judgment creditors initiate discovery of the oil & gas company's assets. They request Judge Preska to order YPF to produce documents that will prove that Argentina and YPF are the same (Alter Ego) so they can start seeking and attaching assets.
The filing includes some examples of egregious = corrupt expenditure by the Kirchners, payroll padding, political advertising etc...
Ho hum
Another stride forward .. this may push the issue further up Mr Milei list of priorities as I don’t believe anyone including Burford wants to see 51% of YPF seized..