Burford Capital Share Price (BUR)

Well yes that is true in principle but it means that there are fewer profitable cases they can take on because the "price" of litigation funding is more expensive. It's all fairly standard supply-demand economics where tax increases reduce both the profitability and volume of the product.

For existing cases it seems like it is a pure hit to net profits.

I don't think anyone has mentioned this yet but even if the tax changes it doesn't necessarily mean profits will be reduced by anywhere near the headline change.

The result of the tax change will be Burford and every other provider inputting different figures into their spreadsheet and the profit split offered will be changed. This is because the risk of 100% loss on the investment hasn't changed but the retainable portion of the winnings has.

Even now, Burford will be changing their model and only accepting new cases priced on the new uncertainty. When the issue is resolved they can price again.

But.... The risk of tax increase is out there now so this will have ramifications going forwards (look at the North Sea drilling and taxation mess).

Is this a fair summary of what is happening right now? (from chat gpt):

What’s Happening Right Now:

On June 16, the Senate Finance Committee released its draft reconciliation text, which explicitly retained the Tillis proposal to impose a 40.8% flat tax on 'qualified litigation proceeds' (i.e., litigation funder profits).

The text has been submitted for review in the so-called “Byrd Bath” — the stage where both parties raise objections under the Byrd Rule, and the Senate parliamentarian determines if provisions are permissible based on budget impact and committee jurisdiction.

What Comes Next:

Byrd Law Challenge – Any senator can object, arguing the litigation-funder tax is too policy-focused and that any budget effects are “merely incidental.” It will be evaluated for compliance with the Byrd Rule, which could strike it if judged extraneous.

Senate Floor Debate – If the parliamentarian rules it eligible, it will remain in the bill during the “vote-a-rama” and final vote in the Senate.

House Reconciliation – If the Senate amends the bill, the House must approve the changes before it can be sent to the President.

Expect a Byrd Rule decision by late this week or next — that will clarify whether the provision can stay.

If it survives, it will proceed through Senate and then face another vote in the House.

Final clarity likely comes within the next 2–4 weeks, barring delays.

Re: ... would be applied to new deployments only ...

Well, I can't remember what was the obstruction up to this point but over last couple of days BUR ticker got some new deployments from me.

"So glad you enjoyed and thank you for the kind words! The proposal's definitely net negative, as Wed's PA showed, given worst case tax rate almost doubles, right. Though I think the market may have overreacted a bit -- there's a lot of horse trading to be done. Whatever is proposed in the Senate's different from the House, so hard to know what version, if any, will ultimately be signed into law. Also, not yet clear exactly how 'profits' are defined, you'd think BUR could optimize that accounting wise and/or jurisdictionally, and presumably it would be applied to new deployments only (eg not YPF.) I don't think the people who wrote the law could even tell you.. Lastly, it may benefit BUR in the sense that it'll force eg smaller comps and multi-strat HFs to walk away from the space."