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We know that BUR will need a substantial pool of BUR (USA) stock available for trading at the opening of first days dealing on NASDAQ. Now as I understand it shares of BUR in London and BUR (USA) in New York would not be readily interchangeable. For example you will not be able to buy BUR in London and sell those shares in New York on the same day.
Even so I would be quite happy to swap my UK quoted BUR shares for the NASDAQ equivalent (BUR USA), because then I would have US$ exposure directly, instead of indirectly at present.
I should mention the disadvantages. Such as US withholding tax (I think 15%) deducted on dividends, and need for IRS documentation. Even so, I would prefer direct US$ exposure.
Unfortunately we has not been given any information as how this quotation process will be structured, so we have no idea whether such a swap will be possible (other than selling in London and unrelated repurchasing BUR (USA) in New York). One thing they have said is that no new shares will be issued. Likely BUR and their advisors are working hard on this whole thing.
If BUR’s business is booming, very profitable and share price so undervalued (as you keep telling us) why would it not be a takeover prospect? When the dual listing comes to pass later this year, a takeover bid after that would be that much more complicated, and probably a lot more expensive.
So that suggests that anyone thinking of making a move (a US merchant bank?) has a small window of opportunity in which to make the play. July/ August anyone?
I agree BUR needs careful watching, but big disruptions are going to happen long before three years are up. Within 6 months more likely.
First up is Petersen. We tend to forget that BUR has already booked an unrealised gain of $737m. To validate this we need to have a formal Court decision soon on the merits of the case (sorry, TB, your opinion is not enough). Although that decision still leaves the difficulty of actually getting cash out of the Argies, this major step forward will be legal underpinning for the share price.
Second is the dual listing. Again this is a very significant event that will make or break the share price. I said previously that if we assume that BUR is held 50%/50% UK/USA, we have to ask where the USA 50% is coming from. On the face of it (given that no new share capital is to be issued) the USA pool has to come from UK shareholders. That can only mean one thing for the UK price.
Finally, a takeover bid. Must be a real possibility. Buckle up boys and girls, get ready for a bumpy ride.
Huge volume of transactions around yesterday’s close, with bid price higher than ask. What does it all mean? My guess is that it’s the new management at Invesco have a clear out of the Woodford/ Barnett portfolio. It seems like a very bad piece of timing to be getting rid of a shed load of BUR, but maybe they are under pressure from withdrawals, and anyway they need to be seen to be reorganising their portfolio?
Whatever. Courage brothers! Maybe this is a dip that was needed. Now would be a good time for Messrs B and M to invest the rest of their bonus. That would be another 100,000 shares each. Surely a Court decision on the merits of Petersen can’t be that far away. And when the US quote comes to pass, and the shares are held say 50/50 UK/USA, where will the USA 50% come from? Existing shareholders? All will be concealed.
Again according to BUR 2019 Accounts (page 37) , on average only 16% of balance sheet commitments are deployed in the following year. So 2019 year end commitments should not cause a liquidity problem in 2020. I would say though that the first half 2020 results have a very tough comparison against the same period of 2019, when a profit on the part sale of Petersen was included. I think what is needed to support BUR share price is a decision "on the merits" of Petersen. The Court should surely come to a decision within months. Sure, that would just be the start of trying to get the Argies to settle, but it would do a lot to restore confidence in the case, with an unrealised gain of $737m riding on it.
It seems clear to me that BUR does not have a liquidity problem.
The cash flow statements in BUR 2019 Accounts show that BUR reinvests a large part of incoming cash into existing and new commitments. Obviously, that is the engine for future profits. BUR say that a significant part of this outflow is discretionary. So they could defer payment if they had to. They could also slow down new commitments, by tightening underwriting criteria. So it appears that they have plenty of options if cash became tight. Also, most of the sovereign wealth fund facility has still to be deployed.
Consequently I was very disappointed..…no…. I was annoyed that BUR cancelled a divi that was covered multiple times by “earnings”.
BUR have said that they are not looking to raise new capital from the listing. So what shares will be available to buy on NASDAQ or wherever? The suggestion that BUR could buy back shares from UK shareholders to provide a pool of shares for this purpose is a possibility. But to make a meaningful market in the US would require this to be done at a scale that does not seem feasible. So I am still puzzled about the mechanics of how a substantial pool of shares can be created in the US. Any ideas?
I have also given my broker (Hargreaves Lansdown) instructions to vote in favour of the resolutions. At the same time pointing out that the deadline was 4.00pm Monday 11. The procedure was fairly straightforward, but I can't help feeling doubtful that they will make the deadline.
Bogart and Molot said that they would use their 2019 bonuses to buy more BUR, but that doesn't seem to have happened yet. The announcement on May 1 concerned a rearrangement of their existing shareholdings, but we can ignore that, with no change in overall. Does this suggest that something is cooking, or that they are just waiting for a convenient moment. Any ideas?
After various comments about the YPF/Petersen situation and unrealised gain ($734m), I just had to look at page 64 of the 2019 Accounts again. Much of this information has been disclosed before, in presentations etc., but this time it is part of BUR audited 2019 Accounts. That’s not to say that the auditors have given it their seal of approval, but nevertheless they must not have objected to its inclusion in a significant company document signed off by them. In other words, it has that much more credibility.
Just look at the range of “hypothetical outcomes”. The LOW end of the range is a result similar to the Repsol settlement. That would exceed the unrealised gain by around $300m, and that would be credited to P&L. And a huge cash injection of over $1 billion that would transform BUR’s balance sheet. Wow!
But allow yourself a glimpse of fantasy land. The TOP end of the range shows a net entitlement to BUR of $5.5 billion. Take a moment to pick yourself up off the floor. More than 4 times BUR’s present market value! If this is fake news, why did the auditors allow it? Why would BUR put this in their 2019 company accounts if it is complete fiction?
There must be some basis for the top end, but they do not say what it is. But again, the Board of Directors are responsible for these Accounts, and must be fully aware of what is in them.
Now, I do agree with those who think that a final Petersen settlement is some years away. The Argies are going to fight dirty with blocking tactics and appeals, what else can they do. But there are important milestones along the way. The case is ongoing, with the defendants having answered the case in the US district court. But in fact there could easily be a decision “on the merits” this year, albeit in the lower court. Yes, the Argies would appeal, but every time they appealed and lost, the risk of a substantial settlement would get painfully higher. BUR can afford to be patient. So should we.
The way people comment about the unrealised gain, you would think it was a negative thing. But actually it is just the tip of a potentially huge gain. TB you had better get back in quick.
Thanks TB, but it looks like the information overload must have got to you as well. You quote pages 62 and 63 but did you get to the "hypothetical outcomes" on page 64? Oops! Perhaps you need to re-visit your numbers?
Anyone tried reading BUR 2019 accounts? Call me naïve, but I thought the concept of litigation finance was simple: you lend money to pay legal fees, and if the case is successful you get back interest, principal and a percentage of recoveries. But who knew it could become so complicated? Putting a wet towel around your head won't do any good. Talk about information overload. The cash flow looks negative, but that is because they invest all their revenue back into either existing or new cases (that they confusingly describe as "capital provision"). If they are half as good at cherry picking cases as they are at bullsh**, we're on a winner here.
The share price has fallen around by 80% in the last 9 months. Yet Mr Bogart and his pals still get their bonuses. How is that justified? To add insult, they say that the final dividend has been cancelled. We are not even getting that paltry compensation for our losses. It makes you wonder what it would take for Mr B to have his bonus cancelled. If he is to be believed when he says BUR finances are sound, surely the dividend would only take a small slice? More than anything, wouldn’t paying the dividend demonstrate confidence in the future of the business?
The shorters are waging psychological warfare….but cheer up! This is no time to capitulate. Only five more weeks until the results announcement and the shorters are running out of time. Alright, unrealised gains are being cut back, perhaps to appease the auditors, but less reliance on unrealised gains in declared profits is a good thing anyway. Continuing demand for legal financing is encouraging for future profits. That demand puts pressure on BUR’s capital resources, but if BUR needed to, it could always tighten the criteria for accepting cases. It is unrealistic to expect the BOD to give a running commentary on the share price whilst they are on the point of finalising the year end results. Hold your nerve…and look forward to BUR increasing the dividend as an expression of BOD’s confidence in future prospects.
It is well known that Invesco’s fund performance has been poor for a while, resulting in investors demanding their money back. To meet these redemptions, Invesco has had to sell some of the underlying investments, including BUR. Unfortunately selling causes those share prices to fall, resulting in more poor fund performance, resulting in more redemptions, and Invesco needing to sell more shares…………you get the picture. Hence the trickle of sales of BUR. But its not that Invesco necessarily has a bad opinion of BUR, its mainly that it needs the cash so long as it has to fund those pesky redemptions.
Meanwhile it could be that Gladstone has a strategy of front running those BUR sales. In other words, selling before Invesco does. Your only comfort is the more BUR Gladstone has sold short the more it will have to buy back………..at some point. And sometimes that can be painful for the short seller. I am in favour of short selling in principle, but it would be nice if they got a bloody nose in this case……….
Payback time. How convenient was it that MW should rant more nonsense bad mouthing BUR to send down the shares just 2 days before Kuvari decided to close its short? Who was selling until around midday yesterday, and who was frantically buying in the afternoon? Was this payback for K or G assisting with spoofing and layering way back in August last year, so that MW could trouser £8m and deny stock manipulation? Paranoid conspiracy theory or another one to add to the LSE court case? Above all don't expect the plods at the FCA to do anything.
Gladstone sitting on a 2.5 million share short against a recovering BUR market price? The short increase is likely a bluff before they bail the lot. They had better take their profit whilst its still there. They have the terrifying example of the shorters losing billions on Tesla......
Are we viewing the BUR situation too negatively? Has BUR become so cheap that it is now in takeover bid territory? Instead of seeing the Invesco c.10% BUR holding as an “overhang”, more positively, it could be seen as the springboard for a takeover.
Litigation is big business in the USA, but many potential claimants with a good case are held back by the daunting legal costs involved. Step up market leading litigation funder BUR. Yes hefty amounts of capital are essential for this business, but instead of a problem, maybe that should be seen as a “moat”. BUR has imaginatively solved the problem (at least for now) by having the sovereign wealth fund arrangement.
But who would be interested in BUR? Maybe a US merchant bank, to name names what about JP Morgan ?? They would provide access to substantial capital. Confidentiality issues notwithstanding the benefit from JPM point of view is that as well as acquiring an undervalued rapidly growing niche business, they could see a litigation funder as a means of extending their reach into more business areas than they would otherwise...…..