"Is a 30% jump in the shares of litigation finance specialist LSE:BUR:Burford Capital worth chasing as it sets new all-time highs?After bumper 2017 results, AIM-listed Burford leapt to 1,450p, currently around 1,400p. It seems a big move though ..."
AIM shares which qualify and held for only 2 years (not 7) are zero rated for IHT. There must be many elderly investors who invest in solid AIM shares for this reason and if the company moves to the main market these shares should be sold. I wonder how many investors have shares in ASOS to reduce their IHT and this gives the board of ASOS a reason to remain in AIM. I hope that Burford Capital board may consider to stay in AIM and I can stay invested.
With today's increase in SP, I think BUR is now has the fourth largest valuation of all the companies on AIM. Some investors don't like AIM, and I am wondering if BUR will decide/come under pressure to move to the main market?
Even at today's closing price I see BUR as a "buy" in terms of its future potential. However the SP may drift lower in the absence of news later in the year, so only a "weak buy".
i ve followed thes e for a couple of years going in and out.Now my biggest holding.i am now more comfortable holding these as Pe is not that great for a conssistent growth stock.Obviously there will be some profit taking, at some stage.But also this will get some broker upgrades and go on tip sheets.
I have opened a good bottle of Margaux...
> Do you see the SP increasing in coming days/weeks or profit taking etc. forcing it down?
A bit of both, is my guess. Profit taking is always a risk at all-time highs when everybody is in profit!
I have no plans to sell any in the forseeable future, so I am essentially betting on this news being the catalyst to resume the long-term uptrend (see graph). Not advice, DYOR, etc.
The recent range-boundedness over the last 6 months or so is something I've been seeing over all my holdings, with the more volatile ones having even pulled back a bit (e.g. IQE). To me, BUR appears to have broken out from that to the upside.
I do believe that the markets generally are moving past the blip, and we will see more breakouts across the markets through to summer.
· Net profit after tax up 130% to $264.8 million (2016: $115.1 million)
o Operating profit up 132% to $289.0 million (2016: $124.4 million)
o 37.4% return on equity (2016: 21.1%)
· Income up 109% to $341.2 million (2016: $163.4 million), driven by 127% increase in income from investments to $318.2 million (2016: $140.2 million)
o Realized gains from investments also more than doubled
o 20 different investments contributed to 2017's realized net gains
o Unrealized gains remained generally consistent with prior year levels at 53% of income
(2016: 54%) and 36% of investments (2016: 31%) notwithstanding Petersen impact
· Strong growth in earnings per share, up 126% to 127¢ (2016: 56¢)
· Record investment recoveries; robust organic cash generation of $362 million (2016: $230 million)
· 20% increase in annual dividend proposed, to total FY17 dividend of 11.0¢ per share (2016: 9.15¢); final dividend of 7.95¢ payable on 22 June 2018 with record date of 1 June 2018
· Persistent demand for Burford's capital reflected in record new investment commitments of $1.34 billion (2016: $378 million), sowing seeds for future profits
o Burford now has $3.3 billion invested in and available for investment in legal finance in a widely diversified portfolio
· Assets under management in Burford's investment management business increased to $1.7 billion (2016: $1.3 billion) and additional fundraising anticipated in 2018
· Active start to 2018, with $128.5 million committed to 12 new investments in the first two months of the year compared to a single $1 million investment in the same period last year
· Secondary market sale of Teinver investment agreed in March 2018 for $107 million in cash - a $94.2 million investment gain and a 736% return on invested capital.
Sir Peter Middleton, Chairman of Burford, commented:
"Burford has experienced another record year, its eighth consecutive year of significant growth. Burford continues to lead its growing and evolving industry and looks forward to continuing to innovate to meet its clients' ever-expanding needs. The Board is grateful for the continued support of our shareholders and bondholders and is delighted to propose another increase in the dividend."
Christopher Bogart, Chief Executive Officer of Burford, added:
"The past year saw an explosion of demand for Burford's capital from clients around the world, including from our expansions into Asia and Europe. We met that demand by raising incremental capital on our balance sheet and by making robust use of our new investment management business. We grew our team by 23 people so that we now field a team of more than 90, including more than 40 experienced lawyers, and we have by far the largest capital base in the business. We are excited to continue to lead the legal finance industry into the future."
Hardman have a brief note in their March monthly summary: Burford has announced another successful fundraise through a retail bond issue. The justification for this was given in the January statement, which revealed record commitments during 2017. The second half, in particular, saw Burford make new commitments of $855m, almost twice the rate in the first half. No indication was given on the cash position, or inflows from maturing investments. However, for previous bond issues, Burford has aimed to avoid the drag that excessive uninvested cash brings. From this, we can infer that the new investments had reduced cash significantly, to the point where a bond issue was justified. ► Issue details: Although the issue was scheduled to close on 6th February, it did so a week early. The issue is denominated in US Dollars a first for ORB with a coupon of 6.125% and maturity on 12th August 2025. The offer was oversubscribed and raised $180m. ► Risk management: Given Burfords business exposures, a US Dollar issue makes sense from both a risk and diversification perspective. The spread over the corresponding US Treasury is lower than last years sterling issue was relative to gilts, although, due to interest rate moves, the coupon is higher. ► Risks: The investment portfolio is still diversified, with exposure to over 500 claims, but it retains some very large investments, which means revenue may be volatile. As the company matures, we would expect that to decrease, but not to disappear. The Teinver case shows that this volatility is not simply a negative. ► Investment summary: Burford has already demonstrated an impressive ability to deliver good returns in a growing market, while investing its capital base. As the invested capital continues to grow, the litigation investment business will continue to produce strong earnings growth., Their 2017 forecast eps stays at underlying eps of 104c (ie. 75.5p) so a PER of 13.3x. Expensive, cheap? ~~~~~~~~~~~~~~~~~~~~~~~~~~~~~ I noticed something from the 10 Jan RNS, then forgot about it: As previously noted, Burford's board of directors determines the fair values of investments following the close of each financial reporting period after taking into account the views of management, the operation of the audit process and input from external experts (as it considers appropriate). Generally, that process does not conclude finally until shortly before the release of Burford's financial results for the relevant period and as a result Burford is unable to comment or provide guidance on its 2017 financial results in advance of their release. So, really, they'll never comment on profit numbers, positively or negatively and maybe no outsider can form a view, either! What they do comment on is "... made $1.3 billion in new commitments, more than triple its 2016 level." So future business won't lack volume. ~~~~~~~~~~~~~~~~~~~~~~~~~~~~~ Share price weakness? Redemptions from funds, maybe. But I've seen before instances of order book manipulation where DMS gives operators the chance to persuade holders that selling is happening in volume, when it's really series of AT trades of under 100 shares. It can be unnerving for long-term holders sitting on a decent profit. Short interest appears to be zero.
Hi Freedom 35
I agree this a great share which appears to be consolidating after a fast rise.
I wonder if it also due to lower $ as profits from US will decrease.
re SUK2 i have purchased these in the past but not at this FTSE level. My problem is that they are for short terms(weeks) as the 2 x is due to options which have a time cost. Also if the £ decreases(say Brexit) then a lot of components of the FTSE will increase earnings so SUK2 does not do a lot of protection. Not sure of an alternative for what you are looking for apart from using City Index etc or an ETF short of FTSE 350.
Not sure if this is useful.
Analysts expect a sharply increasing business volume for the group, with high growth rates in the coming years.
The group's activity appears highly profitable thanks to its outperforming net margins.
The group usually releases upbeat results with huge surprise rates.
Over the past year, analysts have regularly revised upwards their sales forecast for the company.
For the last twelve months, analysts have been gradually revising upwards their EPS forecast for the upcoming fiscal year.
Analysts covering this company mostly recommend stock overweighting or purchase.
The stock is in a well-established, long-term rising trend above the technical support level at 960.5 GBp
Prospects from analysts covering the stock are not consistent. Such dispersed sales estimates confirm the poor visibility into the group's activity.
The company is not the most generous with respect to shareholders' compensation.
Yes I did my homework on this one, and have not even thought about selling it. My usual goal with individual stock picks is to sell half when it has doubled in price. Hopefully that day will come here.
SUK2 is a 2x short FTSE100 ETF. If the index drops by x% then the etf increases in value by 2X%.
There are also long multiplier ETFs for example UK3L which gives 3x value movement should on the FTSE100. So if the ftse goes up 2% then the fund goes up 6% and vice versa.
Over a couple of years this has been very good, it does go up/down a lot, but over time steadily up, someone referred to it as a new asset class which I agree with, I think their a smart bunch and they are expanding at a rapid rate, seem to be doing the right things - but I guess people 'play' this one too, sell on the highs, buy on lows as it's fairly predictable, a bit like IQE. (the only bit in common thank god). and being America based also may have suffered from the recent correction, results soon and I don't think you will be disappointed. A long term hold for me.
I do hope you do well with it, I think you will if you hold, just probably bought at the wrong time. It's supposed to be the third largest on AIM by capital.
What is SUK2 - sounds rude!
Shares magazine today: We expect more investors will flock to litigation financier Burford Capital The company is particularly appealing to investors seeking assets with low correlation to markets AIM-quoted Burford Capital (BUR:AIM) may interest investors seeking assets with low correlation to markets. It is a leading operator in the nascent area of litigation finance. Essentially it provides cash to help fund lawsuits and then takes a proportion of any resulting compensation award. It invests its own money in this activity (from cash raised in debt and equity issues as well as recycling funds secured from successful lawsuits). Burford also acts as an asset manager investing on behalf of third parties. Rapid growth has been recognised by the market such that the shares are up more than eight-fold in the last three years and five-and-a-half times in the last two years. WHY WE HAVE TURNED BULLISH We turned cautious on the stock in December 2017 on valuation grounds but after a period of weakness during the market correction, we now believe investors should give the shares another look. The company trades on a price to earnings ratio of 14.7 and yields 1.6%, based on forecasts from stockbroker Numis. Its ability to deliver substantial returns which are not linked to either the performance of other asset classes or the economic backdrop could find favour in the current environment. A FAST-GROWING INDUSTRY Lawyers appear to be increasingly comfortable with the concept of third party financing. The potential of this market is reflected in the $1.34bn worth of investment Burford committed to its different areas of activity in 2017. This is nearly as much as it had put up since its inception in 2009 through to June 2017 and, in addition, reflects a change to its business model since it acquired Gerchen Keller, a deal announced in December 2016. This deal helped the company establish its asset management arm and as chief executive Chris Bogart tells Shares added access to a deep pool of capital to help grow Burford. In the future this part of the business could also deliver significant management and performance fees which could help smooth out the less predictable returns from court payments. Numis analyst Jonathan Goslin reckons fees could total $40m a year based on the firms current returns on capital. EXCEPTIONAL RETURNS Goslin calculates a return on invested capital (ROIC) of 52%; for context a firm delivering consistent returns on capital above 15% is usually considered a good quality business. Burford has expanded into legal insurance and loans to law firms as well as investing in lawsuit defences in return for a pre-determined fee if successful. For now, the company still derives most of its profit from investing its own cash. It recently raised $180m of new funds in the first dollar-denominated bond issue on Londons retail bond platform ORB. Bogart rejects the concerns over a lack of earnings visibility and limited transparency on live cases, arguing Burford is no different to any large provider of commercial finance. The confidentiality agreements which are a standard feature in legal settlements prevent it detailing returns from every individual case. Yet the company can point to several examples to show how historic investments have played out and the average duration of cases the firm invests in is fairly limited at less than two years. Some insight has also been provided by sales of interests in its Petersen V Argentina case. This concerns Spanish investment group Petersen which faced insolvency after the Argentine government summarily renationalised oil company YPF. The sums received for these stakes to date imply the asset could be worth several multiples of Burfords initial investment of $18m. BARRIERS TO ENTRY The barriers to entry into this market, namely scale and reputation, are, according to Bogart, reflected in the fact that Burfords competition comes principally from established players rather than new en
Does anyone have a view as to why the SP is dropping for quite a while after hitting 1280 on the 1st Jan. Just profit taking and the 'correction' in all stocks?
I will be grateful for opinions as I'm sure many would with this stock being a bit different to the norm.
Burford Capital (BUR:1,205p), a global finance provider focused on investing in litigation cases, is now one of the largest companies listed on Aim, with a market capitalisation of £2.5bn, a reflection of the 725 per cent rise in its share price since the summer of 2015 when I initiated coverage ('Legal eagles', 8 Jun 2015). I last advised top-slicing your holdings when the shares hit a record high of 895p ('Top-slicing and running profits', 26 Jun 2017). It paid to maintain a financial interest as the share price is up another third since then, and within touching distance of last autumns all-time high of 1,258p. Ahead of full-year results on Wednesday 14 March, this looks an opportune time to reassess the investment case.
In a pre-close trading update, the directors revealed that new commitments made to litigation funding cases more than trebled to $1.34bn (£970m) last year. This implies Burford made $855m (£620m) of new commitments in the second half of 2017, up from $488m in the first half, and $488m for the whole of 2016. As analysts at investment bank Berenberg Capital rightly point out, this suggests the company, which is the leading litigation funding player in a litigation market worth $800bn in annual revenue, has had no problem finding sufficient opportunities to deploy its capital. It also augurs well for future profits. Thats because new cases typically take two years to complete, so, given the high returns on capital Burford makes, its high success rates and portfolio diversification which mitigate risk, it can realistically expect a hefty financial return on these new commitments.
It also makes sense for the company to consider tapping the debt market again to recycle low-cost capital into funding potentially high return litigation cases. Having raised a total of $519m through three London Stock Exchange retail bond issues since 2014, all of which are trading above par, the company is currently holding meetings with fixed income investors.
Importantly, results for the 2017 financial year are going to be eye-wateringly good. Analysts at Numis Securities predict a near doubling of pre-tax profit to $218m on revenue of $313m, up from $163m in 2016, to produce EPS of 96.6¢, or 75p based on the average sterling dollar exchange rate last year. Part of the profit booked reflects the gain Burford realised by selling off 25 per cent of its economic interest in the multibillion-dollar Petersen legal case relating to the 2012 expropriation by Argentina of a majority interest in YPF, the New York Stock Exchange-listed energy company formerly owned by Repsol, the Spanish energy major. The $106m realised equates to six times its original investment, and analysts believe its retained economic entitlement could be worth $1.25bn (£905m) in the event of a successful outcome in the courts.
In addition, Burford had a favourable decision in an arbitration relating to the claim by Teinver S.A. and others against Argentina in connection with the countrys expropriation of two airlines. The arbitration tribunal ruled against Argentina, requiring it to pay $324m in damages, of which Burfords entitlement is estimated to be $140m, or 10 times higher than its original investment of $13m in the case. Burfords entitlement represents over 4.5 times the $30m carrying value of its investment in the companys half-year accounts to the end June 2017. Rated on 16 times likely earnings, I would run your bumper profits.
Burford Capital eyes bond launch to support legal boom
By Gavin Lumsden / 10 Jan, 2018 at 12:43
Burford Capital eyes bond launch to support legal boom
Burford Capital (BURF), the legal financier backed by fund managers Mark Barnett and Neil Woodford, is eyeing another retail bond issue to support its rapid growth.
The AIM-listed investment company has revealed it made $1.3 billion in new commitments to legal cases last year, more than treble the level of 2016.
Given the growth Burford has experienced, the company intends to hold meetings with fixed income investors. A bond issue may follow subject to market conditions and pricing, it said.
Burford has issued three retail bonds on the London Stock Exchanges ORB market in recent years, with the last raising £175 million in an oversubscribed offer in May 2017. The bond pays a 5% annual coupon and matures in December 2026.
Burford shares jumped over 5% to £11.62 at the signal the company, which takes a cut from payouts of cases it funds, could continue the expansion that has propelled the stock to a 12-fold increase in the past five years.
Today's rise ends a period of weakness since the company reshuffled its management last month.
Phil Dobbin, equity analyst at Jefferies, maintained his buy recommendation and price target of £13 for the shares. He said the figures showed a steady increase in single case financing in the second half of the year but a five-fold rise in portfolio finance, which involves multiple claims and therefore is less vulnerable to a single negative verdict.
This also implies that Burford and its managed fund are gaining further traction with major law firms and corporates with large legal departments, the gatekeepers to the market, and the main targets of Burfords marketing efforts, Dobbin said.
Invesco Perpetual is the biggest investor in the £2.3 billion company with a 22.7% stake mostly held in Barnetts High Income and Income funds. Woodford, Barnetts predecessor, owns 11.4% in his Equity Income fund, according to Thomson Reuters. The stock has been a positive highlight for both fund managers who have endured a difficult 12 months.
BUR buample from ford Capital looks interesting technically and got a good write up on
ample from Edmond Jackson | Sun, 24th December 2017 - 12:00....Ive taken a chunk just ove a hour ago.
<b>I drew attention to this AIM-listed litigation finance specialist (BUR) at 123p in 2015: a special situation since legal funding is independent of business cycles, Burford was evolving as a market-leader (principally a US-based firm) yet its shares were below-radar. In a habit of nearly doubling annual profits, at 570p last December it appeared well-placed for 2017 and has maintained its soaring chart to a recent high of 1244p, currently 1125p where it trades on a forward P/E in the mid-twenties, yielding 0.8%. Id expect consolidation from here given the story is now better-known and new investors may not appreciate how lumpy, litigation finance profits can be; also there is no meaningful yield despite progressive dividends, in support. Yet in the long run Burford is prime-positioned in an international growth industry that's more stable than retail fashion or technology. Yes its stock appears to reflect animal spirits of a mature bull market, and is exposed to a market slide, but would then be a priority to buy/add. The chief risk would be an extensive falling out among senior management, that fragments the firm with key talent leaving but theres no such sign as yet. Buy on weakness.</b>
This Co. is supposed to be a new 'asset class' - a new way of doing things...
And now classed as just a momentum stock
The market seems to be resembling ladies fashion, 'oh no BUR is so 6 months ago'
Is big oil the market's darling now?
I'd like to see some good news from this company too...
My second rant done....
Sorry ,but i can't find any comment by man apart a price target which looks good at £13.00
though the price is a little rocky,though i guess there is no real news out so thesis moving with general market.But i do have faith in these prospects.
I note Woodford capital has built up a 7th biggest holding in his fund.
Though lately he has been having a bad time Privident financal 50 percent down today,Purple bricks rocky with snorters and sunday times,allied minds tanking tobacco shares sliding.hope he has a winner to compensate...
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