I think a lot of the coverage of this name ignores the annual overhead, management compensation structure, and their impact on the intrinsic value to shareholders. I'd love to see a detailed independent analysis of those factors but haven't found one.
as a 5yr bagholder, i was excited to read your take here despite bad headlines this week. (less excited to see your buy threshold ~2X my basis)
throttling my rant mode, i'll hit 3 key points :
- burford has explicitly shown their case status value&timeline distribution for inspection of any statistic of interest.
i find the bumpiness of monetization quite expected, as well as target IRR forecasts.
this is the now the main driver of adding\holding burford...and maybe some gdp uncorrelated spice.
- there are a few rather large cases way above the median.
pick & choose to match ypf in size!
- most important, only for sentiment, is now ypf.
for > decade, judges slowly awarded burford win after win. then 2 major events happened.
trump made friends with milei and a loan client out of argentina.
trump pulled a ypf himself in VZ...even more brazenly, confiscating energy assets held in a foreign country on behalf of american corporates!
the next 2 minor milestones adjudicated, per DoJ guidance, went against burford in the form of delays.
Thanks for the comment. The uncorrelated return stream angle is their best selling point for their overall product.
I think a lot of the coverage of this name ignores the annual overhead, management compensation structure, and their impact on the intrinsic value to shareholders. I'd love to see a detailed independent analysis of those factors but haven't found one.
Agree, I’m guilty of overlooking this point somewhat alongside the high leverage issue ex-YPF. Expensive lesson…
How do you feel about it post YPF appeal?
It might be a better a short today now that they might breach their covenants