Watchlist Add-- BUR-- Burford Capital

Un-muddying the waters?

Burford Capital (BUR). Burford is a litigation finance business. They deploy capital into claims on plaintiffs’ cases, basically fronting the money to people for their claims on legal proceedings. Law firms aren’t allowed to be publicly-traded in America, and litigation finance as an asset class was (is?) an interesting avenue for institutional investors to deploy capital into an economically uncorrelated return stream.

The Pitch:

Burford gets the double-barreled effect of litigation finance beta: they’d be the asset manager that could raise institutional capital and lock it up long-term, and they’d have balance sheet exposure to their cases to align incentives. More inflows, more fee revenue, more owner economics. Pretty great as long as the asset class was working.

Buying it now would be at a ~trough-ish valuation, alongside some significant insider buying ($4.5M from execs) and a buyback program announcement. The elephant in the room is the Argentina/YPF case, which shows no signs of resolving amid perpetual injunctions/appeals/etc. from the Argentinian government. So maybe people have given up for that reason!

You can BUR as a portfolio cases, and then an alternative asset manager like KKR/BX/APO on top of this. If the book does well, the whole complex gets supported, and the fees and lockups keep rolling in. Litigation finance as an asset class continues to attract flows, and this stock is one of the only ways to pure play it. It’s also underperformed the alt asset managers quite a bit since it listed.

At one point, before the Muddy Water short report, BUR was trouncing the alt asset managers:

The Bad Stuff:

• The book is all mark-to-model. Every case in their portfolio is some subjective judgement (no pun intended) on whether their cases will be worth anything

• The Muddy Water short report is all true— management is promotional (you kind of have to be to build a brand as an alt asset manager— just look at Steve Schwartzman) and thus somewhat untrustworthy with mark-to-model judgements

• Also, because their is a spotty history of mark-to-model, you can safely assume that book value is probably overstated

• The YPF case is literally squaring off against an armed country, and Argentina has a long history of treating their creditors extremely poorly

  • Even with the current Turnover Order (which mandates Argentina hand over its 51% stake in YPF), the U.S. government has recently (March 2026) backed Argentina, calling for a halt to "intrusive" discovery into sovereign assets to avoid diplomatic fallout.

  • Nothing resolves this year, probably not even in 2027

• But other than these terrible things, the stock looks cheap!

The Chart

I’ve added the 200-week moving average (famous from our “Charlie Munger Value Checks”) but I wouldn’t consider this company ~quality enough to be an auto-buy below the 200-week.

By my dumb math, I’d like to buy at book value ex-YPF case. So that’s around ~6.50ish, which isn’t that far away. I need a bit more work for comfort before pulling the trigger, but we’re close here.