Author Topic: BUR.L - Burford Capital  (Read 62851 times)

Gregmal

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Re: BUR.L - Burford Capital
« Reply #370 on: August 21, 2019, 07:07:42 AM »
Apologies if this has already been posted, but Jonathan Molot has purchased 8.6M of stock at an average price of 9.18 per share in the last two weeks.

While I agree he sold a lot more (81M) in 2018, this is hardly an insignificant amount of money.

Source: https://finance.yahoo.com/quote/BUR.L/insider-transactions/

Mondegreen

Meh.  $8mm on $81mm of net worth is very different (less significant) than $80k on $800k of net worth.   Insignificant IMO if the goal is to show resounding confidence in the both the business, accounting, and current valuation.   

Said another way, this guy can lose $8mm tomorrow and it doesn't impact his life in quite literally any way.

Losing 10% of your net worth wouldn't impact your life in any way? I'm not sure how many guys you know with 8-9 figure net worths, but they don't spend $ like they have an endless stream. These are people who care about having a balanced personal portfolio, and frankly putting 10% of your net worth into a single public company is a lot.

That and it fails to understand what it is like for someone who has built a business from the ground up, and taken a portion of the reward for being successful with that, off the table. Why wouldn't anyone at some point take the opportunity to diversify their assets if indeed they are heavily concentrated in a single venture? So no duh the guy isn't going to take a same amount he already took off the table, and reinvest ALL of it, when 1) he still holds a substantial position in the shares, and 2) even at todays prices, it is still up substantially from not terribly long ago...This is a case where investors just fail to understand or take into consideration what it is like as a business owner/entreprenuer in real life.


Foreign Tuffett

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Re: BUR.L - Burford Capital
« Reply #371 on: August 21, 2019, 07:10:12 AM »
Apologies if this has already been posted, but Jonathan Molot has purchased 8.6M of stock at an average price of 9.18 per share in the last two weeks.

While I agree he sold a lot more (81M) in 2018, this is hardly an insignificant amount of money.

Source: https://finance.yahoo.com/quote/BUR.L/insider-transactions/

Mondegreen

Meh.  $8mm on $81mm of net worth is very different (less significant) than $80k on $800k of net worth.   Insignificant IMO if the goal is to show resounding confidence in the both the business, accounting, and current valuation.   

Said another way, this guy can lose $8mm tomorrow and it doesn't impact his life in quite literally any way.

Losing 10% of your net worth wouldn't impact your life in any way? I'm not sure how many guys you know with 8-9 figure net worths, but they don't spend $ like they have an endless stream. These are people who care about having a balanced personal portfolio, and frankly putting 10% of your net worth into a single public company is a lot.

Exactly. I'm not sure when the standard for meaningful insider buying became "If he didn't sell a kidney and refinance his house to buy more shares it's meaningless!"

Gregmal makes a good point too.
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SnarkyPuppy

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Re: BUR.L - Burford Capital
« Reply #372 on: August 21, 2019, 06:39:08 PM »
Apologies if this has already been posted, but Jonathan Molot has purchased 8.6M of stock at an average price of 9.18 per share in the last two weeks.

While I agree he sold a lot more (81M) in 2018, this is hardly an insignificant amount of money.

Source: https://finance.yahoo.com/quote/BUR.L/insider-transactions/

Mondegreen

Meh.  $8mm on $81mm of net worth is very different (less significant) than $80k on $800k of net worth.   Insignificant IMO if the goal is to show resounding confidence in the both the business, accounting, and current valuation.   

Said another way, this guy can lose $8mm tomorrow and it doesn't impact his life in quite literally any way.

Losing 10% of your net worth wouldn't impact your life in any way? I'm not sure how many guys you know with 8-9 figure net worths, but they don't spend $ like they have an endless stream. These are people who care about having a balanced personal portfolio, and frankly putting 10% of your net worth into a single public company is a lot.

That and it fails to understand what it is like for someone who has built a business from the ground up, and taken a portion of the reward for being successful with that, off the table. Why wouldn't anyone at some point take the opportunity to diversify their assets if indeed they are heavily concentrated in a single venture? So no duh the guy isn't going to take a same amount he already took off the table, and reinvest ALL of it, when 1) he still holds a substantial position in the shares, and 2) even at todays prices, it is still up substantially from not terribly long ago...This is a case where investors just fail to understand or take into consideration what it is like as a business owner/entreprenuer in real life.

You're misunderstanding the point, but I didn't articulate the point clearly either. 

The guy can do whatever he wants.   For me (personally) to think this is investable I would need to see a very significant investment by the team closest to the books/operations.  I don't consider putting $8mm when you have likely $50mm+ net worth to be a very significant investment (i.e. it goes to 0 and he still has $42mm net worth).   He can do whatever he wants with his money - but in my opinion it doesn't cross the threshold of an amount needed to show true conviction and resounding confidence. 

Ironically, earlier in this thread, we had some posters push back on what was being perceived as excessive focus on small details which later proved to be a money saving exercise.   

Exactly. I'm not sure when the standard for meaningful insider buying became "If he didn't sell a kidney and refinance his house to buy more shares it's meaningless!"
There is no standard.  You choose your own - I'm communicating mine.   

That and it fails to understand what it is like for someone who has built a business from the ground up, and taken a portion of the reward for being successful with that, off the table. Why wouldn't anyone at some point take the opportunity to diversify their assets if indeed they are heavily concentrated in a single venture?
So only someone in his shoes can truly understand his perspective.  I'm assuming you're in a similar situation then.   Also I can think of a few famous investors that others on this board may be aware of that stayed heavily concentrated in what they built...

writser

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Re: BUR.L - Burford Capital
« Reply #373 on: August 22, 2019, 07:56:11 AM »
Exactly. I'm not sure when the standard for meaningful insider buying became "If he didn't sell a kidney and refinance his house to buy more shares it's meaningless!"

Gregmal makes a good point too.

In 2018 the founders together sold 1/3 of their stake, or ~8m shares at 1350p for ~110m gbp. That datapoint was not important enough to be included in the legendary 215 slides pitch and was basically discarded by the bulls in this topic. The two founders combined had, after the Muddy Waters report, presumably ~16m shares valued at ~130m gbp and at least 110m gbp in cash (I think we can assume they structured their sale tax-efficiently). Together they bought back ~1m shares for 8m gbp, increasing their combined position by ~6% and reinvesting just 6% of the cash they received last year. In terms of what they sold last year (and in terms of their net worth) it's basically chump change.

Yes, it is a positive sign and a statement from management. Yes, an insider buying is probably more significant than an insider selling. But these guys didn't exactly load up the truck and I think it is biased to be very optimistic about the buys while basically ignoring the insider sales as good diversification. The insider sales were much, much, much larger.
« Last Edit: August 22, 2019, 08:30:31 AM by writser »
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Gregmal

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Re: BUR.L - Burford Capital
« Reply #374 on: August 22, 2019, 10:31:07 AM »
Exactly. I'm not sure when the standard for meaningful insider buying became "If he didn't sell a kidney and refinance his house to buy more shares it's meaningless!"

Gregmal makes a good point too.

In 2018 the founders together sold 1/3 of their stake, or ~8m shares at 1350p for ~110m gbp. That datapoint was not important enough to be included in the legendary 215 slides pitch and was basically discarded by the bulls in this topic. The two founders combined had, after the Muddy Waters report, presumably ~16m shares valued at ~130m gbp and at least 110m gbp in cash (I think we can assume they structured their sale tax-efficiently). Together they bought back ~1m shares for 8m gbp, increasing their combined position by ~6% and reinvesting just 6% of the cash they received last year. In terms of what they sold last year (and in terms of their net worth) it's basically chump change.

Yes, it is a positive sign and a statement from management. Yes, an insider buying is probably more significant than an insider selling. But these guys didn't exactly load up the truck and I think it is biased to be very optimistic about the buys while basically ignoring the insider sales as good diversification. The insider sales were much, much, much larger.

Anyone placing too much weight on it as either a positive or negative is missing the boat. Its a minor positive in terms of confidence, but certainly nothing thesis altering. Look at Phil Frosts insider buying on OPK. This shit is never as important as it seems.

Normax59

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Re: BUR.L - Burford Capital
« Reply #375 on: August 22, 2019, 11:25:33 AM »
It would be great to compare the purchases to their remuneration this year. Those two are being paid millions per year already, they had a 100 person team going into the 2018 annual report with staff costs of almost $50MM. Chop off $10MM for traveling expense etc. I know for a fact their average employee is making no where near $400k a year.
« Last Edit: August 22, 2019, 11:39:03 AM by Normax59 »

writser

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Re: BUR.L - Burford Capital
« Reply #376 on: August 22, 2019, 12:58:29 PM »
The good thing about being listed on AIM in the UK is that you do not have to disclose that (even though 78% of the 50 largest AIM-listed companies voluntarily do so).
« Last Edit: August 22, 2019, 01:09:46 PM by writser »
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Normax59

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Re: BUR.L - Burford Capital
« Reply #377 on: August 22, 2019, 01:23:41 PM »
The good thing about being listed on AIM in the UK is that you do not have to disclose that (even though 78% of the 50 largest AIM-listed companies voluntarily do so).


They said in the latest RNS that Bogart would be joining the board "in due course", I wouldn't be shocked if he makes anywhere between $6-9MM. The Investment Advisor in 2011, the year before being acquired, was to receive management fees for the year of $6MM from the fund with an 18 person team, this was with $300MM AUM and only half of the capital deployed. Given the opportunity cost I can only assume that shareholders are paying Molot and Bogart an arm and a leg.

Then again, knowing the timing of their Teinver sale, I'm not sure those two understand opportunity cost too well.

Gregmal

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Re: BUR.L - Burford Capital
« Reply #378 on: August 28, 2019, 09:48:09 AM »
Has anyone kept up with the latest MW reports? The second one on "behavioral analysis" was quite possibly one of the most hilarious and farfetched pieces of "research" Ive ever read.

in response to the insolvent claim that even bears have acknowledged was inconceivable, MW report states "Management exhibits aggression, persuasion and evasion behavior around this issue, suggesting liquidity is a bigger concern than they want to admit." Yup! They should have been ELATED!

These sort of magic dot connecting exercises are prevalent throughout these follow up "reports". The big, giant, smoking gun, again, in the final report.... is the already touched on $7M(yes 7, not 70 or 700) Napo case.....

Even the touted headlines of MW is still short... seem just as preposterous as much of the content...dude covered the day before releasing his report, and throughout the entire day of his press parade...and was out of almost the entirety of his position within days of initiating it....So maybe there's multiple different liars, deceivers, and dishonest parties involved....

Most likely, he has a token short position left just so he can go parading around without being guilty of outright lying...just massively misrepresenting ...what an assclown. But as far as the disclosures go, there is no evidence he is still short.

EDIT: Another good example... paraphrasing "they used aggressive words to defend the AIM listing and said they were exploring a US listing which basically means the odds of this are not good and they are being misleading".... LOL like didn't the company state they reached out to investors, and that they'd be starting the process to list in either the US or London big board because investors said the AIM listing was unacceptable?
« Last Edit: August 28, 2019, 09:58:53 AM by Gregmal »

Schwab711

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Re: BUR.L - Burford Capital
« Reply #379 on: August 28, 2019, 12:14:18 PM »
It's not necessarily a high probability but there are ways to have liquidity concerns. At a $1b valuation, they have up to $110m more they can sell in Petersen. If Petersen fails late this year or next year, BUR could have a real problem on their hand.

Ex-Petersen, 1H20 earnings appear likely to be much lower than the last few years (unless there's a future Teinver or Petersen everyone missed). The recent investments have been in shareholder appraisal rights. These can have high IRRs but ROIC is around 1.1x - 1.2x, at best. Ultimately, ROIC pays the bills. If a shareholder appraisal case takes longer than expected and results in a loss + Petersen loses, BUR will all of a sudden have much lower NI and ROE, debt:equity closer to 1, and debt ~2 years from maturity.

Again, I have no idea what the probability of the above is but there is a non-trivial chance BUR isn't worth being involved with. Add to that, the point of Napo is that if the BUR is willing to mislead about one case, it's not a huge jump to mislead on more. One issue where there's not enough information to show conclusively either way is that BUR's cash flows are hard to square. There is reason to believe BUR engages in window dressing.

I get the whole "short attack" thesis but I think investing in BUR without studying it is not a great idea. I assume MW is like everyone else. They really can't allege much more until there's more info, but that doesn't mean there isn't a chance more is out there.