I first recommended buying the shares at 146p last summer ('Legal eagles', 8 Jun 2015), updated my view when the price was closing in on my target of 190p ('Five companies that keep on delivering', 3 Nov 2015), and advised running profits at 196p at the start of this year ('Stock check', 5 Jan 2016).
The share price has risen by a further 30 per cent since that January article and with good reason after Burford posted full-year EPS of 31.5¢ (22p) yesterday, beating consensus EPS estimates of 23.7¢ by a thumping 35 per cent. Operating profit rose by more than a quarter to $102m, buoyed by an 80 per cent-plus rise in litigation investment income, which accounted for $87m of those profits. It's not just a highly profitable niche business to be in, but return on capital is eye-watering, highlighting the ability of Burford's lawyers to cherry pick the best legal cases to back, and ones that generate the best returns. In fact, the company's investment portfolio produced cash of $140m in 2015, more than double the outcome in 2014; return on invested capital on 42 concluded investments increased from 60 to 70 per cent and has never been below 50 per cent on any concluded case in the past five years; and the internal rate of return on these cases rose by four percentage points to 28 per cent.