For chief executive Christopher Bogart, Burford Capital’s (BUR) “best ever” half-year results demonstrate the “degree of demand in general for capital solutions in the legal sector”. This optimism resonated with the market: Burford’s share price rose 9 per cent on the back of stellar earnings growth. Mr Bogart also emphasised the volume of new investment commitments made by the global finance litigation firm, equivalent to $488m (£375m).
Burford’s enormous pre-tax profit boost was largely driven by the sale of 25 per cent of Burford’s entitlement in the Petersen case. This lawsuit, brought by the Petersen Group against Argentina, has generated more than $100m in cash profits – five times Burford’s investment. Management noted that there were 11 investments in total which propelled Burford’s performance, though each period has seen one significant contributor to profits. In the second half, the Teinver suit (entailing another claim against Argentina) will dominate conversation. Only this week, Burford reported a “favourable investment result” for the case.
Burford has also made progress in fund management, literally capitalising on its 2016 acquisition of Gerchen Keller Capital to raise a $500m litigation focused-fund.
Analysts at N+1 Singer expect pre-tax profits of $240.5m for FY2017, up 69 per cent from their previous forecast, with corresponding EPS of 110.4¢ in 2016.
| BURFORD (BUR) | ||||
| ORD PRICE: | 1,088p | MARKET VALUE: | £ 2.27bn | |
| TOUCH: | 1,088-1,095p | 12-MONTH HIGH: | 1140p | LOW: 374p |
| DIVIDEND YIELD: | 0.7% | PE RATIO: | 15 | |
| PREMIUM TO NAV: | 316% | NET CASH: | $194m* | |
| Half-year to | Net asset value | Pre-tax | Earnings per | Dividend |
| 30 Jun | (¢) | profit ($m) | share (¢) | per share (¢) |
| 2016* | 286 | 55.8 | 25.5 | 2.70 |
| 2017 | 339 | 135 | 63.9 | 3.05 |
| % change | +19 | +142 | +150 | +13 |
| Ex-div: | 19 Oct | |||
| Payment: | 15 Nov | |||
| *2016 figures have been re-stated due to a change in the classification of law firm lending investments | ||||
