Alphyn Capital, a New York-based investment firm, is bullish on its investment in Burford Capital.
In his latest letter to shareholders, founder Samer Hakoura sets out his thesis for investing in the global litigation funder. He notes that even if Burford operates in run-off mode, where it incurs operating costs until it concludes all outstanding matters in, say, five years, it could generate cumulatively $8 per share in pre-tax profit, compared to a share price of approximately $10. In other words, even in an unrealistically negative case, it should get 80% of its investment back in 5 years. And he fully expects the biggest litigation funder with a strong brand in the market to do much better than this in practice.
He also points to a significant event that could make his investment a homerun: the outcome of its YPF case against Argentina. Should Burford win, it could receive net proceeds between $1.1bn and $5.6bn, a huge amount in relation to Burford’s current market capitalization of approximately $3bn.