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.