Introduction There are two types of great businesses to own. Ones that require almost no capital and are able to distribute all of their profits, and others that need a lot of capital but earn high returns on it. Burford is the latter type. On a basic level, Burford funds legal claims based on their expected future value by deploying capital from their own balance sheet and private investment funds that they manage. They pay for legal fees and costs of commercial litigation in exchange for a portion of the ultimate award or settlement. Burford only funds cases where the potential upside is multiples of the funding cost. The payout on a successful case is highly asymmetric, however, the amount of capital deployable is limited by the associated legal fees, which are currently ~$20 million on average per single case funded by Burford.
Congrats on the new venture! I've been following you on twitter and I'm really excited about what's coming up here.
The idea looks really interesting in the current market environment where I find shortage of good counter-cyclical investments. This can be one to be used to add on weakness or when other cyclical parts of the portfolio over-perform.
What's your thought process on positioning in the idea given the possibility of lumpy/disapointing earnings?
Congrats on the new venture! I've been following you on twitter and I'm really excited about what's coming up here.
The idea looks really interesting in the current market environment where I find shortage of good counter-cyclical investments. This can be one to be used to add on weakness or when other cyclical parts of the portfolio over-perform.
What's your thought process on positioning in the idea given the possibility of lumpy/disapointing earnings?