Burford Capital offers alternative asset exposure less correlated to traditional debt markets. In the current environment, where valuations are close to historic lows, it is an optimal time to build positions in exceptional companies like Burford. The finance sector thrives in a higher-rate environment, and Burford's litigation finance model benefits from higher nominal yields, making it a compelling investment opportunity.

Burford is the 800-pound gorilla of litigation finance, with a significant advantage in selecting and funding cases profitably due to its extensive settlement data. The company has achieved an 82% return on invested capital over a weighted average life of 2.6 years, resulting in a 25% IRR. Burford's largest allocation of capital is in price-fixing cases involving major food companies, which could lead to settlements exceeding its market capitalization. As trials approach, particularly in the chicken case scheduled for 2027, there is potential for hundreds of millions of dollars to flow back to Burford, alleviating its debt-covenant issues. The market seems largely unaware of these potential payoffs, presenting an opportunity for significant upside.

We believe the market has grossly overreacted to the recent appeals court ruling regarding Burford, which has led to a significant drop in its stock price. Despite this setback, we maintain that Burford is greatly undervalued on its own merits, irrespective of the YPF cases. The appeals verdict does not eliminate the possibility of recovering damages from Argentina, and there are multiple pathways to recovery that we are confident in pursuing. We have taken advantage of the drop in share price to quintuple our position in Burford, viewing it as a virtual steal at current levels.

Burford Capital is our UK listed global market leader in litigation finance. The company has compounded book value per share and realized cash proceeds from litigation matters settled ahead of our original underwriting assumptions. My estimate of the cash 'run-off' value of the existing book of claims has increased from approximately $9 to $12.50 per share, while the share price remains unchanged from our original purchase price of $9.50. Burford is the only listed business of its kind, making earnings difficult to forecast, which I view positively. My estimate of fair value is about 3x the current price, with several catalysts on the horizon to narrow the gap between price and value.

We own shares of Burford primarily for the quality of their ongoing litigation finance business and high returns on capital deployed. As a bonus, Burford has a judgment against Argentina that could be very significant relative to market capitalization. The market appears to be pricing in a far more adverse outcome than history would suggest. Burford shares were down 30% in 2025, ending the year at approximately 10X cash flow (excluding YPF) for a growing and scalable business that will not require any additional equity capital to grow. This was a broken stock in 2025, but not a broken business.

Burford Capital has an amazing business model with stellar returns, demonstrating steady IRRs of 30% on their investment portfolio. The company is the leader in litigation finance, providing capital for high-stakes commercial cases, and has a strong competitive moat due to its unique combination of legal expertise, investment acumen, and substantial capital. Despite initial concerns over valuation, the stock's significant drop following negative reports made it an attractive investment. Burford's recent success in the YPF case further validates its business model, and the firm remains deeply undervalued with substantial growth potential ahead.

Burford Capital's current share price does not reflect the potential value of the $16 billion YPF judgment against Argentina, which remains a significant factor in its valuation. Despite the ongoing legal challenges, including a stay on the turnover order, Burford's underlying portfolio is maturing, and demand for its capital is strong, with new commitments reaching $1.1 billion in the first nine months of 2025. The core business is expected to continue growing, and the YPF outcome represents a 'free option' for investors, indicating that the market may be undervaluing the company's potential.

Burford Capital is our UK listed global market leader in litigation finance, making money by funding select commercial litigation claims in exchange for a share of the settlement or court awarded judgement. The relevant developments are significant, particularly the ruling against Argentina, which adds pressure to settle a $17bn claim. Burford's share of this claim is $6.8bn, accruing interest at $1.64 per share annually. The core business continues to deliver solid returns, with $463mn deployed into new claims and $742mn in realizations, showing growth of 23% and 40% year over year, respectively. The core business remains undervalued at 8.5x earnings, excluding YPF, and we believe the cash flows underpin the value of the shares.

Burford isn't just 'getting there' - they're already the leader in litigation finance with a 27% historical gross IRR and losses on only 13% of cases, according to their disclosures. They rarely lose money on cases, in part because the vast majority (76%) settle. Burford’s leadership team personally owns stock totaling 9% (>$200M) of the company and has been a net buyer of the shares. With aligned insider ownership, historically low loss rates, and tangible book value making up more than 80% of their share price, Burford is a well-capitalized and sustainable business. I believe there is a greater than 50% chance that we get a settlement worth at least the entire 2024 year-end share price of Burford in the next 2 years.

Burford Capital finances litigation and there are virtually no tariff impacts on the company. During economic downturns, companies are typically more likely to turn to external financing for their litigation. We attended Burford’s recent investor day, and management agreed that the tariffs should not impact their core business. With a market capitalization of approximately $3B and a judgment against Argentina for $6B+, Burford’s expected ability to collect on the judgment should have a far larger impact on the share price than tariff negotiations. The good news is that Burford has a very healthy business outside of their Argentina claim.