Litigation Funding Leader Burford Warns of Profit Dip
The company sought to minimize the impact of the dip, pointing to litigation successes in January 2020 and a record high in funding commitments. Investors responded positively to the news.
February 03, 2020 at 01:24 PM
4 minute read
The original version of this story was published on The American Lawyer
Burford Capital announced Monday that its profits from the last year were likely to be lower than those from 2018, but the litigation finance giant highlighted a record $1.6 billion in commitments to new investments.
In an update on its 2019 trading performance, the company sought to minimize the impact of an expected $20-30 million dip in net realized gains and an anticipated $50-70 million decline in unrealized gains, pointing to a series of litigation wins in January 2020.
The London-listed financier had a tumultuous 2019, when an attack from short-selling investment research firm Muddy Waters caused the company's stock prices to plunge and prompted a shakeup in its leadership structure.
"Burford had an exceptional year of growth in 2019, including a 24% increase in overall commitments, positioning the business favourably for the years ahead, while our returns remained robust and even inched higher than before," Burford CEO Christopher Bogart said in a statement. "The new year is off to a brisk start. This is evident in our January numbers where, if ultimately affirmed and paid, would generate more than $150 million in profits for Burford and more than $100 million in balance sheet profits in a single month."
The company's stock, which trades on London's AIM exchange for smaller businesses, ticked upwards on the news, rising over 3% over the course of trading Monday.
In addition to its $1.6 billion in new commitments, Burford said that it deployed $1.1 billion to investments over the course of 2019, matching its tally for the previous year. In March 2019, Burford announced a total of $2.6 billion in commitments over the previous two years. That figure was accompanied by a 23% increase in operating profit over 2018.
This year, the company chose to emphasize a jump in its cash proceeds, which rose 23%, and the fact that it posted a record low $6 million in losses across its litigation portfolio, compared to $21 million the previous year.
"We focus on cash, and the best value outcome for shareholders from our investments, rather than managing realisations to an accounting year-end," the company said in its announcement. "We can't control when courts rule or matters resolve—and in many instances we make more money from delay because of the pricing structure of our legal finance assets."
Burford and its peers in the commercial litigation finance arena have recently been pushing a narrative that corporations are increasingly receptive to using outside capital to advance lawsuits, as demonstrated in a report released by the June in August. The company pointed iMonday to a $75 million monetization for a Fortune 100 company as an example.
Burford's value plunged by roughly half after the short-selling attack by Muddy Waters in August, but the company's stock has traded relatively steadily since then. It reassigned its finance chief, Bogart's spouse, to a new role that month, and announced a number of new management roles in January.
The attack also prompted a securities class action lawsuit against Burford in New York, which was dismissed in December. The company is currently investigating claims of market manipulation and suspicious trading against Muddy Waters and has asked a London judge to weigh in.
|Read More
Litigation Finance Sector Saw Growth—and Growing Pains—in 2019
This content has been archived. It is available through our partners, LexisNexis® and Bloomberg Law.
To view this content, please continue to their sites.
Not a Lexis Subscriber?
Subscribe Now
Not a Bloomberg Law Subscriber?
Subscribe Now
NOT FOR REPRINT
© 2024 ALM Global, LLC, All Rights Reserved. Request academic re-use from www.copyright.com. All other uses, submit a request to [email protected]. For more information visit Asset & Logo Licensing.
You Might Like
View AllGibson Dunn Sued by Crypto Client After Lateral Hire Causes Conflict of Interest
Australian Corporations More Concerned About Class Actions Risk, HSF Report Finds
3 minute readSingapore Oil Tycoon Appeals 17.5 Year Prison Sentence In Fraudulent Trading Case
Charles Russell Speechlys Opens in Milan to Focus on Ultra-High Net Worth Clients
Trending Stories
- 1Jury Says $118M: Netlist Wins Another Patent Verdict Against Samsung
- 2Big Law Media Law Attorneys Brace For Changes Under Trump and Carr’s FCC
- 3Will England Accept that Digital Assets Are ‘Property’?
- 4Congress and Courts Are Considering Litigation Financing: Is Disclosure Imminent?
- 5Bar Report — Nov. 25, 2024
Who Got The Work
Michael G. Bongiorno, Andrew Scott Dulberg and Elizabeth E. Driscoll from Wilmer Cutler Pickering Hale and Dorr have stepped in to represent Symbotic Inc., an A.I.-enabled technology platform that focuses on increasing supply chain efficiency, and other defendants in a pending shareholder derivative lawsuit. The case, filed Oct. 2 in Massachusetts District Court by the Brown Law Firm on behalf of Stephen Austen, accuses certain officers and directors of misleading investors in regard to Symbotic's potential for margin growth by failing to disclose that the company was not equipped to timely deploy its systems or manage expenses through project delays. The case, assigned to U.S. District Judge Nathaniel M. Gorton, is 1:24-cv-12522, Austen v. Cohen et al.
Who Got The Work
Edmund Polubinski and Marie Killmond of Davis Polk & Wardwell have entered appearances for data platform software development company MongoDB and other defendants in a pending shareholder derivative lawsuit. The action, filed Oct. 7 in New York Southern District Court by the Brown Law Firm, accuses the company's directors and/or officers of falsely expressing confidence in the company’s restructuring of its sales incentive plan and downplaying the severity of decreases in its upfront commitments. The case is 1:24-cv-07594, Roy v. Ittycheria et al.
Who Got The Work
Amy O. Bruchs and Kurt F. Ellison of Michael Best & Friedrich have entered appearances for Epic Systems Corp. in a pending employment discrimination lawsuit. The suit was filed Sept. 7 in Wisconsin Western District Court by Levine Eisberner LLC and Siri & Glimstad on behalf of a project manager who claims that he was wrongfully terminated after applying for a religious exemption to the defendant's COVID-19 vaccine mandate. The case, assigned to U.S. Magistrate Judge Anita Marie Boor, is 3:24-cv-00630, Secker, Nathan v. Epic Systems Corporation.
Who Got The Work
David X. Sullivan, Thomas J. Finn and Gregory A. Hall from McCarter & English have entered appearances for Sunrun Installation Services in a pending civil rights lawsuit. The complaint was filed Sept. 4 in Connecticut District Court by attorney Robert M. Berke on behalf of former employee George Edward Steins, who was arrested and charged with employing an unregistered home improvement salesperson. The complaint alleges that had Sunrun informed the Connecticut Department of Consumer Protection that the plaintiff's employment had ended in 2017 and that he no longer held Sunrun's home improvement contractor license, he would not have been hit with charges, which were dismissed in May 2024. The case, assigned to U.S. District Judge Jeffrey A. Meyer, is 3:24-cv-01423, Steins v. Sunrun, Inc. et al.
Who Got The Work
Greenberg Traurig shareholder Joshua L. Raskin has entered an appearance for boohoo.com UK Ltd. in a pending patent infringement lawsuit. The suit, filed Sept. 3 in Texas Eastern District Court by Rozier Hardt McDonough on behalf of Alto Dynamics, asserts five patents related to an online shopping platform. The case, assigned to U.S. District Judge Rodney Gilstrap, is 2:24-cv-00719, Alto Dynamics, LLC v. boohoo.com UK Limited.
Featured Firms
Law Offices of Gary Martin Hays & Associates, P.C.
(470) 294-1674
Law Offices of Mark E. Salomone
(857) 444-6468
Smith & Hassler
(713) 739-1250