Burford Capital Limited (BUR): A Bull Case Theory

Core Thesis - Burford Capital Limited is viewed positively due to its potential high returns from the Argentina-YPF litigation, with shares trading at $9.32 and a trailing P/E of 23.93 and forward P/E of 9.68 [1][2] Company Overview - Burford Capital provides legal finance products and services globally, operating in two segments: Principal Finance and Asset Management and Other Services [2] - The company acquired distressed claims from Petersen Energía for approximately €15 million, aiming for a potential return of 37,000% [2] Litigation Details - The litigation arises from Argentina's 2012 expropriation of 51% of YPF shares from Repsol, which allegedly violated tender offer obligations [3] - Argentina argues that its sovereign expropriation law takes precedence over private contractual claims, leading to uncertainty regarding jurisdiction and liability [4] Legal Proceedings - The appellate panel has shown skepticism towards the plaintiffs' case, but historical precedents may support Burford's position, with potential damages ranging from $18 billion to a dismissal [5] - The decision on the case is anticipated within 6–12 months, with even a reduced award representing a significant return on Burford's initial investment [6] Market Sentiment - Burford shares currently reflect a market perception that the case is unlikely to succeed, presenting a potential investment opportunity if the court rules in favor of the plaintiffs [6] - The company's long-term growth prospects remain strong despite a 34.73% decline in stock price since previous bullish coverage [7][8]