Burford Capital Limited (NYSE:BUR) Q3 2025 Earnings Call Transcript

Burford Capital Limited (NYSE:BUR) Q3 2025 Earnings Call Transcript November 5, 2025

Burford Capital Limited misses on earnings expectations. Reported EPS is $-0.09 EPS, expectations were $0.3.

Operator: “

Josh Wood: “

Christopher Bogart: “

Jordan Licht: “

Jonathan Molot: “

Mark DeVries: ” Deutsche Bank AG, Research Division

Operator: Hello, and thank you for standing by. My name is Bella, and I will be your conference operator today. At this time, I would like to welcome everyone to Burford Capital’s Third Quarter 2025 Financial Results Conference Call. [Operator Instructions]. I would now like to turn the conference over to Josh Wood, Head of Investor Relations. You may begin.

Josh Wood: Thank you, Bella, and good morning, everyone. We appreciate you taking time to join us to discuss Burford’s third quarter results. On the call, we have our Chief Executive Officer, Christopher Bogart; our Chief Investment Officer, Jonathan Molot; and our Chief Financial Officer, Jordan Licht. Earlier this morning, we posted a detailed earnings presentation, which we’ll refer to during the call and also filed our Form 10-Q, both of which you can find on our Investor Relations website. Before we get started, just a reminder that today’s call may contain forward-looking statements that involve certain risks, uncertainties and other factors that could cause actual results to differ materially from those discussed during the call.

For more information regarding these risk factors, please refer to our earnings materials relating to this call posted on our website and our filings with the SEC. We’ll also be referring to certain non-GAAP financial measures during the call. Please refer to today’s earnings materials and our filings with the SEC for additional information, including reconciliations of these non-GAAP financial measures to the most directly comparable GAAP measures. With that, I will turn the call over to Chris.

Christopher Bogart: Thanks very much, Josh, and hello, everybody. Thank you again for joining us today. We’re going to do this call today a little differently than usual. Before we turn to Jordan and the usual financial review, I would like to cover a few different topics with you. Let’s start with YPF, given the market reaction to last week’s oral argument. The YPF case was adjudicated in the Southern District of New York. That’s the Federal Trial Court in Manhattan. It is one of the highest quality courts in the United States. Court-wide its reversal rate on appeal is 6.28% over the last 10 years. The YPF case was decided by Judge Preska, the former Chief Judge of the Southern District. Her individual reversal rate is 4.63% over the same period.

So, the statistical reality is that a judgment from this court and especially from Judge Preska is likely to be affirmed on appeal. Because of some of the questions and comments from the panel at oral argument, the market seems to have freaked out a little bit about the risk of the case being dismissed on the legal doctrine known as Forum non conveniens, literally an inconvenient forum. Forum non, as it’s called, is a discretionary doctrine. It allows the court only once it has determined that it has jurisdiction, which is settled law already here. It allows the court to send the case to another more convenient court for trial. This occurs most often when there is some logistical issue going on, for example, that witnesses can’t travel to the U.S. courts for trial.

A sort of hooky example of Forum non is for Jordan and me to go to a conference in Arizona and get into a fight and for Jordan to punch me in the nose and for me to sue him for damages. That case could be brought in Arizona because that’s where the punch happened. But given that Jordan and I both live in New York and never otherwise go to Arizona, Jordan could try to argue that it would be more convenient for the case to be heard in New York and not in Arizona. That’s really the essence of what Forum non is all about. And although anything can happen in litigation, it would be extraordinary for the appellate court to dismiss the YPF case on this ground on Forum non grounds now for several reasons. First of all, the trial judge has discretion to decide Forum non motions.

And Judge Preska twice exercised her discretion to deny 2 separate Forum non motions over time. To reverse her decision, the appellate court would not only have to disagree with her rulings but also conclude that she abused her discretion in deciding the matter. That is a very high standard, and it is very hard to satisfy. Second, there is a substantial body of law out there that says that further along a case goes, the less viable a forum non dismissal is. It’s one thing to send the Jordan-Chris case to New York as soon as it’s filed. It is quite another to do so after 10 years of litigation, a trial and a judgment. Indeed, it would be extraordinary to dismiss a case after trial judgment. As the plaintiff’s lawyer, Paul Clement, who is the former solicitor General of the United States, said during the oral argument, the only case example Argentina could find was 38 years old and from another circuit.

And its facts are nothing like the fact here with a New York Stock Exchange issuer being sued in New York by U.S. shareholders. In fact, the old case was about a Peruvian sailor who died on a Peruvian ship that just happens to have been docked in Texas at the time. Every single other element of the case was Peruvian, and that’s the best-case Argentina could find 38 years old. Third, Argentina would also have to show substantial prejudice from having to litigate in New York, for example, by not being able to have witnesses show up to testify, which was a problem in the Peruvian case. That is simply not an issue here. Every witness showed up for trial. And Argentina suffered no prejudice at all from litigating New York, which it has been doing for decades in numerous litigation matters.

In short, although we don’t litigate cases in the press and while there is always litigation risk and Forum non was not the only issue on appeal, it would be exceptional for this case to be dismissed out of the U.S. courts at this juncture and sent to Argentina on Forum non grounds. And even then, by the way, wouldn’t be the end of this case. The market seems to us to have completely overreacted to the appellate argument. As we said in our release before the argument, trying to read the tea leaves in an oral argument is a perilous course. Of course, it would be lovely if all the judges came in and said loudly and in unison, of course, you win. But that is just not how the process works. Judges ask probing questions of both sides as part of the Socratic process.

So now we wait for the court’s decision. That will take months, but we remain bullish on this case. The YPF case is only part of our business, and it’s not the largest part. And we are excited about the broader business and its growth and performance potential. We’re continuing to grow organically and inorganically, and we’re confident in our 2030 plans as laid out in our April Investor Day. Looking at Slide 9, we are having a great year for the business. Definitive commitments up more than 50%. The overall portfolio is up 15% already year-to-date, that’s 20% annualized. That is well above the level to achieve our goal of doubling the business by 2030. I don’t care much for quarterly results, but looking just at the third quarter, deployments were up 61%.

And this slide that we’re looking at just underlines the new business point. We have done a lot more business this year in dollars and in number of cases than last year. And as we have discussed before, the thing that makes the difference quarter-by-quarter is the presence of big cases, and we have already had more than our fair share of those this year. As Jordan will show you later, a lot of that new business is also in the nicely high returning zone on a modeled basis. In other words, we have seeded the ground for substantial realizations in the years to come. And don’t forget the overall potential of the portfolio. We showed you modeling at Investor Day, estimating $4.5 billion of potential realizations from the portfolio as it was then, and we keep on growing it.

Let’s shift from new business to actual realizations and move to Slide 10. We are running ahead of last year in the volume of realizations. And we’re making new realization records on a rolling average basis. That’s consistent with how we are feeling about the portfolio that things are moving. They never move as fast as we would like, and Jon is going to address this a little bit more in a few minutes, but they are moving, and you can’t look at this on a short-term basis. This is always a long game. Results. In fact, the weighted average life of both the concluded book and the ongoing portfolio are pretty stable, around 2.5 years for the former and a bit over 3 years for the latter. Does every location drive us nuts? Sure. And especially because delays can cause accounting noise has occurred this period when some duration extensions negatively affected the unrealized line.

No court ever calls and says, “Hey, good news. We’ve moved your trial date up by 6 months. So while delay and a lack of predictability is something that is a constant frustration to anyone involved in litigation, it is simply how the system operates. And frankly, we are good at managing through that process and structuring deals around the inevitability of delay. Our focus really has to be in running this business on whether bad things are happening like a spike in losses, which simply isn’t happening and not whether the system is working as it has for the entire 35 years I’ve been involved in what are always delayed litigation matters where, frankly, no deadline ever actually holds. And notwithstanding delays, notwithstanding uncertainty, our IRRs are also remaining steady at 26%, and that’s now on $3.6 billion of realizations.

So with that and loss rates steady, we’re feeling very good about the portfolio. Let me add just a bit of color to those bare numbers as a cross check. As we showed you at our Investor Day, the business relies on big cases for a material portion of its growth and performance. Whether we do a new big deal in any period will affect our new business numbers and whether a big case concludes or has forward progress will affect our realized and unrealized gains. As we have said since the beginning of time, this doesn’t happen smoothly. And as you can see, our realized gain numbers are down, suggesting that we haven’t had a big case realization yet this year, although we have actually had more case realizations in total this year than last year, just not as many big chunky ones.

However, we have lots of good forward progress. As just one example, we have had 4 large case wins so far this year, each of which, if held at their current levels, would generate more than $100 million in proceeds for us. Those cases aren’t over. And as a result, their value is nowhere close to being reflected in our accounting numbers, but they offer a window into the potential performance power of the portfolio. And at the same time, we have not had any case losses of anything approaching that size because of the continuing positive asymmetry in the business. Another important point about the business reflected in Slide 11 is the very significant spread between our book value and our expected value. That disconnect exists because of the nature of our asset class.

Value occurs at the end of the case because that is when the binary nature of litigation has ended in either a trial conclusion or a settlement. Our history demonstrates that we know how to identify that value and to do so much earlier in the process than the accounting will actually drive. That being said, we can’t just create income or GAAP value in a case by merely investing. We need the case to run its course. And that leaves is a disconnect between the likely ultimate value of our assets versus the accounting value, as you can see with this graphical illustration of the point. If our track record holds true, there is a significant amount of embedded value in our assets yet to come. So in short, Jon and I are passionate about the business and the portfolio.

Investors can take confidence in our strong alignment of interest as large shareholders and committed executives. Our personal financial performance is directly tied to the success of the portfolio and to the performance of the stock. We recognize that needing to take the long view and put up with volatility like the volatility you’ve seen in these quarterly numbers isn’t the perfect fit for quarterly earnings obsessed public markets. But that is just the way this business works, and that is the price of high uncorrelated returns. Turning more directly to the market. Shareholders have, I think, every right to be unhappy with our share price performance, just as we are. As we all know, markets can become obsessed with elements of the company, and they can attract an undue level of attention, often masking more fundamental valuation presets.

That seems to be what has happened with respect to the YPF case. When a company’s share price goes down, especially when it declines in what seems to be a fashion unrelated to its fundamental value, shareholders tend to respond by wanting management to buy stock or for the company to do a share buyback. Here, management has indeed been buying the stock because we think there’s a good value. In fact, Jon and I bought more than 1.3 million shares of Burford stock in just the last year. But we don’t think it’s prudent at this moment, much as we think Burford shares are cheap to use corporate funds to buy back stock. This is something we’ve talked a lot about with the Board, with shareholders and with our advisers. And here’s our reasoning and Slide 12 tries to help make this point.

We are continuing to grow this business. In fact, we are sticking to our prediction of being able to double it by the end of 2030 as we laid out at Investor Day. And given that we don’t reliably have incoming cash flow from realizations at any particular point in time to meet our growth capital needs, we fund the gap with debt. Because the asset cash flow isn’t predictable, we don’t want to take on too much leverage. But we think the current level of long-dated maturities is fine, and we have confidence in the portfolio performing over time to meet our debt service needs. However, diverting cash to a buyback changes that equation because we’re now essentially funding the buyback with debt; but we’re removing the cash and its earning power permanently from the business.

This isn’t just about accretion. So for example, given our returns and the average life of our assets, we would expect $200 million today, as this slide shows you, to generate about $800 million of cash by the time we need to repay the underlying 33 debt. That’s a comfortable position. But if we divert the $200 million to a buyback, we will have to find all that repayment capacity elsewhere. And at some point, that becomes less comfortable. I’m not saying that we couldn’t do that. Our leverage is low enough, we probably could, but it doesn’t seem very prudent, and it would certainly add risk to the business. And when investors sit back and think about that dynamic, they tend to agree in our conversations with them. To be clear, we’re not a closed book on this point, coming back to our shared frustration with the stock price.

And we will keep on discussing it ourselves and continue to welcome shareholder feedback. I think it’s clear to the market what we believe about the business and the share price. And so I don’t think a signaling release where we do a little buyback does a whole lot for us. And a big buyback just seems imprudent when we talk through the issues. But as I said, it’s something that we will continue to talk to people about and continue to listen to shareholder feedback on. And then just before I turn you over to Jordan, I’d just highlight Slide 13. First of all, to highlight the appointment today of Bank of America as a corporate broker for us, representing yet another step forward in both the U.S. and the U.K. markets, and just more evidence of our maturity and market leadership.

I’m not going to spend time on this, the rest of this slide orally, but it’s worth a look for those of you based in London, where the LC, frankly, never ceases to lose its capacity to amaze me. And with that, I’ll turn you over to Jordan and Jon and look forward to taking your questions later on.

Jordan Licht: Thank you, Chris, and good morning, everyone. I’m going to take us through the 2 segments, Principal Finance, Asset Management. Jon will spend some time in the middle on the portfolio. Three things that I want to make sure to hit upon a little bit deeper and coincides directly with some of Chris’ comments, which is to talk about capital provision income, discuss realizations and new business. When you look in overall at the financial results and you see that year-to-date, we’re down in capital provision income revenue. A lot of that was driven by extension of fair model durations. And I’ll unpack that even further when we get into the Principal Finance segment and the bridge. But before we get to that, I’d like to spend a little bit of time just commenting on the portfolio.

Right now, ex YPF, I’m on Page 19. ex YPF, we’re deployed cost of just under $1.7 billion. Chris already highlighted and it reflects in some earlier slides, the amount of fair value unrealized gains associated with that, which is around 32%. So as mentioned, there’s significant upside to come in terms of future gains to the extent we hit our historical ROICs. I really do love the right side of the page, and it correlates with not just the historical portfolio, but the way in which the business is continuing to grow. You look at all the different colors and you can see the diversity. On the top, it’s the diversity in geography and on the bottom, the diversity in the actual portfolio, whether it’s arbitration, antitrust, contract cases or patents.

We really have a diversified portfolio and a diversified team around the globe. Moving to Page 20, we can go through the capital provision income and the fair value bridge. I’m going to focus specifically on the bottom left-hand side to illustrate some of the numbers. And this shows how we moved from $3.8 billion to $3.9 billion in total fair value. First 2 pieces to discuss that somewhat offset each other when you look at the quarter or the year is deployments and realizations. Deployments putting the money out, and we’ll discuss that more on a future slide and then realizations with the cash coming in. The middle is how we earn the income in terms of fair value as well as the realized gains, and we break it apart into 3 components. First is the Duration Impact.

Now this Duration Impact that’s what we’re outlining here as passage of time is truly just the passage of time. So, this is if you take all of the fair value models and you move forward a quarter towards the ultimate completion date. You then have change in discount rate. We’ve discussed that before. When rates go up, the value comes down slightly and vice versa, it works the same way as bond math when you’re discounting an NPV. And then you have the collection of milestones and other model impacts. And so, this is the recognition of an objective event with a milestone or in the case of this quarter, if we’ve identified some cases in which we’ve extended the fair value model estimated duration. And when you push that out, it will then correspondingly have a reduction when you think of an NPV, we will have a reduction in value.

It’s important to take a pause there and say, by moving duration, that doesn’t necessarily at all change our view of the case or the outcome. It also doesn’t necessarily impact what we’re going to receive. In some cases, or in many instances and in most of our assets, we have back-end adjustments in which multiples can rise the longer the capital is outstanding. We have back-end fee arrangements. Duration can also be extended because the case has progressed through the lower courts and has made it through objective milestones. And so, while the movement of duration was a significant impact on this quarter, it doesn’t necessarily change our view on the portfolio at all. So that gives you a little bit of more color around what happened in this quarter.

Flipping back to new business, though, and how that portfolio expands, the first piece on Page 21 is to think about new definitive commitments. Chris highlighted the diversity of the risk bands associated with this year, not to mention the growth that we’ve seen in 2025 compared to where we were at the same point in 2024. That also corresponds with a growth in deployments. Ultimately, the commitments are great, but you still put the money out and the cases are progressing and it’s the money that earns the returns. And so you can see our deployments here have increased over 2025. And it’s important to harken back, I’m not going to make a switch back to all the slides, but just the different diversity in the numbers of different new commitments, and we highlight that on some of the earlier slides that Chris mentioned.

I move to 22 and talk about realizations. And it’s important to note that we look at this business on a multi-period basis, not just on a single quarter. We highlighted that on some earlier slides, $310 million of realizations this year. The other thing that’s important is we do not look at ROIC on a quarter-by-quarter basis or even on an annual basis, but rather on a blended basis across the entire portfolio. And I want to remind folks that 43% ROIC that we see that occurred in 2025, we did have a very large event that ended quickly in Q1. That was a great IRR, but given the short duration resulted in a low ROIC. And so given where we stand, we would expect to see that number obviously be lower. I’ll pause there to hand it over to Jon to talk more about the portfolio.

Jonathan Molot: Thanks, Jordan. Thanks to you all for joining. And I’m going to turn to Slide 23, which you’ve seen before, but I want to talk to it in a way that emphasizes and fleshes out something Jordan said earlier, which is as a shareholder and running this business, I don’t pay as much attention, as Chris said, to how we do in a particular period, except maybe to make sure that we are continuing to put out money. And why is that so important? Why is the growth in commitments and deployments are important. You kind of understand from Slide 23, it is a reminder that we have a really good asset class that when we are the ones managing that asset class and deploying capital into it. When you put out new money in a new deal, there’s only 3 things that are going to happen.

It’s going to go to trial and win, it’s going to go to trial and lose or it’s going to settle. And over the course of our life, these numbers have stayed pretty steady. In any particular period, they could bump around because you could have one really large adjudication gain. Large adjudication losses are kind of harder, as Chris said, because I mean they don’t happen in the same way because we’ve got these asymmetric returns, which I’ll turn to on the next slide. So they’re not as possible. But when you look at this is what we’re putting the money into, that we know the majority of our matters are going to settle as long as we continue to pick good cases and our track record shows that we have been able to do that. And the adjudication gains outnumber the adjudication losses, both in number and size.

And so you just look if you can produce, which we’ve stayed constant, 83% ROIC, 26% IRRs, you want to be sure that pipeline is continuing to move, you continue to bring in new matters, and that is what we’ve been experiencing, which is experiencing, which is really wonderful. It is the thing we can control. As Chris said, we can’t control court dates. We can do everything we can to make sure that parties and lawyers know the urgency and the importance of moving things forward and not agreeing to extensions, but courts are going to make those decisions. What we can control is being out there in the market, solving people’s litigation problems by providing capital to those who need it to litigate effectively. If you turn to Slide 24, you see the same theme, but in a different representation, which is basically, again, I described how the nature of the asset class as invested in by us and why that produces attractive returns.

Here, you actually see what we’ve achieved. You see the asymmetry of outcomes where we can have truly outsized returns. And for the smaller number of losses, it’s much smaller numbers. And so you take these 2 slides together and you say, how did Burford do? Well, it continued to put out money into this very attractive asset class that has been generating these returns over time. And that to me is what, as Chris said, makes me so bullish about this business. And with that, I will turn it back over to Jordan.

Jordan Licht: Thanks, Jon. So, coming back to the asset management part of our business, and I’m going to focus on Slide 27. To take a step back and remind folks where we are with asset management, we’re continuing to deploy capital for the balance sheet. And we’ve been clear on the importance of doing that and enjoy the partnership that we do have with the sovereign wealth funds, which we also call the BOF-C portfolio. The rest of the other funds are in runoff. And so we wouldn’t see management, continued management fees from those funds, and we’ll see episodic performance fees from the fund. Overall, you’ll see cash receipts from asset management was approximately flat year-to-date at $17 million between ’25 and ’24. If you isolate just to the quarter and you look at the negative in the asset management, the reason for that is simply put that when fair values move and we then book a corresponding adjustment to the future potential profit sharing income that we would receive.

And so if you have a negative there in fair value movement, you’ll have a negative with that. It doesn’t impact our view necessarily of the future of the cases. So that gives you a little bit more color with respect to the quarter there. Switching to Page 29 now to go through some of the capital structure and expenses. We sit in a great cash position at $740 million. Obviously, that number has been impacted by 2 things. One, which is the recent issuance of the $500 million notes in July of 2025. And as a reminder, we do have a maturity coming due in December of 2026. And so part of that cash is sitting there to address that maturity. The bottom of the page shows the cash receipts, again, being consistent and coming back over $100 million in the third quarter.

On our operating expenses on Page 30, while we look at this also more frequently on an annual basis, and it’s important to look at that, a couple of items I want to make sure to pull out. The first is when you look at the share-based and deferred compensation. And I’ve discussed this before, but that also includes the movements in our share prices that impacted both up and down given the DCP program. But also what’s included is a onetime item related to a mechanical acceleration of tenure-based awards that vested in this period but haven’t been paid out, and that’s a onetime impact. With respect to the G&A overall for the year, you also see that, that’s slightly up, and that’s due to increased costs associated with policy and planning. On Page 31, some highlights.

And in a couple of quarters, this page will actually change. And I mentioned before the USD 235 million that’s in U.S. dollars on this page that’s outstanding for the ’26 maturity. As we look to address that, and we’re addressing that similarly to how we addressed this year’s ’25, looking to potentially purchase in the open market as well as then addressing it at its final maturity. But that’s the last of the bond that has a covenant that’s outlined on the left-hand side of the page. We’ll then move to the covenants associated with, on the right-hand side of the page, that’s with the 144A U.S. transaction. And as you can see, at 0.9x, we’re well within our debt to tangible equity covenant levels, approximately 5 years average on the debt outstanding and a 7.4% weighted average cost.

So with that, I will turn it over to Chris to take us through Q&A.

Christopher Bogart: Great. Thanks, Jordan. And rather than doing yet more closing remarks, why don’t we just go straight to questions, operator?

Operator: [Operator Instructions] Your first question comes from the line of Mark DeVries with Deutsche Bank.

Q&A Session

Mark DeVries: I appreciate all that new perspective on the YPF case. Just had a related follow-up on that. Could you just give us a sense of potential timing of the appeal of the Second Circuit on the order for Argentina to turn over its YPF shares?

Christopher Bogart: Sure. Although like everything in, as you’ve heard from us today, the timing of litigation is inscrutable to some extent. But that appeal is going to be fully briefed, if I’m not mistaken, Jon, correct me if I’m wrong with this, by sometime in December. And then after it’s fully briefed, the court will schedule it for argument. There’s no argument date for it at the moment. As you know, from the main appeal, that can take a long time. It doesn’t always take a long time, but it can take a long time. And then after the oral argument of the appeal, there will be court will go out and write a decision about that again, that doesn’t have any particularly fixed timing associated with it. So it’s certainly not a 2025 event. It’s likely, but not certainly a 2026 event.

Mark DeVries: Got it. And then just a question on realizations. How are you guys thinking about the trajectory of that over the coming years, particularly as we think about the impact from the pandemic on courts and the backlogs that created? Are you still getting, are you seeing elevated realizations as courts play catch-up? And what might the implications be for the next couple of years?

Christopher Bogart: Well, you sort of, we tried to show the data on a few different metrics when we did some of these slides. So some of the slides that we put together had some new information because we know people are focused on this theme. And I think that looking at the rolling 3-year realization is kind of an interesting way to do it as opposed to having sort of quarter-by-quarter up and down shocks. And I don’t know, Rob, if you want to put that back up again, that was Slide 10. And so what that slide is telling us is there’s quite a lot of activity going on. You’ve seen 61 assets so far this year have realizations. And if you look forward to next year, and again, like I don’t want to use these kinds of numbers as predictors because courts change their minds about schedules all the time.

But if you look at where we stand today, we have more events, more trials, more hearings and so on scheduled for the next 12 months than we had for the 12-month period a year ago. So what that says is there’s this continuing velocity in the portfolio. And the thing, of course, that drives settlement activity, cases really don’t settle without a catalyst for them settle. And so when Jon was showing you the slide that we’ve used before that show really a very high level of settlement activity in the portfolio in the upper 70s percent. I think it might even be 79% now. So how do you get that settlement done? And the answer is you need some pressure on the defense usually to get there, and that pressure is a looming trial date. So, when cases get set for trial and when trial approaches, that’s the most likely time for them to resolve by settlement.

So I just think you’re seeing, you’re continuing to see forward momentum, at the same time, you have frustrating moments, like we had this quarter where we also saw courts, not do things as quickly as we would have otherwise expected. And when that happens, because of the relatively new valuation approach that we use, that can have a negative impact on our unrealized gain and loss line. So, it looks like Julian Roberts is joining us by webcast today. So, his question is, thanks for the presentation. Are you able to give us any more detail on the change of expected or modeled timing of the case whose duration has been extended. Jordan, do you want to try your hand off?

Jordan Licht: Sure. And thanks for the question. I’m going to answer that in a second and first, just to make sure everyone understands how we think about modeling. First and foremost, we look at all of our assets every quarter and the assets are constantly changing with a variety of different inputs, whether that’s an observable milestone event, whether it’s expected proceeds or duration discount rate that I’ve mentioned. With respect to this, Julien, I’m not going to answer the part of saying, hey, which case or cases it was, I think that would be inappropriate. But overall, if you looked at the impact of the duration change, it’s somewhere in the $40 million to $50 million of impact when you look at that compared to the overall deployed cost fair value associated with the non-YPF book.

Christopher Bogart: So, we’ve got another webcast question. This is from Jonathan Alexander at Evergreen, who says, on the buyback, the logic that you have laid out makes sense. But if we anticipate a positive YPF return, isn’t it merely a short-term levering of the business when the stock is cheap that will then be paid off when the YPF result comes through and the overall risk to the business hasn’t increased. So again, as I said, like we’re not dogmatic and dug in on this point. It’s something that we talk about a lot. I think, frankly, my partner, Jon Molot, would probably agree with you on that question. I think it all comes down to a question around the prudential management of the business. as we were just talking about in other contexts, we lack the ability to be able to accurately predict when cases are going to turn into cash.

We have shown that we’re pretty darn good at predicting whether they’ll turn into cash. We’ve got a really long and successful track record of being able to do that. But that doesn’t answer the “when” question. And of course, that sits somewhat uncomfortably beside a world where public debt does come with a “when”. And so, the interest on the debt has to be paid and the principal has to be repaid on agreed timing, obviously. And it doesn’t work. The debt holders don’t say, “Oh, well, the court delayed, so that’s fine. We’ll delay too.” Like that’s just not how it works. And so that’s really the dilemma that we have always had, not even just in the context of a buyback, but in the context of how much leverage to use in the business in general because you are not wanting to put the equity holders in the business at risk of the debt becoming an obstacle to be able to manage the business properly.

So those are sort of the things that we weigh. And where we’ve come out thus far, and this has been talking to lots of investors and talking to advisers and talking to the Board and so on is to be on the prudential side of that equation. But as I said, it’s something that people are frustrated with the share price. Jon and I are frustrated with the share price. Our team is frustrated with the share price. So, it’s something that we welcome continued dialogue and debate about. Let’s see. There’s another question. This is from Steve Thompson about buying and selling of shares. So let me explain how Jon and I largely buy shares in the business. So, we make use as this is a very common U.S. corporate practice, which is considerably less common in the United Kingdom.

So, what we do is we take cash income and we put that cash income into a deferred vehicle. And we could, in that deferred vehicle, buy something other than Burford stock. We could buy S&P 500 indexes. But Jon, I don’t do that largely. We principally have been taking that cash in substantial quantity now and using it to put against Burford stock. And when we do that, it’s disclosed publicly in security filings. But the stock itself lives within the plan in the hands of a custodian as opposed to living in my own individual brokerage account. So that’s how the significant purchases are going. But they are realized purchases and Burford typically goes into the market and makes those purchases to hedge the position as well. Another webcast question from Igor Arkhipov, sorry if I messed up that name.

Has there been any impact from the U.S. government shutdown? No is the short answer. In fact, and this is I think why the shutdown progresses, like living in the United States, you don’t really notice that there’s a shutdown going on except maybe when you go to the airport sometimes. And, but it hasn’t had any impact at all on our litigation portfolio. The courts are continuing to operate. The place in litigation it has impacted things is with respect to the U.S. government, but that doesn’t really affect us. So, if the U.S. government is a party, they have been asking for delays and accommodations and so on, but that’s not a factor in our book. So, waiting for another question that is being typed from Thomas Fickel. With several peers facing refinancing and balance sheet pressures, do you see opportunities for Burford to accelerate growth through portfolio or corporate acquisitions as part of broader industry consolidation?

I think the short answer is we don’t know. It’s, we’ve certainly talked about the competitive landscape before. And you’ve seen a migration in what has been going on in the competitive landscape a little bit. If you went back some years, you would have found litigation finance mostly being done by smaller pure-play litigation finance specialists. And those firms have, many of them have struggled to grow and the financial, sorry, the COVID really, the pandemic really caused them some distress because that really did slow down durations. And many of them are organized as 220-style funds and that really through the ability to earn performance fees into some degree of chaos. And so, you’ve seen, as the question suggests, you’ve seen some level of distress among both of the other public peers that we have out there, the other public much smaller players.

Where that all shakes out at the end is a little bit unclear. We’re always happy to look at things, but Jon has a pretty sharp pencil when it comes to things and forms, our team forms its own view about value, which sometimes is lower than the valuation expectations of others. So, we’ll just have to see how it all plays out. And with thanks for another investor who says, not even as a question, just well done to management, I agree completely on the view of not doing a buyback, investing in the business. And now I think there is a question on the phone.

Operator: Your next question comes from the line of Mark DeVries with Deutsche Bank.

Mark DeVries: Just a follow-up question on kind of the recent commitments deployments, whether there’s any kind of noticeable trend worth calling out on kind of the distribution of those among some of the shorter duration, lower ROIC versus some of the longer duration, higher ROIC.

Christopher Bogart: Jon, do you want to comment on that?

Jonathan Molot: Sure. I guess what I’d say is our approach is to be all things to all people. So, it depends what comes in the door, and we end up achieving diversification, not just of the sort that Jordan described geographically and by subject matter, but also in terms of duration and risk. I don’t know, like I haven’t, I don’t have the numbers at hand as to the portion of new deployments that are on the shorter or longer, although I did would note, Jordan noted that a sizable chunk of the new business that was done is in deals that are, that have the capacity to generate higher returns and higher ROICs. Jordan, if you have the statistics more in hand than I do, I would just be talking anecdotally. We’ve put out, we’ve done some big deals that are that have very high profit potential.

Of course, we do know is things can settle earlier and you can end up with lower returns earlier, but with attractive IRRs. But if they go as we would project, they are meatier investments with higher upside potential.

Mark DeVries: Okay. That’s helpful. Just a follow-up then for Jordan, I guess, on Slide 9. Does the lack of kind of the larger north of $25 million commitment speak to the point that Jon just made. Are you less likely to put a lot of money out the door if you’re not expecting a more immediate return? Or is that kind of unrelated?

Jordan Licht: I wouldn’t necessarily correlate the 2. We do see opportunities that are smaller but can also be more towards the monetization in which we’re putting more money out the door earlier. So I don’t want to necessarily equate the two.

Christopher Bogart: So we’ve had some more sort of capital allocation buyback-related questions and comments. And so if I sort of sum them up, like one perspective was will, over time, this dynamic change? If we’re successful in meeting our objective of doubling the base portfolio by 2030, that obviously means we’ll be doing a significantly larger number of cases. And one hopes at some point, the law of large numbers kicks in and you get more predictable, steadier returns. And I think that there’s some truth in that. We have sort of not succeeded in achieving that thus far because of the way that the asset class has grown and the way we’ve been able to grow the asset class. And so we are doing much larger transactions than we were a decade ago.

If we had stayed at our average ticket size a decade ago and had the business of the size it is today, then I think you would have that kind of greater predictability. But at the same time, you’d have such a volume of business that I think the OpEx and the business model would be slightly challenged. And so because we have more than quadrupled the average ticket size, that has led to us having this, still this dependence on pretty large cases for a significant portion of the returns, and we haven’t yet reached or even frankly, come close to the sort of the law of large numbers point. Will that change in the future? And will that result in us having a greater sense of predictability of cash flow such that we would expand our capital return options.

I think that’s entirely possible. And of course, we also have the dynamic of YPF sitting out there because assuming a positive return from YPF, that is a very large cash event for us as well that as we’ve said repeatedly to shareholders, would require a discussion with shareholders about what to do in terms of capital utilization and capital return. So that’s sort of where we are on the buyback front. I know that there are also people who are going to say, but it’s accretive, right, who are just going to do the corporate finance math and say, look at the book value, look at the share price, do the math, you should, instead of putting a new dollar into a new case, you should put that dollar into the existing portfolio. And I understand that corporate finance math, which is why we keep on having this discussion.

But I think if you go back to the slide that we showed earlier, I think that it is not as simple in a levered business that isn’t always reliably producing positive cash flow. I don’t think it’s as simple as just doing the corporate finance math. But as I said, it’s something that we don’t claim a monopoly of brilliance on. And so it’s certainly something that we’re happy to hear from shareholders about as we continue to walk down the road. And with that, I am told we are done. So thank you all very much for your time and attention. We enjoy being able to give you these updates. And hopefully, we shed a little more clarity on our views about what’s going on both with YPF and with the business as a whole. We remain bullish and fans and sorry for my raspy voice.

So thank you all for joining us today, and we look forward to talking to you soon.

Operator: Ladies and gentlemen, that does conclude our conference call for today. Thank you all for joining, and you may now disconnect. Everyone, have a great day.