aj

[aj @Spii75]

@RFortunae @FletchFFletch82 Wonder if it's a short closing out. Feeling lucky to have bought this morning...

[aj @Spii75]

@quanttendies believe this one will have the YPF write down since the reversal happened in Q1...

[aj @Spii75]

@smallcap_stonks doing some research on Burford. Anything I should read to get background/insight into ETM and the claim? Thanks, would be greatly appreciated.

[aj @Spii75]

@EarningsB4Hugs Agree but perhaps YPF was the speculative piece and that’s not priced in now. I love how everyone is talking about the company in the past tense. Are you taking another look now?

[aj @Spii75]

@insiwest @ToffCap if you're willing to believe their modeled returns, yes.

[aj @Spii75]

@Broswar1 @siyul Agree here, if you assume full staffing and interest costs you have to assume they keep deploying into good deals. If they do and receive enough realizations to deploy $700M+ annually, the numbers look silly even if you assume they delever completely which is unrealistic.

[aj @Spii75]

@siyul @karimyoussef Yeah, and the key is more realizations. They need to hit all-time levels over the next few years, which sounds aggressive but it'd be in line with their trajectory thus far.

[aj @Spii75]

@siyul @karimyoussef Agreed. The IRR scrape is huge at this scale and so they need debt to hit the 20% ROE target they talk about. The operating leverage would be superb with a 5x larger portfolio in the future though.

[aj @Spii75]

@siyul @karimyoussef Agree OpEx is too high right now at current scale, but a 25% gross IRR absolutely carries value if they can scale the portfolio at those returns through 2030. Not sure what you mean by a shrinking asset size unless you're talking about YPF.

[aj @Spii75]

@siyul @karimyoussef If they can keep deploying money at a ~25% gross IRR and scale the portfolio, the cash numbers start to look silly. If you believe returns are sustainable, this is a good entry point ex-YPF IMO. Not quite cheap enough to feel protected in a drawn out liquidation scenario though.

[aj @Spii75]

@Broswar1 what do you think comes next? Seems like en banc and cert are both unlikely but given the remarkability of the situation, perhaps there's a much higher chance than normal?

[aj @Spii75]

@PDuddumpudi Yeah they have a long runway. They made up 1/3 of all industry commitments in 2025 so you'd think they've benefitted from pricing power on recent deals. Could easily be better than historical but hard to bet on that after YPF loss. Seems management didn't see it coming either...

[aj @Spii75]

@ShmuelLon Those more recent deals (deployed+committed) have to be nicely profitable to continue deploying into the landscape. They should intuitively be good deals but this all adds more leverage to the story. Cuts both ways.

[aj @Spii75]

@ShmuelLon I'm thinking more of the last few years' vintages which are mostly still active. They have $1.1B of unfunded commitments against $900M in liquidity. I'm effectively netting those out since they've only deployed 80% of commitments historically.

[aj @Spii75]

@ShmuelLon yes which is the dilemma for me. Despite this setback BUR is still the market leader and did 1/3 of all commitments in 2025. They should be getting more favorable deal terms due with less competition, but hard to quantify. How much is that story worth against the wind-down case?

[aj @Spii75]

@ShmuelLon Yeah if YPF=0 the business is in a tough spot. If they can't harvest large realizations before 2028 and especially 2030, they'll have to delever rather than rollover notes and do new deals due to the issuance covenants.

[aj @Spii75]

@ACapitalLP @gruust Source?

[aj @Spii75]

@Shrimp_a_Whales Burford made up nearly a third of all commitments in the industry based on the report. Seems like maybe their competitive advantages continue to solidify their position as other participants struggle to raise capital, or maybe I’m an idiot…