Burford Capital’s Earnings Call: Growth Amid Challenges

Burford Capital ((GB:BUR)) has held its Q3 earnings call. Read on for the main highlights of the call.

The latest earnings call from Burford Capital paints a picture of a company experiencing significant growth and portfolio diversification, yet facing challenges from market reactions and litigation delays. While the business showcases strong growth in new commitments and a robust, diversified portfolio, concerns over specific cases and share price frustrations pose challenges. The overall sentiment is one of cautious optimism, tempered by these concerns.

Substantial Growth in New Business

Burford Capital reported a remarkable increase in new business, with definitive commitments rising by more than 50% and the overall portfolio growing by 15% year-to-date. Deployments surged by 61% in the third quarter, underscoring the company’s aggressive expansion and commitment to scaling its operations.

Strong Portfolio Performance

The company’s portfolio performance remains robust, with internal rates of return (IRRs) holding steady at 26% on $3.6 billion of realizations. Despite a large event concluding quickly in the first quarter, Burford achieved a 43% return on invested capital (ROIC) in 2025, highlighting the efficiency and profitability of its investments.

Diverse and Expanding Portfolio

Burford’s portfolio demonstrates significant diversity in both geography and case type, contributing to its robustness and growth potential. This diversity is a key factor in the company’s ability to weather market fluctuations and capitalize on various opportunities.

Positive Asymmetry in Case Outcomes

The company reported no large case losses, with four large case wins potentially generating over $100 million each. This positive asymmetry in case outcomes indicates strong forward momentum and the potential for substantial financial gains.

Market Overreaction to YPF Case Developments

Concerns over the YPF case being dismissed on Forum non conveniens grounds led to a market overreaction. Despite this, management remains optimistic about the case’s prospects and the company’s overall position.

Impact of Litigation Delays on Financials

Litigation delays have introduced accounting noise, negatively affecting unrealized gains due to duration extensions. These delays pose challenges to financial reporting and the perception of the company’s financial health.

Challenges in Predicting Realization Timing

Despite a high number of case realizations, the absence of large, significant cases has impacted realized gain numbers. This unpredictability in case outcomes highlights the challenges in forecasting financial performance.

Share Price Performance Concerns

Both management and shareholders have expressed frustration over the decline in share price. While there are calls for buybacks, these are being weighed against the need for prudent financial management.

Forward-Looking Guidance

Looking ahead, Burford Capital remains optimistic about its growth trajectory. The company aims to double its business by 2030, with ongoing growth in new business and realization volumes. Despite a decline in capital provision income due to duration extensions, the firm maintains a steady IRR and a stable portfolio life, indicating a strong foundation for future expansion.

In summary, Burford Capital’s earnings call reflects a company with strong growth prospects and a diverse portfolio, yet facing challenges from market reactions and litigation delays. The overall sentiment is cautiously optimistic, with management confident in its strategic direction and growth potential.