Burford

Share Price 1121p

Market Cap £2.45bn

Conflict Disclosure: No position

  • Shares Burford are cross. Their shares fell 19% yesterday. Muddy Waters’ tweet below is alleged to be the culprit.
  • Statement from Burford this morning says the company has $400m cash and cash equivalents at 5 August. They state that they are investigating whether market manipulation has occurred and will litigate if this has happened. They say they are “strongly suspicious”. They say companies are largely powerless to intervene in this dynamic.
  • Conclusion In my view their 85% ROIC is overstated relative to LCM and Manolete who make 138% and 180% ROE. However it is still a strong ROE. Just they will need more equity if they continue to grow.  They seem to protest too much. Lets see the 8 am report (if indeed it is Burford) but I doubt they are insolvent. Threatening litigation on an RNS will not endear them to the market.

Standard Life Aberdeen – H1 Results

Share Price 282p

Mkt Cap £6.79bn

Conflict Disclosure: No Holding

  • Results The heart sinks when results come in 4 parts. Adjusted PBT down 10% to £280m but EPS up9% to 8.9p.  Net outflows 2.9% and AUMA up 5% to £577.5bn. Action has been taken to deliver £234m of the targeted £350m cost savings. Core operating profit was down 45% to £142m while share of associates and joint ventures profits almost doubled to £116m. The PBT also includes £22m from increases in the value of seed investments etc. Surplus capital is £900m. The Lloyds settlement is disclosed today which includes a one off payment of £140m which will be taken to P&L in H2. The outlook refers to investing for growth and the strong balance sheet
  • Estimates Full year PBT expectation shows as £600m on Sharepad but with the £140m from Lloyds to come in H2 this will be higher on a one off basis. Going forward forecasts seem to be anticipating 4% PBT growth.
  • Valuation EV/AUM 1.02%. PER 14X yield 7.7%. Price/NAV 1.2X
  • Conclusion The shares are down 16% over the last 12 months.This company feels like it is where Man Group was in 2015 when it was acquiring its way out of its core product becoming dated.  It will take a long time to turn round this asset manager and the temptation is for investors to buy value too early. It is still too early.  

jeremy@charltonillingworth.co.uk