Greenhaven Road Capital, an investment management company, released its fourth quarter 2023 investor letter. A copy of the same can be downloaded here. In the fourth quarter, the Fund returned approximately 15%, bringing the full-year returns to approximately 51%. The reason for all of the Q4 returns was perseverance along with multiple expansions during the quarter as investors were willing to pay a higher P/E or P/S for the same underlying company. In addition, you can check the top 5 holdings of the fund to know its best picks in 2023.
Greenhaven Road Capital featured stocks such as Burford Capital Limited (NYSE:BUR) in its Q4 2023 investor letter. Based in Saint Peter Port, Guernsey, Burford Capital Limited (NYSE:BUR) is a legal finance products and services provider. On February 14, 2024, Burford Capital Limited (NYSE:BUR) stock closed at $14.58 per share. One-month return of Burford Capital Limited (NYSE:BUR) was 0.90%, and its shares gained 76.30% of their value over the last 52 weeks. Burford Capital Limited (NYSE:BUR) has a market capitalization of $3.193 billion.
Greenhaven Road Capital stated the following regarding Burford Capital Limited (NYSE:BUR) in its fourth quarter 2023 investor letter:
“Burford Capital Limited (NYSE:BUR) – The litigation finance company is by definition “playing the long game” as their average case takes almost three years from funding to resolution, but many take significantly longer. As a result, earnings in three years really are being driven by the investments being made today. The two senior managers of Burford each own more than $100M worth of stock. They are building an asset management business. Two of management’s priorities with long-term implications are to continue to build out both their data science infrastructure – Burford believes that they have the best proprietary data on legal settlements, which improves their case underwriting and thus long-term returns – and their customer base.
Historically, the “deal pipeline” of cases came from law firms looking to get their legal work paid for by Burford so that clients were more likely to pursue their cases. Increasingly, large companies are coming to Burford with cases as a case financed by Burford allows management to pursue a case without hurting current year earnings and their current year bonuses. Burford is currently working with 2 Fortune 50 companies. Working directly with corporates is going to be important for continuing to grow the litigation financing business.
Like the rest of Burford’s investor base, I am paying attention to their Argentina YPF case because – if and when they can collect their judgement – the potential proceeds exceed the market capitalization of the company. The developments with the new Argentinian president are incrementally positive for Burford. We are also tracking several other material cases, including Sysco, and any indications of continued progress on the corporate front. As discussed in our investor presentation (to investors only) that accompanied our last letter, Burford’s business is one where power laws can come into play. In general, they earn good returns on average for “meat and potatoes” type cases but have the potential to earn incredible returns on a smaller basket of cases which can have outsized impacts on business valuation.”
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Burford Capital Limited (NYSE:BUR) is not on our list of 30 Most Popular Stocks Among Hedge Funds. As per our database, 23 hedge fund portfolios held Burford Capital Limited (NYSE:BUR) at the end of third quarter which was 22 in the previous quarter.
We discussed Burford Capital Limited (NYSE:BUR) in another article and shared Vltava Fund’s views on the company. In addition, please check out our hedge fund investor letters Q4 2023 page for more investor letters from hedge funds and other leading investors.
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Disclosure: None. This article is originally published at Insider Monkey.