5 Best Stocks to Buy According to Angela Aldrich’s Bayberry Capital Partners

1. Burford Capital Limited (NYSE:BUR)

Bayberry Capital Partners Stake Value: $42.6 million

Percentage of Bayberry Capital Partners 13F Portfolio: 13.31%

Number of Hedge Fund Holders: 12

Burford Capital Limited (NYSE:BUR) is a finance and professional services company.

Bayberry Capital Partners is the biggest shareholder of Burford Capital Limited (NYSE:BUR), with over 4 million shares worth $42.6 million. According to Insider Monkey’s data, 12 hedge funds were long Burford Capital Limited (NYSE:BUR) at the end of the second quarter of 2022, with aggregate stakes valued at about $106 million.

Burford Capital Limited (NYSE:BUR) stands first on the list of 10 best stocks to buy according to Angela Aldrich’s Bayberry Capital Partners. According to the latest 13F filings, Bayberry Capital Partners owns more than 4 million shares worth $42.6 million in Burford Capital Limited (NYSE:BUR). The hedge fund increased its holdings in the company by 43% in the second quarter of 2022.

Here is what Alphyn Capital has to say about Burford Capital Limited (NYSE:BUR) in its Q2 2022 investor letter:

“The most significant event affecting Burford will be the outcome of its YPF case against Argentina. Should Burford win, it could receive net proceeds between $1.1bn and $5.6bn. These numbers are derived from a formula written in YPF’s prospectus and bylaws and depend on several assumptions, hence the wide range, but in any case, are significant when compared to Burford’s current market capitalization of approximately $3bn. In a recent lengthy interview, an Argentinian legal expert concluded that based on what we know, the case should be a home run for Burford, but “we don’t know 70% of what is said, we don’t know the private documents, we don’t know the private positions. We don’t know lots of things. Experts have testified in both sides; we don’t know what’s there.” Hardly conclusive.

Nevertheless, I believe Burford remains an attractive investment regardless of the outcome of this one case. To understand why it is helpful to consider how Burford’s litigation finance works. Each case Buford funds has one of three outcomes, a win, a loss, or a settlement. A loss typically results in Buford losing its entire investment. Which has, historically, occurred 10% of the time. Given this risk, Buford actively assesses a case’s merits and potential return. A high payout on wins, typically 5x, increases the expected payout of the whole portfolio. In this way, litigation financing somewhat resembles venture capital investing, where VCs expect only a handful of big wins to make up for lost investments and still provide a reasonable return on the overall portfolio…” (Click here to see the full text)

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