Alphyn Capital Management, an investment management firm, released its first-quarter 2023 investor letter. The same can be downloaded here. The fund returned 7.5% (net) in the first quarter compared to a 7.5% return for the S&P500 Index. In addition, please check the fund’s top five holdings to know its best picks in 2023.
Alphyn Capital Management highlighted stocks like Burford Capital Limited (NYSE:BUR) in the first quarter 2023 investor letter. Based in Saint Peter Port, Guernsey, Burford Capital Limited (NYSE:BUR) is legal finance products and services provider. On April 26, 2023, Burford Capital Limited (NYSE:BUR) stock closed at $12.83 per share. One-month return of Burford Capital Limited (NYSE:BUR) was 77.70%, and its shares gained 48.15% of their value over the last 52 weeks. Burford Capital Limited (NYSE:BUR) has a market capitalization of $2.809 billion.
Alphyn Capital Management made the following comment about Burford Capital Limited (NYSE:BUR) in its Q1 2023 investor letter:
“Burford Capital Limited (NYSE:BUR) has effectively secured a victory in its landmark case against Argentina. On paper, Burford stands to receive between $1.9bn and $3.3bn before interest. The range is due to the technicalities of the formula used to calculate the damages owed. Argentina will additionally be responsible for paying an annual interest of 6-8% on the specified amount, beginning in 2012 when Argentina seized YPF and continuing until it makes payment. This case could add $13-$25 per share to Burford’s value. The timing of receipt of funds is uncertain. Burford could pocket roughly $500 million in the near future by selling a portion of its claim to institutional investors and is likely to negotiate a lower (yet still substantial) settlement or agree to payment terms over several years to ensure payment certainty.
This case holds significance for Burford for various reasons. Firstly, it should help validate Burford’s business model in the eyes of many skeptical investors who have been doubtful since Muddy Waters released its short report a few years ago. A fair value assessment of the Argentina case makes a significant part of Burford’s balance, and this win lends credibility to those numbers. Moreover, Burford can put the money to good use, whether it is distributing a large special dividend, buying back shares, or generating 15-20%+ returns on investment as it deploys its substantial windfall in future cases, as it has proven it can do.
I believe the shares remain considerably undervalued at $11/share. While there is uncertainty on the timing and final amount from the Argentina case, there is low risk regarding a large payout. The company is worth about $35/share (approximately $20/share for the core business, plus an estimated $15/share for Argentina).”
photo by scott graham on Unsplash
Burford Capital Limited (NYSE:BUR) is not on our list of 30 Most Popular Stocks Among Hedge Funds. As per our database, 12 hedge fund portfolios held Burford Capital Limited (NYSE:BUR) at the end of the fourth quarter which was 12 in the previous quarter.
We discussed Burford Capital Limited (NYSE:BUR) in another article and shared Alphyn Capital’s views on the company in the previous quarter. In addition, please check out our hedge fund investor letters Q1 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.
