Alphyn Capital Management, an investment management firm, released its third-quarter 2023 investor letter. The same can be downloaded here. The Master Account of the fund returned -1.1% net in the third quarter compared to -3.3% for the S&P500 Index. As of September 30, 2023, the top ten holdings accounted for approximately 71% of the portfolio, and approximately 8.6% of the portfolio was held in cash. 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 third quarter 2023 investor letter. Based in Saint Peter Port, Guernsey, Burford Capital Limited (NYSE:BUR) is a legal finance products and services provider. On November 24, 2023, Burford Capital Limited (NYSE:BUR) stock closed at $14.30 per share. One-month return of Burford Capital Limited (NYSE:BUR) was 15.79%, and its shares gained 58.89% of their value over the last 52 weeks. Burford Capital Limited (NYSE:BUR) has a market capitalization of $3.131 billion.
Alphyn Capital Management made the following comment about Burford Capital Limited (NYSE:BUR) in its Q3 2023 investor letter:
“Burford Capital Limited (NYSE:BUR) presents a compelling investment opportunity. Somewhat similar to my investment in Fairfax, we suffered initial losses on the investment, this time due to Muddy Waters’ infamous short attack. But with patience and some additions to our position at low prices, we’ve witnessed Burford effectively address all of the short report’s concerns, expand its business profitably, and secure a significant legal victory against Argentina, worth approximately $16 billion, of which Burford is entitled to $6 billion ($28 per share). While the share price has rebounded strongly from its lows, I believe the company holds the potential for substantial further gains.
I envision the company achieving normalized earnings of $1.5 to $2 per share. At a 10x multiple, this would value the core business at $15/share. In addition, while it is doubtful that Burford will collect the full $28 per share from the Argentina case, a negotiated settlement and payments spread over a few years could yield a present value of anywhere between $5 and $10 per share.
Combining the $15 core business with the potential $5+ from Argentina results in a valuation far exceeding the current trading price. Burford represents a classic instance of the market not crediting “uncertainty.” While the exact amount and timing remain unknown, I am confident our patience will be rewarded.”
An accountant meticulously going over documents in her office, exemplifying the company’s commitment to accuracy and detail.
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 the list of best undervalued U.K stocks to buy. In addition, please check out our hedge fund investor letters Q3 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.
