Weekend: Juridica (JIL) and Burford (BUR)

Good Afternoon, 

Juridica (JIL) - in June we saw no benefit in holding. We believe in the third party litigation model but saw limited to no upside in Juridica, preferring Burford Capital (BUR). It's prudent to take some profits on Burford with 90% over two years not to be sniffed at. 

EMC: Juridica from June:

Having taken profits and dividends in both Juridica (JIL) and Burford (BUR) today's portfolio update was negative on the bottom line. Measured in NAV, JIL is valued after today around $150M (ish) without checking. Consequently, the stock correctly repriced the stock 88 pence.

With some volatility in JIL at the moment, it’s hard to justify any share appreciation based on the NAV. As a result, a disappointing 17% return over near 3 years on this investment, allowing for today's sale with no further holding. Better than most bank returns but disappointing. Time will tell whether its wisdom to hold Burford (BUR), performing better over the 3 years with a better blend of small dividend and share appreciation (50%) ish.

Juridica are contemplating winding things up - they appear not to have the size or traction to absorb losses after the portfolio update (16 November 2015). Juridica provided case funding of $3.5M and are likely to receive around $2M ($6.9M below case valuation). They state they’re considering an appeal but…

The corporate review of operations was a little surprising (18^th November 2015) – it appears JIL had discussions with some shareholders. They state they envisage no further investments will be made and elude to a potential a change in business purpose or operations in a different sector – finance? SME lending? Biotech? Who knows...? Also a wild card of there being some form of tie up between Burford and Juridica - although unlikely.

The Board announces that the Company will not make new investments (other than for funding existing investments in the Company's portfolio where such funding is reasonably required to realise maximum shareholder value).

Will seek to return capital to shareholders in the most appropriate manner, following the completion of investments.

Comprehensive review of all its cost and fees structure, with the objective of reducing the ongoing costs and fees of the Company given the investment approach set out above.

We feel Juridica’s fair value is around £62.5m lower end (57p ish) to £67.5m top end (61.5p) - although there could be some benefits from higher than expected return on certain cases and/or cost savings if no further investments being made.  

Atb Fraser

GBPUSD Exchange rate used £1:$1.52 / Number of shares 109.98m