{ "schemaVersion": "deck-intelligence.v1", "id": "019dd923-622c-750b-8b96-f3c4eec7233d", "slug": "82170a6f8b9e", "title": "Burford Capital (BUR)", "subtitle": "Carson C. Block · 2019-09", "author": "Carson C. Block", "date": "2019-09-24 00:00:00", "pageCount": 2, "kind": "research-note", "orientation": "portrait", "aspectRatio": 0.77272725, "targetCompany": "Burford Capital", "targetTicker": "BUR", "document": { "id": "019dd923-622c-750b-8b96-f3c4eec7233d", "slug": "82170a6f8b9e", "title": "Burford Capital (BUR)", "rawTitle": "MW BUR 09242019", "authorId": "51_Muddy_Waters", "authorName": "Carson C. Block", "authorDisplay": "Carson C. 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Follow-up in the August 2019 Muddy Waters vs Burford campaign, responding to Burford's own presentation defending its fair value accounting. No charts or graphics — pure prose rebuttal with a handful of accounting ratios. Signed by Carson Block as Director of Research. Short position disclosed in the generic Muddy Waters disclaimer, no specific size given.", "kpisCited": [ { "detail": "$717M NFVG on $654M cost (110% ratio)", "metric": "Net fair value gains — unconcluded cases" }, { "detail": "$95M NFVG on $152M cost (62%)", "metric": "Net fair value gains — concluded cases (profiled 20)" }, { "detail": "$101M NFVG on $519M cost (19%)", "metric": "Net fair value gains — all 76 concluded cases" }, { "detail": "26 of 76 (~1/3) ever experienced fair value changes despite mandatory IFRS 9", "metric": "Concluded cases with any FV change" }, { "detail": "Napo and Desert Ridge flagged as problematic among the four that drive returns", "metric": "Problematic concluded cases" } ], "closingAsk": null, "extraction": { "at": "2026-04-22 19:40:34+00", "model": "unknown-legacy", "runId": null, "seconds": 67.13553, "promptVersion": null }, "scqaReward": "No explicit target price; thesis implies the equity is materially overvalued because the bulk of booked gains — sitting in unconcluded cases at implausible 110% mark-up ratios — is likely unrealized and unrealizable.", "thesisTypes": [ "fraud_exposure" ], "top3Reasons": [ "Only $130M of FV gains in 'concluded' cases vs $717M in unconcluded — marks sit where scrutiny is absent", "Unconcluded cases show 110% NFVG/cost vs only 19% for concluded — evidence of aggressive marking", "Only 26 of 76 'concluded' cases ever had any fair value changes — inconsistent with IFRS 9 claim" ], "scqaSituation": "Burford Capital is a UK-listed litigation finance firm that applies IFRS 9 fair value accounting, marking ongoing cases to a model estimate and truing up to realized outcomes only when an investment is deemed 'concluded'.", "thesisSummary": "This follow-up note from Muddy Waters rebuts Burford Capital's presentation defending its IFRS 9 fair value accounting and reiterates the short thesis that Burford manipulates valuations. Carson Block argues the company cherry-picks which cases it deems 'concluded': $717M of net fair value gains sit in un-concluded cases versus only ~$130M in concluded ones, and the gain-to-cost ratio is 110% for unconcluded vs just 19% for the full 76-case concluded book. Further, only 26 of 76 'concluded' cases ever experienced fair value changes — inconsistent with a mandatory IFRS 9 regime. Outside of four cases (two problematic: Napo and Desert Ridge), Burford's ROIC and IRRs are called pedestrian and likely insufficient to cover operating costs. Burford is accused of hiding behind attorney-client privilege rather than disclosing Petersen's carrying value or gross FV gains by period.", "primaryDemands": [ "Disclose gross fair value gains by period", "Disclose carrying value of the Petersen investment", "Stop using attorney-client privilege as a pretense to avoid accounting transparency", "Stop cherry-picking which investments are deemed 'concluded'" ], "scqaResolution": "Muddy Waters demands Burford disclose gross fair value gains by period and the carrying value of its Petersen investment, stop hiding behind attorney-client privilege, and end the manipulation of what it deems 'concluded'.", "thesisOneLiner": "Burford cherry-picks which investments count as 'concluded' to avoid truing up marks; the 110% vs 19% gap between unconcluded and concluded returns exposes systematic fair-value manipulation.", "precedentsCited": [], "scqaComplication": "Burford cherry-picks 'concluded' designations: $717M of FV gains sit in unconcluded cases vs $130M in concluded, unconcluded NFVG/cost runs 110% vs 19% for concluded, and only 26 of 76 concluded cases ever had any FV movement.", "narrativeInterest": 3, "notableSlidePages": [ 2 ], "peerCompaniesCited": [], "valuationFrameworks": [ "not_shown" ], "visualCraftInterest": 1 }, "pitchdeck": { "metadata": null, "profile": null }, "slides": [ { "page": 1, "type": "setup", "title": "This is a standard legal disclaimer page for an investment research firm.", "function": "other", "imagePath": "https://imgproxy.kitesheet.com/RKlCj925AFK6KbQJNJjE8rz9ENVMheV4RvzTxfnZJQY/rs:fit:1200:1200:0/q:82/f:webp/czM6Ly9raXRlc2hlZXQvY29ycHVzL3NsaWRlcy84MjE3MGE2ZjhiOWUvcDAwMS5qcGc", "rawType": "disclaimer", "block": null, "metadata": { "slideType": "disclaimer", "slideTypeCanon": { "name": "Disclaimer", "slug": "disclaimer", "status": "active", "canonId": "019de52d-0801-727b-b98a-5ed095aeee78", "version": 1, "description": null }, "function": "other", "functionCanon": { "name": "Other (fallback)", "slug": "other", "status": "active", "canonId": "019de52d-15e1-75bc-99dc-07732380e2ce", "version": 1, "description": null }, "density": "sparse", "densityScore": 4, "componentCount": 2, "textChars": 107, "nDataPoints": 0, "notes": "This is a standard legal disclaimer page for an investment research firm.", "elementsJson": [ "paragraph" ], "confidence": 1, "extraction": { "model": "google/gemini-3.1-flash-lite-preview-20260303", "runId": null, "at": "2026-05-02 20:49:01.563+00", "seconds": 2.159, "promptVersion": "v2-canon-conditioned" } }, "links": { "slide": "/slides/019dd923-622c-750b-8b96-f3c4eec7233d/1", "deck": "/decks/019dd923-622c-750b-8b96-f3c4eec7233d", "deckAnchor": "/decks/019dd923-622c-750b-8b96-f3c4eec7233d#slide-1", "deckJson": "/decks/019dd923-622c-750b-8b96-f3c4eec7233d.json" }, "components": [ { "bbox": { "h": 0.75, "w": 0.9, "x": 0.05, "y": 0.16 }, "kind": "disclaimer", "text": "The reports on this website have been prepared by Muddy Waters Capital LLC... 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The following shows otherwise: https://www.casemine.com/judgement/uk/5b2897ab2c94e06b9e198326)", "attrs": null, "canon": { "kind": { "name": "Paragraph", "slug": "paragraph", "status": "active", "canonId": "5f2affc0-941d-4d07-959d-4bfc1930cea4", "version": 1, "description": "Single prose block in the body of a slide." }, "tool": null, "subkind": { "name": "Paragraph", "slug": "paragraph", "status": "active", "canonId": "019de52c-fb80-75af-aa5c-a7a4bfac2433", "version": 1, "description": null }, "framework": null }, "subkind": "paragraph", "groupRole": null, "confidence": null, "extraction": { "at": "2026-05-02 20:49:04.868+00", "model": "google/gemini-3.1-flash-lite-preview-20260303", "runId": null, "seconds": null, "promptVersion": null }, "componentId": "2e6fe62d-9e32-4a17-bbf0-76e1c6e3ee33", "parentComponentId": null }, { "bbox": { "h": 0.09, "w": 0.76, "x": 0.12, "y": 0.82 }, "kind": "paragraph", "text": "Burford continues to evade key questions, including what gross fair value gains it has taken by period. Its stammering excuse about why it fails to disclose the carrying value of Petersen holds no water in our view. Instead, we see Burford as using attorney-client privilege as a false pretense to avoid providing real transparency into its accounting. Further, our contention stands that outside of four cases - two of which (Napo and Desert Ridge) are problematic - Burford's ROIC and IRRs are pedestrian, and are likely insufficient to offset its egregious operating expenses.", "attrs": null, "canon": { "kind": { "name": "Paragraph", "slug": "paragraph", "status": "active", "canonId": "5f2affc0-941d-4d07-959d-4bfc1930cea4", "version": 1, "description": "Single prose block in the body of a slide." }, "tool": null, "subkind": { "name": "Paragraph", "slug": "paragraph", "status": "active", "canonId": "019de52c-fb80-75af-aa5c-a7a4bfac2433", "version": 1, "description": null }, "framework": null }, "subkind": "paragraph", "groupRole": null, "confidence": null, "extraction": { "at": "2026-05-02 20:49:04.868+00", "model": "google/gemini-3.1-flash-lite-preview-20260303", "runId": null, "seconds": null, "promptVersion": null }, "componentId": "824de177-7bf2-480e-acb6-191972234c98", "parentComponentId": null }, { "bbox": { "h": 0.05, "w": 0.76, "x": 0.12, "y": 0.13 }, "kind": "paragraph", "text": "Burford's presentation on fair value accounting fails to address the key issues. This is typical Burford speak - to write so much, and yet say so little. The little substance there is supports our thesis about Burford's valuation abuse.", "attrs": null, "canon": { "kind": { "name": "Paragraph", "slug": "paragraph", "status": "active", "canonId": "5f2affc0-941d-4d07-959d-4bfc1930cea4", "version": 1, "description": "Single prose block in the body of a slide." }, "tool": null, "subkind": { "name": "Paragraph", "slug": "paragraph", "status": "active", "canonId": "019de52c-fb80-75af-aa5c-a7a4bfac2433", "version": 1, "description": null }, "framework": null }, "subkind": "paragraph", "groupRole": null, "confidence": null, "extraction": { "at": "2026-05-02 20:49:04.868+00", "model": "google/gemini-3.1-flash-lite-preview-20260303", "runId": null, "seconds": null, "promptVersion": null }, "componentId": "9bfc028d-2264-4343-a2c0-c168e2409b88", "parentComponentId": null }, { "bbox": { "h": 0.08, "w": 0.76, "x": 0.12, "y": 0.58 }, "kind": "paragraph", "text": "Given that \"concluded\" cases almost certainly average older vintage than non-\"concluded\" cases, one way to sanity check whether Burford's non-concluded marks are justified is to ask: As Burford has gotten larger, and had to put more capital to work across more types of cases, has it gotten so much better at allocating capital? We think that's unlikely, and instead Burford is just more aggressively marking its cases.", "attrs": null, "canon": { "kind": { "name": "Paragraph", "slug": "paragraph", "status": "active", "canonId": "5f2affc0-941d-4d07-959d-4bfc1930cea4", "version": 1, "description": "Single prose block in the body of a slide." }, "tool": null, "subkind": { "name": "Paragraph", "slug": "paragraph", "status": "active", "canonId": "019de52c-fb80-75af-aa5c-a7a4bfac2433", "version": 1, "description": null }, "framework": null }, "subkind": "paragraph", "groupRole": null, "confidence": null, "extraction": { "at": "2026-05-02 20:49:04.868+00", "model": "google/gemini-3.1-flash-lite-preview-20260303", "runId": null, "seconds": null, "promptVersion": null }, "componentId": "a2f71474-d7f4-4322-99df-0ec48e83f909", "parentComponentId": null }, { "bbox": { "h": 0.14, "w": 0.76, "x": 0.12, "y": 0.67 }, "kind": "paragraph", "text": "We continue to disagree that Burford has no choice but to apply IFRS 9. As Burford noted, there are competitors that do not apply it, and we believe that Burford's attempt to explain their different accounting treatment is grasping at straws. However, if we were to take Burford at face value, then another disturbing pattern is evident. Burford's presentation discloses that only 26 out of 76 \"concluded\" cases ever experienced fair value changes. If Burford must fair value these cases, then it seems contradictory that it has it applied fair values to only ~1/3 of the \"concluded\" cases. However, marking outsized fair value gains on a small percentage of cases would be consistent with our thesis that fair value gains are arbitrary to outright manipulated.", "attrs": null, "canon": { "kind": { "name": "Paragraph", "slug": "paragraph", "status": "active", "canonId": "5f2affc0-941d-4d07-959d-4bfc1930cea4", "version": 1, "description": "Single prose block in the body of a slide." }, "tool": null, "subkind": { "name": "Paragraph", "slug": "paragraph", "status": "active", "canonId": "019de52c-fb80-75af-aa5c-a7a4bfac2433", "version": 1, "description": null }, "framework": null }, "subkind": "paragraph", "groupRole": null, "confidence": null, "extraction": { "at": "2026-05-02 20:49:04.868+00", "model": "google/gemini-3.1-flash-lite-preview-20260303", "runId": null, "seconds": null, "promptVersion": null }, "componentId": "bfeb6160-b019-435c-9a25-dfde387a296c", "parentComponentId": null }, { "bbox": { "h": 0.22, "w": 0.76, "x": 0.12, "y": 0.35 }, "kind": "paragraph", "text": "It is interesting to note that in the 20 \"concluded\" cases Burford profiles in the presentation, Burford only booked net fair value gains of 62% of the costs ($95 million NFVG/ $152 million cost). If looking at the entire \"concluded\" body of 76 cases, booked net fair values to cost is even lower at only 19% ($101 NFVG million / $519 million cost). In contrast, the non-\"concluded\" cases have net fair value gains equal to 110% of their costs ($717 million NFVG / $654 million). The outsized ratio of net fair value gains to cost among this group underscores our concern that Burford is cherry-picking the cases to deem \"concluded\", and thus avoiding scrutiny of the vast majority of its fair value gains. It also points to the strong possibility that as time wore on, Burford became more aggressive in its marks, given that \"concluded\" cases are likely to be of older vintage.", "attrs": null, "canon": { "kind": { "name": "Paragraph", "slug": "paragraph", "status": "active", "canonId": "5f2affc0-941d-4d07-959d-4bfc1930cea4", "version": 1, "description": "Single prose block in the body of a slide." }, "tool": null, "subkind": { "name": "Paragraph", "slug": "paragraph", "status": "active", "canonId": "019de52c-fb80-75af-aa5c-a7a4bfac2433", "version": 1, "description": null }, "framework": null }, "subkind": "paragraph", "groupRole": null, "confidence": null, "extraction": { "at": "2026-05-02 20:49:04.868+00", "model": "google/gemini-3.1-flash-lite-preview-20260303", "runId": null, "seconds": null, "promptVersion": null }, "componentId": "ce7087ed-169b-4109-ac85-86e8920e0487", "parentComponentId": null }, { "bbox": { "h": 0.15, "w": 0.76, "x": 0.12, "y": 0.19 }, "kind": "paragraph", "text": "At the end of the day, as we have repeatedly stated, Burford cherry picks what it deems as a \"concluded investment\". We have shown where Burford deemed litigation that was still ongoing to be \"concluded\" and recorded a favorable result, and also where Burford funded a futile appeal of adverse litigation result and thus deferred recording an unfavorable result. The verbose discussion of Burford's concluded cases is only helpful in illustrating how much of its booked fair value gains are from cases it has not deemed \"concluded\": $717 million in un-concluded versus approximately $130 million of FV gains in \"concluded\" cases. We believe Burford is manipulating the cases it deems \"concluded\" in order to avoid truing up marks.", "attrs": null, "canon": { "kind": { "name": "Paragraph", "slug": "paragraph", "status": "active", "canonId": "5f2affc0-941d-4d07-959d-4bfc1930cea4", "version": 1, "description": "Single prose block in the body of a slide." }, "tool": null, "subkind": { "name": "Paragraph", "slug": "paragraph", "status": "active", "canonId": "019de52c-fb80-75af-aa5c-a7a4bfac2433", "version": 1, "description": null }, "framework": null }, "subkind": "paragraph", "groupRole": null, "confidence": null, "extraction": { "at": "2026-05-02 20:49:04.868+00", "model": "google/gemini-3.1-flash-lite-preview-20260303", "runId": null, "seconds": null, "promptVersion": null }, "componentId": "feff492b-ebc6-42fd-9fb4-9d80f3c1c44e", "parentComponentId": null }, { "bbox": { "h": 0.02, "w": 0.34, "x": 0.33, "y": 0.09 }, "kind": "title", "text": "Burford: It Just Doesn't Get Better", "attrs": null, "canon": { "kind": { "name": "Title", "slug": "title", "status": "active", "canonId": "019de52c-f7dd-76d9-b848-b1f12bd85cf4", "version": 1, "description": "Slide title or headline." }, "tool": null, "subkind": { "name": "Headline", "slug": "headline", "status": "active", "canonId": "019de52c-fae1-7463-9a7c-d60668eced0d", "version": 1, "description": null }, "framework": null }, "subkind": "headline", "groupRole": null, "confidence": null, "extraction": { "at": "2026-05-02 20:49:04.868+00", "model": "google/gemini-3.1-flash-lite-preview-20260303", "runId": null, "seconds": null, "promptVersion": null }, "componentId": "638b6589-a0a1-4cd1-80c1-dee38956afa8", "parentComponentId": null } ], "metrics": [], "tools": [], "frameworks": [], "arcBeats": [ { "to": 2, "arc": { "name": "Problem-Agitate-Solution", "slug": "problem-agitate-solution", "status": "active", "bestFor": "Sales pitches, urgency-driven, competitive displacement", "canonId": "019dd956-5ec6-70f9-9fd8-fdbaaff39acf", "version": 1, "bodyDocId": "019df22a-2356-73eb-8061-d8c81dc0aa49", "structure": "Problem (Identify pain) -> Agitate (Make it worse) -> Solution (Provide relief)", "description": null, "familyLabel": null }, "from": 2, "name": "Evidence & Proof", "beatId": "2749bb8c-2a58-4207-94f1-3ee8a872007b", "matchId": "33b2323c-bcb2-42ae-a23e-90bd7a3f34cb", "beatType": { "name": "Evidence & Proof", "slug": "consultants-gambit-evidence-proof", "status": "active", "canonId": "019dd9b8-07b1-7688-8e1e-7637fec3802a", "version": 1, "description": null }, "evidence": "The expose on page 2 presents evidence of the issue", "position": 1, "isPrimaryArc": true, "parentBeatType": { "name": "Evidence", "slug": "evidence", "status": "active", "canonId": "019dd9b8-03f9-772a-b84a-4f07b415b77a", "version": 1, "description": "A dedicated proof beat exists in only ~4 arcs (Gambit, Sequoia, AIDA, Monroes). 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