{
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  "docSlug": "2d9ed566f5e8",
  "documentTitle": "Burford Capital (BUR)",
  "authorId": "51_Muddy_Waters",
  "authorName": "Carson Block",
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  "sourceTypeSlug": "short_seller",
  "sourceTypeLabel": "Short seller",
  "presentationDate": "2020-05-12 00:00:00",
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  "notes": "The slide uses a reconciliation table to adjust reported cash receipts and highlight an overstatement, followed by a narrative critique of the company's cash flow reporting.",
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      "kind": "callout",
      "text": "As a result, not only did Burford's cash receipts decline by -11.8% YoY, but Burford overstated its 2019 cash receipts by 14.5% by changing their definition.",
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      "text": "Operating Cash Receipts: 14.5%",
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      "text": "Operating cash flows do a better job of reflecting Burford’s consolidated cash generation, and they are consistently negative. Burford’s 2019 stated operating cash outflow is, at first glance, a nearly breakeven -$8.3 million. However, as shown in the below reconciliation, nonroutine cash flow events provided $114.7 million of cash inflows in the period. Excluding these to isolate ongoing Burford operations yields operating cash burn of -$123.0 million:",
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      "kind": "paragraph",
      "text": "We believe that Burford chose to discuss cash receipts because it allows the company to avoid factoring in ongoing expenditures necessary to sustain its business. Under a section header titled “Cash Generation”, Burford launches into a discussion of cash receipts.",
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      "text": "To that end, Burford’s balance sheet business consumed significant capital in 2019, with cash balances falling to $206 million from $277 million, a -26% decline YoY. The company likes to protest this reality by noting the obvious, that the bulk of cash outflows are new capital deployments.",
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      "text": "2 BUR 2019 Annual Report, p. 32 3 BUR 2019 Annual Report, p. 105 4 Such items accounted for -$12.0 million of cash outflows in 2018.",
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      "kind": "table",
      "text": "2019 Operating Cash Receipts, Adjusted for Inappropriate Reporting (Millions) Operating Cash Receipts, As Stated 517.8 Less Cash from Margin/Hedging (56.2) Less Refinancing Proceeds (9.2) Operating Cash Receipts, As Adjusted 452.4 Degree of BUR Overstatement 14.5% 2018 Operating Cash Receipts, As Stated in 2018 513.0 YoY Decline in Cash Receipts (11.8%)",
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      "kind": "title",
      "text": "Cash Receipts Ignore Reality: Burford Burns Cash",
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