There’s a lot you can learn about a Litigation Finance company by looking at at its investors. Insider investment is common in firms that are newer and smaller, while more established players boast large institutions as their major shareholders.
An LFJ Conversation with Michael Kelley, Partner, Parker Poe
There’s a lot you can learn about a Litigation Finance company by looking at at its investors. Insider investment is common in firms that are newer and smaller, while more established players boast large institutions as their major shareholders.
Yahoo Finance explains how this applies to a litigation funder like Burford Capital. Burford is a large funder with institutions as major backers—over 40% in fact. At the same time, the next smallest investor group is made up of ordinary citizens. This bodes well for Burford, since it implies that the company has earned the trust and respect of regular folks, while still being attractive to institutional investors.
But what happens if there is a change in how more than one institution views the company? That could spell big trouble for share prices. Burford’s recent short-selling attack is evidence that opinion can alter abruptly.
Burford’s insider investment is significant at nearly 10%. It’s good to have affirmation that those who work for the company also believe in it. One might say that number should climb even higher in the future.
Over 6% of Burford Capital is owned by hedge funds. Some say this is potentially problematic. Hedge funds are sometimes known to put pressure on management to make changes, specifically to increase shareholder value. Should this conflict with what’s best for Burford’s clients, trust from the general public might erode—impacting a much larger portion of investors. Meanwhile, just over 5% of Burford shares are owned by private companies. In theory, the same issues could develop.
While it doesn’t comprise the entire picture, looking at investors can tell you a lot about a company.
