Burford Capital (BUR:AIM) £11.60

Gain to date: 58%

Original entry point: Buy at 734p, 9 March 2017

Litigation finance provider Burford Capital (BUR:AIM) is up nearly 60% since we flagged its attractions in the spring and its market value has increased more than eight-fold since the beginning of 2016.

We still rate Burford as an excellent business, but a few issues prompt us to lock in our gains. A recent setback, including the departure of key figures from the acquired Gerchen Keller Capital (GKC) business, together with a lofty valuation mean we now see a risk the shares will drift lower in the short-term.

Notably house broker Liberum has downgraded the stock from ‘buy’ to ‘hold’. House brokers will almost never put out a ‘sell’ recommendation on their corporate clients so going to ‘hold’ should be seen as a negative.

Analyst Justin Bates says: ‘We continue to believe in the longer term growth story for Burford, as the leader in the burgeoning litigation finance market.

‘However, based on the combination of 1) downgrades to 2017/18 forecasts, largely due to the timing of performance fees, 2) disappointing news that the GKC principals will be leaving the business, and 3) recognising the incredibly strong share price run year-to-date, up 110%, we believe the shares are now trading around fair value.’

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