BUR earnings call transcript, November 4, 2026

To ask a question, please press star 1 to raise your hand. To withdraw your question, press star 1 again. If you have logged in via the webcast, please use the Q&A button to submit your questions. I will now hand the conference over to Rob Balish, Head of Investor Relations. Please go ahead.

Good to have you, everyone. Thank you for taking time to join us to discuss Berford's third quarter results. On the call, we have our Chief Executive Officer. Chris Bogart, our Chief Investment Officer, John Malone, and our Chief Financial Officer, Jordan Leach. Earlier today, we posted a detailed earnings presentation, which we'll refer to during the call, and we also filed our Form 10-Q. If you haven't already answered, access them, you can find those materials on our Investor Relations website at investors.berthaCapital.com. Before we get started, just a reminder that today's call may contain forward-looking statements that involve certain risks, uncertainties, and other factors that could cause actual results to differ materially from those discussed during the call. For information regarding these risk factors, please refer to our earnings materials relating to this call posted on our website and our filings with the SEC. We will also be referring to certain non-GAAP financial measures during the call. Please refer to today's earnings material. and our filings with the SEC for additional information, including reconciliations of these non-GAAP financial measures to the most directly comparable GAAP measures. Without further delay, I'll turn the call over to Chris.

You know, the top line here, the top line here obviously is that it was a strong quarter, and you see the numbers sitting on the slide. Revenues up strongest year to date, more than double the revenues that we posted in the comparative period last year, and that was notwithstanding some real headwinds from adverse discount rate moves that affect. Our non-cash modeled results, and Jordan will take you through that in a little bit more detail, but without those headwinds, we would have been north of $200 million of capital provision income, well north of $200 million of revenue. Even with those headwinds, we posted an ROE of 13.4% annualized. If we hadn't had the interest rate headwinds, that number would have instead been well into the 40s. And it was a solid quarter for cash. So we're well pleased with the the quarterly performance. And in a minute, we're going to talk about a further success that happened after the after the quarter end. The other thing during the quarter that it feels a little bit like old news now, but was was very significant for us was the beginning of our delivering campaign. So we took $100 million of debt off the balance sheet. We eliminated our 2028 maturity. We had an extremely successful new issue that that pushed the timing out. So we're well pleased with that as well. And before I turn some pages, I'll just mention a couple of other things of notes during the quarter. These all have been sort of out there in the public, but it's worth just rolling them all together. First of all,

on YPF, while YPF is likely going to go through an arbitration process, it hasn't completely finished in the U.S. courts. And in fact, Monday was the deadline for the filing of what are called amicus briefs. So those are briefs. By third parties who want to express their views to the U.S. Supreme Court about the case, and we saw the filing of a significant number of amicus briefs, nine in total, which is an unusually large number for cases. And they included, among other things, 15 U.S. states and territories, a U.S. senator, market participants, and a bunch of policy institutions and legal academics. So that was a pretty significant development in the process of that case. We also, as you know from public statements, during the quarter had a couple of big sort of first instance litigation activities. We had a successful arbitration win. In the case involving an African mining matter against Cameroon. That was a 600 plus million dollar tribunal award with Burford entitled to something around a third of that. That obviously has to go through now some more proceedings. And some enforcement, but that was certainly a nice strong result. And we also saw a very large, in fact, the largest U.S. patent verdict in history, a very large patent verdict in a case that we had. been involved in against Apple. So those all are coming down the road. We'll see what happens with all of those individually. Turning to slide nine, I want to use this slide for several purposes.

This at bottom is another strong success from a case resolution. And this is a resolution that has already been completed. We've already got the cash in the door from this. That has been paid in full. And I want to use this to make a number of points. First of all, obviously, just the success itself. We're very pleased with outcomes like this. This is a very significant on ROIC. As you can see here, we made more than 11 times our money. So it's a nice high return matter with, as I said before, the cash already paid. But I'd really use this to underline a very important point as well. Lots of investors talk to us about old cases. And I think they and they talk to us with some skepticism about them. And I think that's probably a hangover, maybe from private equity, where if you start seeing things that are a decade old in a private equity fund, you know, the odds of that going well are probably not very high. And so there's a little bit of a sensation out there that old cases, you know, might be bad cases. And I think this really, and we've always said that isn't our view at all, that age in litigation usually means either the case is trundling down the road on a fairly long procession towards trial, or that there have been procedural. You know machinations along the way, but that in our world old does not mean bad, and I think this case is really absolutely proof positive of that adage.

It's also a good case study for the showing the. Real world impact a court delay. You know, if you look at the chronology that we've we've set out here, we won this case. We won an important point on appeal in 2020 and that set the case up for trial. Sure, there needed to be a little bit more stuff. happened first, but not that much. And in the normal course of things without COVID, without the pandemic, that you would have reasonably expected that case to be teed up for trial, not too long after that 2020 appellate outcome. And instead, it took six years. That is just too long. It's aberrationally long. The courts are working hard to reduce those timelines. And I think we're going to be the beneficiaries of those timelines coming day. But it does illustrate what we have seen in this post-pandemic period as well. And the final thing I'd point out here is we're also using this as an illustration of how our value accounting. And you can see that it goes up and down and it follows the events in the case, but it also comes out in the right place at the end. So we're very pleased with that and with the ability. To share that information about that case with you. Turning to slide 10, I would really just make the point here. This is this is a slide about the volatility of interest rate movements and. And the consequent impact of that on our on our non cash value P&L, you know, you really just have to underline this. I've been underlining it for 17 years and I and I'm not going to stop doing it. You know, this stuff has nothing whatsoever to do with.

with cash results in our portfolio. This is all just interim accounting along the way that all gets washed out when we get to the end of the case and we get to a result. But, you know, because of the way the accounting works and it's not something. have any choice about, you know, there's obviously market volatility as you see interest rate movements and we saw, you know, basically the largest negative impact of interest rates that we've ever had with. 90 basis points of impact in a quarter. Some of that's obviously already been turned around and reversed in the fourth quarter, but that's why you saw a very strong quarter somewhat negatively impact. Acted by these non-cash charges. And finally, for me on slide 11, the balance sheet. We have talked to you a number of times about our focus on the balance sheet over the last six or nine months. You've seen us engage in, you know, very focused and active management of the balance sheet and the capital structure. We are committed to delivering. We've started that process. We took a hundred million dollars of leverage off the balance sheet in the quarter. That took a. You know our debt equity ratio down by a third of a turn. As I said at the outset of the call that enabled us to retire the entire 2020 maturity debt in full. We had a very successful offering in the market. At, you know, given where interest rates were at the time, at competitive satisfactory rates for us to issue a new round of 2029 paper. Credit rating agencies, debt rate.

Ratings all satisfactory around that. And this is just the beginning of us continuing to to work on and manage actively the balance sheet. So in in summary, we're we're pretty pleased with how the quarter went. We're delighted to be. able to give you, in addition to just some strong numbers, some actual data points so that you can have a little visibility and see what's going on inside the business. And with that, I'll turn you over to Jordan and John. Thank you, Chris. Thank you, everyone, for joining us this morning. I'm going to start on page 13, which goes over some of the financial KPIs for the quarter and for year to date. As a reminder, it's hard to compare year to dates between the years given the activities associated with YPF in the first quarter. So bear with me when I jump around between some quarter numbers and some year to date numbers. Overall capital provision income which Chris just highlighted was impacted by the movements and interest rates was 116 million. That compares very favorable to the year to date. Pace that we saw last year. Overall net realized gains is just shy of where we were last year on the year to date basis 82 versus 93. The flip to that is asset management income. Which is correlated neatly with our assets as they move at 29 million versus 21 million overall cash receipts. I want to point out while Chris walked through that case. Just a second ago, that case study actually concluded both the settlement and the realization in the fourth quarter. So when I'm walking through these numbers, you don't you don't see them appear in it. But the six.

The three or 64 million that we received on that settlement puts us in a nice place compared to year to date cash receipts for last year. The other portfolio metrics I'll hit on and we talk more about the principal finance segment and the asset. Management segment overall though earnings per share at 10 cents took us to book value just slightly below four dollars and Chris already hit upon a number of the debt ratios. I'm going to jump forward then to the principal. Finance segment remember two segments principal finances when we're investing for our balance sheet assets management when we're investing on behalf of the funds that we manage on page 18 you look at. You know the fair value of the assets on the balance sheet compared to the deployed cost and that $500 million compared to the $1.9 billion and you see that rate. And you then compare that to our historical ROIC, you know that's somewhere around 30% versus a 80 plus percent historical ROIC and that demonstrates that there's a lot of you know revenue to come on the existing assets. I know I've mentioned that before but the reason why I I hearken back to it is actually to look at the most recent example of the case study that Chris outlined. And when you look at that example you actually see that most of the revenue associated with that asset occurs at the tail end. And if you go back to investor day. Two years ago we actually talked about the fact that around 50ish percent when you do some sample sizes of revenue associated with concluded assets. Happens within the last year or towards the very tail end and that's the nature of of the assets and the valuation model.

The right-hand side shows the diversity of the portfolio. You've seen these pie charts before. They don't change significantly from period to period and it just continues to demonstrate the global platform when you look at the geography as well as the skill sets that we have when you dissect the different asset types of which we're invested. But how did the fair value move forward? Page 19 demonstrates how that balance sheet, how the capital provision, income, and then just how the asset changes over the period of the quarter. You know, deployments is straightforward. When we deploy, we look to... Capitalize the cash that has gone out the door. You have the impact of duration as we get closer towards the conclusion of an asset. The change in discount rate, which I won't go into too much, Chris already mentioned it. You can see that's been a headwind not just in the third quarter, but on the right-hand side, you have the year-to-date bridge, and it demonstrates the headwind that it's been for the year. Then you have milestones and other impacts. These are the favorable outcomes that occurred in- trial or negative, all in accumulation across the models and the other inputs, and that represents itself in the next green bar. And then, of course, you have realizations. And so that's the progression of our assets. You can see how it moved from $2.3 to just shy of $2.5 billion of fair value at the end of the quarter. On page 20, we outline new business. The key to new business...

...to getting realizations is also putting the money out the door. We consistently put out around $100-ish million of deployments per quarter. And that, you can see on the bottom, it goes up and down. That's been fairly consistent. On Drunk... Commitments slightly larger than where we had finished the year, where we sit right now. And that shows that we have, you know, a healthy book of business to continue to deploy to, as well as the discretion. Undrawn commitments, which is like a right of first refusal or a partnership with either a law firm or a corporate. When you then look at the year to date, new definitive commitments, you know, obviously there's a slight decline when you compare that to year to date last year. We tend to look at things more broadly than just a quarter. But what that also represents is a little bit of our focus. In the most recent quarter, short-term decisioning around prioritizing, deleveraging, and liquidity when we compared that to, you know, moderate expected returns that was in the pipeline at that moment. And with that, I'd like to turn it.

Thanks, Jordan. Thanks to you all for joining. So turning to slide 21, and then the slide confirms what we've always said, that there's period-to-period unpredictability to the business. You know, for example, Chris mentioned in that case that came in after the quarter that would have changed the numbers for the quarter. We're consistently generating positive cash flow and case realizations, and I focus less on the quarter than the longer-term activity. And there's a ton going on. If you turn to slide 22, you see that over time that has translated into us passing quite a remarkable milestone that we've taken in $4 billion of cash realizations. Think back to when we started this business from scratch 17 years ago, and to think that it's now generated more than $4 billion in cash with desirable returns and consistently low losses like. It's a great business model. And as Chris said, we've, you know, there was a period with COVID where things backed up and it took longer, but that stuff is in the portfolio moving through and some of the stuff where we see activity. It is much more recent vintages as well. Turning to slide 22, you've seen this as well, you know, I mean, to try 23, you've seen as well, you know, this is how it happened. That there's sort of a natural spread of possible outcomes to matters with asymmetric return profiles. And that makes it a very attractive business class if you've got the right team to do it, which we do. And we've built a pretty good mousetrap. And with that, I will turn it back over.

Thanks, John. I'm on page 26 to talk briefly about the asset management segment. Two key numbers to look at, both the gap income number, which is on the left. Hand side, which shows increase year to date of 29 million versus 21 million. And then when you look at the cash number that we've received year to date, generally in line with where we were. Over the same period last year, overall, 14 million versus around 16 and a half. Obviously, you can see in the bottom, we continue to enjoy the partnership on BOFCI, and that's what represents the profit-sharing income. Those assets are quite correlated to the assets that we have on balance sheet, and then you see the runoff of the other funds as we continue to manage those down.

Page 28, which highlights the liquidity and our capital bridge, started the year at $621 million, and now we're at $514 million. That, of course, includes the... ...redemption associated that Chris just highlighted of the 28 bonds, and as part of that redemption, $100 million reduction in our total debt outstanding. So we sit... ...strongly in the liquidity position from a cash perspective at the end of the quarter, and $120 million in our due from settlement balance as well. And that doesn't include the case study, right? That was... ...of a fourth quarter event of $64 million that has already paid out. Page 29, outlines our operating expenses. Here again, I'm going to mention that some of these numbers get... ...storted a bit when you try and look at the year-to-date comparisons. And there's a couple of items to make sure that we describe so that people can digest the numbers. First and foremost... When you try and dissect the long-term incentive compensation, the negative number in the year-to-date, positive numbers in the quarter, when you push that together and then try and strip out the YPF-related... Mark, what you do see is that the long-term incentive comp was approximately 10% of our non-YPF revenue, and that's generally in line with the guidance that we've historically given around the range of the carry program. The other piece you can see is the large number in the year-to-date case-related expenditures.

That $31 million represents, or $28 million of the $31 million represents. Deployed costs that is not able to be capitalized in the investment. But from our vantage point, it's deployed costs just like every other asset. And just given some of the accounting rules, we can't... ...capitalize it. We'll continue to outline that number for you so that it can be tracked and appears appropriately in our investment table. And $18 million of that was a reversal associated... ...with some deployed costs from previous periods. So obviously that number distorts a bit of the income statement. You can see our GNA is tracking below where we were on a year-to-date basis compared... ...to last year. And with that, I'm going to move then to wrap up on our capital structure. Normally I get this slide, but Chris took a little bit of my thunder early on in the conversation. So I won't repeat all of those activities except to say, look, we're in a great spot considering our debt-to-tangible book value ratio having come down a third of a turn since last quarter. The other piece, when you look at our weighted average cost of debt at 8.2%, that compares very favorable to a 25% historical IRR. And then you look at the debt outstanding and the weighted average life of it. You compare that to the average life of concluded assets, or even the active deployments that we have. And we feel as though we've built a capital structure that puts us in a good place and a good position. So with that, I'd like to turn to Chris to handle.

any closing remarks before we get to Q&A. Thanks, Jordan. And I'm on slide 31 just to wrap up. So just to go back to where I started, I'm very pleased with the robustness of the quarter, not only in terms of the operations of the business and its cash generation and case progress, but also in terms of the work that we did on the balance sheet. I will echo John's amazement at getting over the $4 billion threshold. $4 billion of cash. Those are not accounting numbers that we have that we have realized on successful investments while being able to continue for a long period of time to generate desire. Probably high positive returns and desirably low losses. We are leading this industry that keeps on growing. We've got a large portfolio that's going to throw off cash for years to come as we continue also to originate new business. And we are pretty excited as you can probably tell about where we are. And with that we'd be delighted to take your questions.

We will now begin the question and answer session. If you would like to ask a question, please press star one to raise your hand. To withdraw your question, press star one again. We ask that you pick up your handset when asking a question to allow for optimum sound quality. If you are muted locally, please remember to unmute your device. If you have logged in via the webcast, please use the Q&A button to submit your answer. answers and questions. Please stand by while we compile the Q&A roster. Your first question from the line of Timothy D'Agostino with Bea Riley. Timothy, your line is up. open. Please go ahead. Hi, good morning, and thanks for taking the questions. I guess to start on the focus for deleveraging, could you maybe just talk through the priorities? When you approach deleveraging, is it handling the closest maturities, maybe paying down the highest coupon debt, or looking out to the deepest discount for long-term debt when it's trading at? It would be great to just kind of understand your priorities around handling deleveraging and maybe how you rank those three initiatives or the way you look at that. Thank you. Yeah, I think, and Jordan can talk in more detail about this. I think the answer is sort of all of the above. Those are all things that we take into consideration. And the other thing, of course, that we're taking into consideration is the business opportunities to be able to put new capital to work as well.

So the goal, as we as we've said consistently during the course of this year, is to do both of these things is to be leverage the balance sheet while also continuing to grow the business and growing. Business, of course, is its own form of deleveraging, because as we as we drive in returns from the portfolio, those build equity value and deliver the business as well. So it's a it really we we. We sit in a pretty active capital management world where we're considering all of those dynamics, you know, pretty much in real time all the time. Jordan, do you have something to add there?

So I think you hit it. Just a point, well, I'll add just a little bit, which is we purposely built a long-term capital structure for a reason to, you know, match the assets that have unknown direction. That being said, you're right. We've got some higher bars in some of the earlier maturities. You get the most gain to equity if you buy back a little bit of debt in the long term. So I think when you take all... All of those, Chris was right in saying it's a little bit of everything.

Okay, got it. That's helpful. And I guess just thinking about deleveraging while still growing the portfolio and kind of, I guess, having that kind of dual mandate to help deleverage the business. Can you help us just give us some commentary on what you think about cash? Maybe what's the minimum cash balance decrease quarter over quarter, obviously, with repurchasing $100 million debt and putting money to work. What's the minimum liquidity that you want to hold, just to get a better sense? Gordon? Yeah, so I don't think there's one number that we look at in terms of minimum liquidity, and I think it varies based off of... a number of different factors. We have good visibility to the portfolio in terms of what activity is going out the door on a regular basis, given the fact that these aren't revolvers and... that we understand where the cases sit. We have visibility, not as close, but some visibility on to where we expect cases to resolve and when, just given all the activity. And while we can't predict each case, we do... with a large, diversified portfolio, feel comfort in the fact that things will resolve throughout the year. And then we have new business and opportunities. And so, unfortunately, it's difficult for us to... sit here and give the market a direct answer to say, hey, what's the minimum amount of cash that we would see on the balance sheet? I do feel that we have a little bit of extra compared to where we normally have. And you can see that based off of our historical balances and how much we've carried. But we don't give guidance on the exact number.

Okay. Thank you so much. Your next question from the line of Henry Coffey with Wedbush. Henry your line is open. Please go ahead. Yes. Good morning and thank you for taking my question.

I hope I don't seem too stupid here. I was trying to straighten out some some of the moving parts. You were talking about the cash case related expenditures and you

know, uh, and capitalize it into the balance sheet. So overall case related expenditures your day is 31 million, 28 million of that is we view. Oh, excuse me. Hang on. Hang on. I got to get to the right numbers. Okay. So overall case related expenditures. Yep. And I'm on, we're 31 million. Yeah. I'm on page 29. Um, and so there were 31.

The majority of our cases are, are drip capital and their capital that goes out the door over time and not a large monetization immediately. And so, and those over time over multi-year periods. And so, you know, we have plenty of room to continue to, um, invest in new assets and continue to grow the portfolio as the historical portfolio rolls off. So you, yeah, you have 446 million in cash right now, 60 million in marketable securities. So that gets you to five 60 or so of, of quote. What? Yeah. Yeah. The marketable securities are, the marketable securities are very short term. So, you know, we practically treat them as cash.

We've seen a couple hundred million. I'm not sure, 500 million. And we have historically done some large monetizations. In terms of debt capacity, right now we're at our covenant levels. There are baskets that we could use to do some incremental items. But there, our goal is to actually see the debt to equity ratio improve as opposed to taking on any more debt. Would there be an appetite for preferred or something if you needed, or would you rather go to the third-party market and do a managed deal?

I don't know that we see the need to do that at all. Like the thing, think of us, when you think of the business, we have, you know, we can... control the amount of new business that we take on. And so, you know, our goal is to continue to grow the business, but also, as Jordan said, to reduce the level of debt that we have or to reduce the debt equity ratio. And so, you know, I think that we would opt to, if we all of a sudden had an onslaught of, you know, a billion dollars of client demand, you know, in the fourth quarter for business, I think the simple answer... The answer is we wouldn't do all of it. If increasing the, improving your debt ratios, some of that obviously will come from earnings. How much cash would you be willing to commit to that? Over the next three to six months, I think it depends. It's a fluid, you know, as we said, in response to, um, to Tim, it's a, it's a fluid issue for us because we're, we're so constantly look. We're looking at three different dynamics at the same time, right? We're looking at, you know, how much do you leveraging we want to do, how much new business we want to put on. And then in the existing. Portfolio. What's the, what are the net flows from the existing portfolio? How much capital is coming in from cases that are resolving and how much cash is going out the cases that we've already taken on and are underway. And so that, that we, we sort of engage in a real-time basis in that triangulation while also maintaining a liquidity cushion as we do that.

Okay. Thank you very much. Great quarter. Good accomplishment. Thank you very much. Appreciate it. Your next question from the line of Hal Potter with Bank of America. Hal, your line is open. Please go ahead.

Hi, gents. Thanks for taking my questions. Two quick ones from me. The one is on your operating expenses. You called out $10 million of annual compensation savings from changes to your management teams. Can you just give us a bit of colour and where in the business those have occurred? Don't expect any impact on performance of those business lines. And then secondary it's about modelled realisations. It would just be great to get a sense of how those are tracking. You also had your 5.2 at Q2. It would be good to get a sense of how those are shaping up. Particularly in the context of your new business and your new definitive commitment mix is mainly in the less than 10% model risk category. Is that a deliberate shift? Does that impact your return expectations? Thanks.

Jordan, do you want to do that one?

Sure. I'll try and hit all of... All of them, and if I miss a little bit, tell me. Look, we talked, I think, a little bit more in detail in the last quarter around some of the moves around the expense savings. Those were predominantly... in, you know, middle management, and we don't see them affecting our ability to continue to execute against the portfolio. as well as to see new growth opportunities. And while we have one or two retirements, and we wish some of those folks well, they've been with the company for quite a long time. But again, I think we feel very well positioned in order to execute against our goals around the portfolio both seeing the existing portfolio and new growth. With respect to the five point two billion we give an update on an annual basis not on a quarterly basis of what are expected with what the models produced with the model. model realizations and so when you saw that referenced in q2 that was actually referencing the year to date now the excuse me the end of year number from the previous year and we'll give an update on where that stands. again in the next in the next quarter and in terms of the mix of new business I think overall there's probably there's always deliberate decisions around each. of the investments that we do and what we see I think that overall we see a good mix that will allow us to produce along our historical returns I think we're

conscious of as always but continuing to be conscious of larger deals that potentially have longer duration but outside of that I think we we still continue to see healthy pipelines and I haven't significantly changed the way in which we view new business. Thank you very much. Your next question from the line of Mike.

Michael Dunleavy with Deutsche Bank. Michael, your line is open. Please go ahead.

Hi, thanks for taking my questions. I just had two quick ones as well. The first, I just wanted to ask you about the really strong fair value gains related to milestones and from the timing around the Apple patent case. I know you put out a statement on the jury verdict really late in the quarter. And could you just confirm if any fair value milestones related to that verdict would have been captured here this quarter as opposed to 4Q, given it was right on the cusp?

So Jordan can talk to the accounting. Let me maybe just say a word about your question though about the case progress. So when things like that happen, you know, that's just the first act of the play, if you will. And so unlike the case study that I took you through, which was a resolution by settlement, which means you can both finish the case and get the cash in in a short period of time. When you have a contested piece of litigation, especially one that has a very substantial trial win like that, there are going to be a series of steps that need to be gone through thereafter. So you start with staying in the trial court and doing post-trial proceedings where one side is trying to knock out the verdict and the other side is trying to keep it. Or add interest to it or add some other embellishment to it. And then, you know, if there's not a settlement along the way, then a case like that is obviously going to end up going up on appeal as well. And so, you know, as I said, we've got a number of. Act still to play in a case like that. And then the Jordan can talk to the accounting. Yeah. When milestones occur in the quarter, they, we would look to account for them in the quarter. But as Chris outlined, there's a lot more litigation risk and procedure associated with the case. Got it. Thanks. That's helpful. And then just to follow up on new business as well, you called. In the slide, the conscious pullback and new commitments to prioritize delivering in the short term.

And I realize this all depends on the opportunities coming in and how attractive they are. But is there a ballpark range for the amount of new commitments you might expect to take in on a quarterly? basis over the next 12 months or so? No, we don't really think of it in quite those terms. We get a meaningful flow of potential opportunities. And we close on the ones that we like calibrated by where we sit with liquidity deleveraging and our, you know, sort of our risk tolerance for price. And so what you know, if you look at the bands that we put out, you know, what you see is that in last, in 2025, we were doing considerably more business in the what we call the 10 to 25% risk band than we did in 2026. And, and so what I'm going to say is not hard and fast, because cases fit into lots of different buckets, but as a, as a general rule of thumb, you can sort of think about the lowest risk band being, you know, sort of multi-case portfolio, multi-case cross collateralized portfolios. You can think of the middle band as being relatively low risk. larger transactions that are often including a monetization element. And you can think of the upper band as being more likely to contain traditional litigation, you know, like, like. You know, a single risk case. And so the, the middle band is where you see us doing less work, right? We're, we're pretty much on top of the, the low risk band and we're actually a little bit above on the high risk band and what.

That suggests is us saying, well, gee, um, if somebody shows up with a, with a chunky low risk ask, and therefore because it's low risk, they're only prepared to pay. A comparatively low return to us on the capital, we might more this year than last year, we might say, eh, you know, maybe not. Maybe we'll instead husband that capital and some of it to buy back debt or put it towards the deleveraging that we did this quarter. That's sort of the decision tree that you see us going through. Got it. Thank you. That's really helpful.

So we have some questions from the webcast as well. The first being with respect to the 2016 and 2017 vintages. Do you have expectations that these vintages will realize gains beyond? On nearly covering deployments? And when can we expect to see significant upside on these vintages? So these are probably, if you think about the pace of litigating, these are your very classic COVID vintages. And I know that seems strange because they're 2016, 2017. But when you think about the cadence of litigation, if you're starting down the road with a case in 2016 or 2017, you would have realistically been thinking that you'd be getting to trial in and around 2020. And welcome to COVID. And so those are vintage vintages that have seen real pandemic-related delay. But just as we showed you with the case study, that does not in any way mean that we have lost faith in what the vintages are going to perform. What's happened is delay. Sometimes that is corrosive to IRR. But in terms of their ability to produce well above the deployments, there's no reason to believe that the performance of the vintages are going to perform. The performance is going to alter on a cash basis for any particular vintage of cases. Each vintage, of course, does perform differently. But there's nothing about those vintages when you look at them that makes you say, oh, gee, you know, there's something, something went badly wrong there, as opposed to looking at them and saying, gee, those are cases that should have been done by now.

The next question also.

From the webcast, the depth to tangible book value multiple is 3.2. Do you have a target?

I think we sort of went through that before. Go ahead, Jordan. Yeah, no, I didn't mean to cut you off there. What I was going to say is there isn't the first piece is that obviously we have covenant ratios and but those covenant ratios were. At a time where we had one single large asset and so, you know, while we've historically talked about a 1.25 or one and a half times ratio, I do want to. I like the fact that we have actually a very diversified portfolio when you think about the gap numbers and the fair value associated with that compared to the debt. I don't think, Chris. You're probably going to say, I don't think we have an exact number or an exact target except to say we understand that it's higher right now and there's two ways to attack it, which is to continue to have positive quarters from a milestone standpoint. helps produce, you know, incremental equity and then continue as the portfolio resolves to use some of that cash, not just a new business, but also to help deliver.

And the last question, also from the webcast, do you believe Burford Capital's shares are fairly valued at the current market price? If not, where do you believe the gap between market value and intrinsic value comes from, and what events do you think? What do you expect could help close the gap? Well, you know, it's obviously for the market to value the shares instead of for me to do so. I probably belong. Pretty firmly in the club of CEOs who are unlikely to say anything other than, yeah, I believe the business is worth more than the market does. Why do I believe that? I believe that because of. The track record that we've developed over 17 years of being able to produce high returns with, as I said earlier, with consistently high returns with consistently moderate loss rates. And I think that warrants. The combination of being able to do that and the growth that we have shown over time, I think that warrants a higher valuation than the market is presently courting us. You know, that being said, we're all very conscious of the fact that this has been a turbulent year and that has both taken some time to settle down and it also has involved the rotation of a number of investors. And so I have a John and I, as you know, are individually the largest shareholders in the business and we have a longer term perspective on it. But it's obviously our hope that continuing to show performance of the way that we have been and continuing to have a focus on the balance

sheet will close that gap and see continued share price improvement.

And now the last question, one more from the webcast. If the Q4 case win of $64 million isn't in the due from settlement component, is it still accounted for on the balance sheet? And capital provision assets? Yes, that's exactly how to think about it. If you look at page nine, you'll see, and we actually outline what the fair value was. It would have been as of the end of the quarter accounted for in capital provision assets at just under $31 million.

And I think that brings us to a close. And for those of you who were curious, the dulcet tones of our question reader, that was Travis Lankner, our COO, who came along to the ride to help us out managing both the phone questions and the website questions. Thank you, Travis. And thank you all for joining us today. We were, we were very pleased with the quarter and we'll look forward to pushing through to the end of the year and reporting some interesting numbers to you. And when we, when we talk to you again in February, so thank you again.