Burford Leans on Portfolio Strength After Court Loss, Stock Dive

Burford Capital Ltd., hit with a 50% stock drop after plaintiffs it backs lost a court ruling, will test the strength of its overall portfolio going forward as it seeks cash returns for lawsuit investors.

The US Court of Appeals for the Second Circuit on March 27 reversed a ruling that ordered Argentina to pay $16.1 billion over the seizure of state-run oil company YPF SA. Burford before the ruling stood to win a large share of the award in return for paying the costs of litigants to bring the suit.

The court loss sent their stock spiraling down 47% the day of the decision and lower by an additional nearly 3% March 30 before gaining more than 12% Tuesday. Still, the YPF case has been worthwhile given that Burford earlier sold off some of its interest in the YPF case and has a broad portfolio of other litigation going forward, said Erick Robinson, a lawyer who leads a litigation funding advocacy group.

“Burford took a smart risk—they won big, and then on this issue, which easily could have gone either way, they lost at least temporarily,” Robinson said. “This doesn’t break a portfolio fund any more than one bad stock pick breaks a hedge fund.”

The YPF loss challenges the resiliency of one of the biggest and best-known litigation funders. Burford since its launch in 2009 has committed more than $12.1 billion to legal finance and currently manages a portfolio of $7.5 billion, the funder said in February report of fiscal 2025 results.

Burford CEO Christopher Bogart said in a statement March 30 that the funder has “always treated YPF as separate and apart” from its core business.

“Our core business is based on a portfolio of many hundreds of valuable cases—a portfolio we expect to produce more than $5 billion in cash proceeds over time and that produced more than $1.2 billion in cash in just the last two years,” Bogart said.

Burford declined to comment beyond the statement.

Not for ‘Weak’

Plaintiffs and their lawyers have been cheering on the growth of litigation investments as a way to pay for lawsuits that otherwise might not be brought. Company advocates such as the US Chamber of Commerce have fought the practice as instigating frivolous, costly litigation.

The Second Circuit decision is a reminder that litigation funding “isn’t for the weak,” said Maria Glover, a Georgetown Law professor. It shows that pursuing lawsuits carries risk, and litigation funding absorbs some of that risk for plaintiffs, she said.

“Obviously it’s a big, temporary blow” for Burford, she said of the YPF decision. “How lasting it is depends on how things play out.”

Burford expects the plaintiffs to seek a rehearing by the entire Second Circuit, though the court rarely grants such requests, the funder said in the statement. Plaintiffs, investors in an oil company now owned by Argentina, next would seek a US Supreme Court review, though the court rejects most such requests, it said.

Another option is arbitration, Burford said. The International Centre for Settlement of Investment Disputes, an agency of the World Bank, would likely be the venue, and “it would be a multi-year process,” according to the funder.

“While we are optimistic about the eventual positive outcome in the case given the availability of international arbitration, we recognize that represents a meaningful delay in expected cash proceeds and affects investors’ views about Burford’s present value,” it said in the statement.

Long Path

The case goes back to 2012 when Argentina nationalized the oil giant YPF. Petersen Energia Inversora SAU and other investors filed suit in 2015, claiming the country did not offer a payout to shareholders as required. Burford acquired the right to pursue the claims for 15 million euro ($16.6 million).

US District Judge Loretta Preska issued the $16.1 billion award in 2023, after finding the nationalization violated YPF’s bylaws requiring a tender offer to shareholders. The award since swelled to $18 billion with interest.

Burford previously sold off more than a third of its interest to other investors, mainly large hedge funds, for $236 million.

Analysts at Wedbush issued a report March 30 downgrading the company to neutral from outperform. The report said that if Burford has to adjust the value of its assets, it could potentially restrict the company from issuing new debt.

The report also said that the stock drop after the appeals decision could be an attractive entry point for investors with an appropriate risk tolerance and long-term holding period.

“We continue to believe that Burford’s successful long-term track record is currently being overshadowed by the YPF outcome and the stock’s significant decline on Friday may have been the necessary clearing event that will now allow investors to focus on the company’s core business,” the report said.

Robinson, a partner at Cherry Johnson Siegmund James and head of litigation funding trade group American Civil Accountability Alliance, said that the case is an example of how lawsuit investments can be helpful to plaintiffs.

“The take home message is that funding works,” he said. “Only a funded plaintiff could have sustained a decade long fight against a sovereign nation.”