Burford Capital - Earnings Call - Q3 2025

Executive Summary

• Q3 2025 was soft on earnings as unrealized losses on non-YPF assets from duration extensions drove a GAAP loss and negative EPS, while core portfolio activity and commitments stayed robust; management reiterated confidence in long-term doubling by 2030 and highlighted record rolling three-year realizations.
• Results missed S&P Global consensus: revenue $69.8M vs $136.0M est. and EPS $(0.09) vs $0.31 est.; management attributed the miss largely to valuation timing (duration) rather than adverse case outcomes; estimate values from S&P Global*.
• Portfolio engines remained active: 61 assets generated proceeds YTD; Burford-only cash and marketable securities rose to $740M aided by a $500M 7.50% 2033 notes issuance; leverage metrics remained within covenants.
• YPF: management remains “bullish,” citing SDNY’s $16B judgment and October 29 Second Circuit oral argument; enforcement actions continued (e.g., turnover order appeal briefing through December), with management pushing back on market concerns after the hearing; timing remains uncertain and legal risk remains.

What Went Well and What Went Wrong

• What Went Well

  • New business momentum: YTD new definitive commitments $637M (+52% YoY); deployments $329M (+20% YoY); portfolio base up 15% YTD, exceeding trajectory to double by 2030.
  • Realization breadth: 61 assets produced proceeds YTD (vs 50 last year), and rolling three-year realizations at an all-time high; Q3 net realized gains implied ~60% ROIC on Q3 realizations.
  • Liquidity and funding: Cash and marketable securities increased to $740M after issuing $500M 7.50% 2033 notes; debt WAL ~4.9 years; leverage 0.9x indebtedness/net tangible equity (within covenants).

  Selected quote: “The portfolio is also active and delivering attractive amounts of cash, with rolling three-year realizations at their highest level ever… We are bullish on [YPF’s] prospects” — CEO Chris Bogart.

• What Went Wrong

  • P&L impact from non-YPF unrealized losses: Q3 saw meaningful negative fair value changes from extended durations on certain assets, pressuring earnings despite no spike in losses; management emphasized this does not change case outcomes.
  • Asset management income headwind in Q3: $(0.2)M (Burford-only) in the quarter due to profit-sharing reversals tied to fund fair value movements, though YTD remained $21M.
  • YoY revenue/EPS decline: GAAP consolidated revenue fell YoY to $69.8M (vs $249.1M) and EPS turned negative $(0.09) (vs $0.61), with net income attributable at $(19)M (vs $136M).

Transcript

Operator (participant)

Hello, and thank you for standing by. My name is Bella, and I will be your conference operator today. At this time, I would like to welcome everyone to Burford Capital's Third Quarter 2025 financial results conference call. All lines have been placed on mute to prevent any background noise. After the speaker's remarks, there will be a question-and-answer session. If you would like to ask a question during this time, simply press Star, then the number one on your telephone keypad. To withdraw your question, press Star one again. I would now like to turn the conference over to Josh Wood, Head of Investor Relations. You may begin.

Josh Wood (Head of Investor Relations)

Thank you, Bella, and good morning, everyone. We appreciate you taking time to join us to discuss Burford's third quarter results. On the call, we have our Chief Executive Officer, Chris Bogart, our Chief Investment Officer, Jon Molot, and our Chief Financial Officer, Jordan Licht. Earlier this morning, we posted a detailed earnings presentation, which we will refer to during the call, and also filed our Form 10-Q, both of which you can find on our Investor Relations website. 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 more 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'll also be referring to certain non-GAAP financial measures during the call. Please refer to today's earnings materials and our filings with the SEC for additional information, including reconciliations of these non-GAAP financial measures to the most directly comparable GAAP measures. With that, I will turn the call over to Chris.

Chris Bogart (CEO)

Thanks very much, Josh, and hello, everybody. Thank you again for joining us today. We're going to do this call today a little differently than usual. Before we turn to Jordan and the usual financial review, I would like to cover a few different topics with you. Let's start with YPF, given the market reaction to last week's oral argument. The YPF case was adjudicated in the Southern District of New York. That's the Federal Trial Court in Manhattan. It is one of the highest-quality courts in the United States. Court-wide, its reversal rate on appeal is 6.28% over the last 10 years. The YPF case was decided by Judge Preska, the former Chief Judge of the Southern District. Her individual reversal rate is 4.63% over the same period.

The statistical reality is that a judgment from this court, and especially from Judge Preska, is likely to be affirmed on appeal. Because of some of the questions and comments from the panel at oral argument, the market seems to have freaked out a little bit about the risk of the case being dismissed on the legal doctrine known as forum non conveniens, literally. An inconvenient forum. Forum non, as it's called, is a discretionary doctrine. It allows the court only once it has determined that it has jurisdiction, which is settled law already here. It allows the court to send the case to another, more convenient court for trial. This occurs most often when there is some logistical issue going on. For example, the witnesses can't travel to the U.S. courts for trial.

A sort of hokey example of forum non is for Jordan and me to go to a conference in Arizona and get into a fight, and for Jordan to punch me in the nose and for me to sue him for damages. That case could be brought in Arizona because that's where the punch happened. Given that Jordan and I both live in New York and never otherwise go to Arizona, Jordan could try to argue that it would be more convenient for the case to be heard in New York and not in Arizona. That's really the essence of what forum non is all about. Although anything can happen in litigation, it would be extraordinary for the appellate court to dismiss the YPF case on this ground, on forum non grounds now, for several reasons.

First of all, the trial judge has discretion to decide forum non motions. Judge Preska twice exercised her discretion to deny two separate forum non motions over time. To reverse her decision, the appellate court would not only have to disagree with her rulings, but also conclude that she abused her discretion in deciding the matter. That is a very high standard, and it is very hard to satisfy. Second, there is a substantial body of law out there that says that the further along a case goes, the less viable a forum non dismissal is. It's one thing to send the Jordan Chris case to New York as soon as it's filed. It is quite another to do so after 10 years of litigation, a trial, and a judgment. Indeed, it would be extraordinary to dismiss a case after trial and judgment.

As the plaintiff's lawyer, Paul Clement, who is the former Solicitor General of the United States, said during the oral argument, the only case example Argentina could find was 38 years old and from another circuit. Its facts are nothing like the facts here, with a New York Stock Exchange issuer being sued in New York by U.S. shareholders. In fact, the old case was about a Peruvian sailor who died on a Peruvian ship that just happened to have been docked in Texas at the time. Every single other element of the case was Peruvian. That is the best case Argentina could find, 38 years old. Third, Argentina would also have to show substantial prejudice from having to litigate in New York, for example, by not being able to have witnesses show up to testify, which was a problem in the Peruvian case.

That is simply not an issue here. Every witness showed up for trial, and Argentina suffered no prejudice at all from litigating in New York, which it has been doing for decades in numerous litigation matters. In short, although we do not litigate cases in the press, and while there is always litigation risk, and forum non was not the only issue on appeal, it would be exceptional for this case to be dismissed out of the U.S. courts at this juncture and sent to Argentina on forum non grounds. Even then, by the way, would not be the end of this case. The market seems to us to have completely overreacted to the appellate argument. As we said in our release before the argument, trying to read the tea leaves in an oral argument is a perilous course.

Of course, it would be lovely if all the judges came in and said loudly and in unison, "Of course you win." That is just not how the process works. Judges ask probing questions of both sides as part of the Socratic process. Now we wait for the court's decision. That will take months. We remain bullish on this case. The YPF case is only part of our business, and it is not the largest part. We are excited about the broader business and its growth and performance potential. We are continuing to grow organically and inorganically, and we are confident in our 2030 plans as laid out in our April Investor Day. Looking at slide nine, we are having a great year for the business. Definitive commitments up more than 50%. The overall portfolio is up 15% already year to date. That is 20% annualized.

That is well above the level to achieve our goal of doubling the business by 2030. I do not care much for quarterly results, but looking just at the third quarter, deployments were up 61%. This slide that we are looking at just underlines the new business point. We have done a lot more business this year in dollars and in number of cases than last year. As we have discussed before, the thing that makes the difference quarter by quarter is the presence of big cases. We have already had more than our fair share of those this year. As Jordan will show you later, a lot of that new business is also in the nicely high returning zone on a modeled basis. In other words, we have seeded the ground for substantial realizations in the years to come. Do not forget the overall potential of the portfolio.

We showed you modeling at Investor Day estimating $4.5 billion of potential realizations from the portfolio as it was then, and we keep on growing it. Let's shift from new business to actual realizations and move to slide 10. We are running ahead of last year in the volume of realizations, and we're making new realization records on a rolling average basis. That's consistent with how we are feeling about the portfolio, that things are moving. They never move as fast as we would like, and Jon is going to address this a little bit more in a few minutes. They are moving, and you can't look at this on a short-term basis. This is always a long game. Get results.

In fact, the weighted-average life of both the concluded book and the ongoing portfolio are pretty stable, around two and a half years for the former and a bit over three years for the latter. Does every litigation drive us nuts? Sure. Especially because delays can cause accounting noise, as occurred this period when some duration extensions negatively affected the unrealized line. No court ever calls and says, "Hey, good news. We've moved your trial date up by six months." While delay and a lack of predictability is something that is a constant frustration to anyone involved in litigation, it is simply how the system operates. Frankly, we are good at managing through that process and structuring deals around the inevitability of delay.

Our focus really has to be in running this business on whether bad things are happening, like a spike in losses, which simply is not happening, and not whether the system is working as it has for the entire 35 years I have been involved in what are always delayed litigation matters where, frankly, no deadline ever actually holds. Notwithstanding delays, notwithstanding uncertainty, our IRRs are also remaining steady at 26%, and that is now on $3.6 billion of realization. With that and loss rates steady, we are feeling very good about the portfolio. Let me add just a bit of color to those bare numbers as a cross-check. As we showed you at our Investor Day, the business relies on big cases for a material portion of its growth and performance.

Whether we do a new big deal in any period will affect our new business numbers, and whether a big case concludes or has forward progress will affect our realized and unrealized gains. As we have said since the beginning of time, this does not happen smoothly. As you can see, our realized gain numbers are down, suggesting that we have not had a big case realization yet this year, although we have actually had more case realizations in total this year than last year, just not as many big chunky ones. However, we have lots of good forward progress. As just one example, we have had four large case wins so far this year, each of which, if upheld at their current levels, would generate more than $100 million in proceeds for us. Those cases are not over.

As a result, their value is nowhere close to being reflected in our accounting numbers, but they offer a window into the potential performance power of the portfolio. At the same time, we have not had any case losses of anything approaching that size because of the continuing positive asymmetry in the business. Another important point about the business reflected in slide 11 is the very significant spread between our book value and our expected value. That disconnect exists because of the nature of our asset class. Value occurs at the end of the case because that is when the binary nature of litigation has ended in either a trial conclusion or a settlement. Our history demonstrates that we know how to identify that value. To do so much earlier in the process than the accounting will actually drive.

That being said, we can't just create income or GAAP value in a case by merely investing. We need the case to run its course. What that leaves is a disconnect between the likely ultimate value of our assets versus the accounting value, as you can see with this graphical illustration of the point. If our track record holds true, there is a significant amount of embedded value in our assets yet to come. In short, Jon and I are passionate about the business and the portfolio. Investors can take confidence in our strong alignment of interests as large shareholders and committed executives. Our personal financial performance is directly tied to the success of the portfolio and to the performance of the stock.

We recognize the needing to take the long view and put up with volatility, like the volatility you've seen in these quarterly numbers, is not the perfect fit for quarterly earnings-obsessed public markets. That is just the way this business works, and that is the price of high uncorrelated returns. Turning more directly to the market. Shareholders have, I think, every right to be unhappy with our share price performance, just as we are. As we all know, markets can become obsessed with elements of a company, and they can attract an undue level of attention, often masking more fundamental valuation precepts. That seems to be what has happened with respect to the YPF case.

When a company's share price goes down, especially when it declines in what seems to be a fashion unrelated to its fundamental value, shareholders tend to respond by wanting management to buy stock or for the company to do a share buyback. Here, management has indeed been buying the stock because we think it's a good value. In fact, Jon and I bought more than 1.3 million shares of Burford stock in just the last year. We don't think it's prudent at this moment, much as we think Burford's shares are cheap, to use corporate funds to buy back stock. This is something we've talked a lot about with the board, with shareholders, and with our advisors. Here's our reasoning, and slide 12 tries to help make this point. We are continuing to grow this business.

In fact, we are sticking to our prediction of being able to double it. By the end of 2030, as we laid out at Investor Day. Given that we do not reliably have incoming cash flow from realizations at any particular point in time to meet our growth capital needs, we fund the gap with debt. Because the asset cash flow is not predictable, we do not want to take on too much leverage. We think the current level of long-dated maturities is fine, and we have confidence in the portfolio performing over time to meet our debt service needs. However, diverting cash to a buyback changes that equation because we are now essentially funding the buyback with debt. We are removing the cash and its earning power permanently from the business. This is not just about accretion.

For example, given our returns and the average life of our assets, we would expect $200 million today, as this slide shows you, to generate about $800 million of cash by the time we need to repay the underlying 33 debt. That is a comfortable position. If we divert the $200 million to a buyback, we will have to find all that repayment capacity elsewhere. At some point, that becomes less comfortable. I am not saying that we could not do that. Our leverage is low enough that we probably could. It does not seem very prudent, and it would certainly add risk to the business. When investors sit back and think about that dynamic, they tend to agree in our conversations with them. To be clear, we are not a closed book on this point, coming back to our shared frustration with the stock price.

We will keep on discussing it ourselves and continue to welcome shareholder feedback. I think it is clear to the market what we believe about the business and the share price. I do not think a signaling release where we do a little buyback does a whole lot for us. A big buyback just seems imprudent when we talk through the issues. As I said, it is something that we will continue to talk to people about and continue to listen to shareholder feedback on. Just before I turn you over to Jordan, I would highlight slide 13. First of all, to highlight the appointment today of Bank of America as corporate broker for us, representing yet another step forward in both the U.S. and the U.K. markets and just more evidence of our maturity and market leadership.

I'm not going to spend time on the rest of this slide orally, but it's worth a look for those of you based in London, where the LSE, frankly, never ceases to lose its capacity to amaze me. With that, I'll turn you over to Jordan and Jon and look forward to taking your questions later on.

Jordan Licht (CFO)

Thank you, Chris. Good morning, everyone. I'm going to take us through the two segments: principal finance, asset management. Jon will spend some time in the middle on the portfolio. Three things that I want to make sure to hit upon a little bit deeper and coincide directly with some of Chris's comments, which is to talk about capital provision income, discuss realizations, and new business. When you look overall at the financial results and you see that.

Year to date, we're down in capital provision income revenue, a lot of that was driven by extension of fair model durations. I'll unpack that even further when we get into the principal finance segment and the bridge. Before we get to that, I'd like to spend a little bit of time just commenting on the portfolio. Right now, ex-YPF, I'm on page 19, ex-YPF, we're deploying cost of just under $1.7 billion. Chris already highlighted, and it reflects in some earlier slides, the amount of fair value unrealized gains associated with that, which is around 32%. As mentioned, there's significant upside to come in terms of future gains to the extent we hit our historical ROICs. I really do love the right side of the page, and it correlates with not just the historical portfolio, but the way in which the business is continuing to grow.

You look at all the different colors, and you can see the diversity. On the top, it's the diversity in geography, and on the bottom, the diversity in the actual portfolio, whether it's arbitration, antitrust, contract cases, or patents. We really have a diversified portfolio, a diversified team around the globe. Moving to page 20, we can go through the capital provision income and the fair value bridge. I'm going to focus specifically on the bottom left-hand side to illustrate some of the numbers. This shows how we moved from $3.8 billion-$3.9 billion in total fair value. The first two pieces to discuss that somewhat offset each other when you look at the quarter or the year are deployments and realizations. Deployments, putting the money out, and we'll discuss that more on a future slide, and then realizations with the cash coming in.

The middle is how we earn the income in terms of fair value as well as the realized gains. We break it apart into three components. First is the duration impact. Now, this duration impact that we are outlining here as passage of time is truly just the passage of time. This is if you take all of the fair value models and you move forward a quarter towards the ultimate completion date. You then have change in discount rate. We have discussed that before. When rates go up, the value comes down slightly and vice versa. It works the same way as bond math when you are discounting an MPV. You have the collection of milestones and other model impacts. This is the recognition of an objective event with a milestone.

Or, in the case of this quarter, if we've identified some cases in which we've extended the fair value model estimated duration. When you push that out, it will then correspondingly have a reduction. When you think of an MPV, we'll have a reduction in value. It's important to take a pause there and say, by moving duration, that doesn't necessarily at all change our view of the case or the outcome. It also doesn't necessarily impact what we're going to receive. In some cases, in many instances, and in most of our assets, we have back-end adjustments in which multiples can rise the longer the capital is outstanding. We have back-end fee arrangements. Duration can also be extended because the case has progressed through the lower courts and has made it through objective milestones.

While the movement of duration was a significant impact on this quarter, it does not necessarily change our view on the portfolio at all. That gives you a little bit more color around what happened in this quarter. Flipping back to new business, though, and how that portfolio expands, the first piece on page 21 is to think about new definitive commitments. Chris highlighted the diversity of the risk bands associated with this year, not to mention the growth that we have seen in 2025 compared to where we were at the same point in 2024. That also corresponds with a growth in deployments. Ultimately, the commitments are great, but you still put the money out, and the cases are progressing, and it is the money that earns the returns. You can see our deployments here have increased over 2025.

It is important to hearken back—I am not going to make a switch back to all the slides—but just the different diversity in the numbers of different new commitments. We highlight that on some of the earlier slides that Chris mentioned. I move to 22 and talk about realizations. It is important to note that we look at this business on a multi-period basis, not just on a single quarter. We highlighted that on some earlier slides: $310 million of realizations this year. The other thing that is important is we do not look at ROIC on a quarter-by-quarter basis or even on an annual basis, but rather on a blended basis across the entire portfolio. I want to remind folks that 43% ROIC that we see that occurred in 2025. We did have a very large event that ended quickly in Q1.

That was a great IRR, but given the short duration, resulted in a low ROIC. Given where we stand, we would expect to see that number obviously be lower. I'll pause there to hand it over to Jon to talk more about the portfolio.

Jon Molot (Chief Investment Officer)

Thanks, Jordan. Thanks to you all for joining. I'm going to turn to slide 23, which you've seen before, but I want to talk to it in a way that emphasizes and fleshes out something Jordan said earlier, which is, as a shareholder and running this business, I don't pay as much attention, as Chris said, to how we do in a particular period, except maybe to make sure that we are continuing to put out money. Why is that so important? Why is the growth in commitments and deployments so important? You kind of understand from slide 23.

It is a reminder that we have a really good asset class that when we are the ones managing that asset class and deploying capital into it, when you put out new money in a new deal, there are only three things that are going to happen. It is going to go to trial and win. It is going to go to trial and lose, or it is going to settle. Over the course of our life, these numbers have stayed pretty steady. In any particular period, they could bump around because you could have one really large adjudication gain. Large adjudication losses are kind of harder, as Chris said, because they do not happen in the same way because we have got these asymmetric returns, which I will turn to on the next slide, so they are not as possible.

When you look at this is what we're putting the money into, that we know the majority of our matters are going to settle as long as we continue to pick good cases, and our track record shows that. We have been able to do that. The adjudication gains outnumber the adjudication losses, both in number and size. You just look if you can produce, which we've stayed constant, 83% ROIC, 26% IRRs, you want to be sure that pipeline is continuing to move. You continue to bring in new matters. That is what we've been experiencing, which is really wonderful. It is the thing we can control. As Chris said, we can't control court dates. We can do everything we can to make sure that.

Parties and lawyers know the urgency and the importance of moving things forward and not agreeing to extensions, but courts are going to make those decisions. What we can control is being out there in the market. Solving people's litigation problems by providing capital to those who need it to litigate effectively. If you turn to slide 24, you see the same theme, but in a different representation, which is basically, again, I described how the nature of the asset class as invested in by us and why that produces attractive returns. Here, you actually see what we've achieved. You see the asymmetry of outcomes where we can have truly outsized returns, and for the smaller number of losses, it's much smaller numbers. And so.

You take these two slides together and you say, "How did Burford do?" It continued to put out money into this very attractive asset class that has been generating these returns over time. That, to me, is what, as Chris said, makes me so bullish about this business. With that, I will turn it back over to Jordan.

Jordan Licht (CFO)

Thanks, Jon. Coming back to the asset management part of our business. I am going to focus on slide 27. To take a step back and remind folks where we are with asset management, we are continuing to deploy capital for the balance sheet. We have been clear on the importance of doing that and enjoy the partnership that we do have with the Sovereign Wealth Fund, which we also call the BOF-C portfolio.

The rest of the other funds are in runoff, and we would not see continued management fees from those funds. We will see episodic performance fees from the funds. Overall, you will see cash receipts from asset management. It was approximately flat year to date at $17 million between 2025 and 2024. If you isolate just to the quarter and you look at the negative in the asset management, the reason for that is simply put that when fair values move, we then book a corresponding adjustment to the future potential profit-sharing income that we would receive. If you have a negative there in fair value movement, you will have a negative with that. It does not impact our view necessarily of the future of the cases. That gives you a little bit more color with respect to the quarter there.

Switching to page 29 now to go through some of the capital structure and expenses. We sit in a great cash position at $740 million. Obviously, that number has been impacted by two things. One, which is the recent issuance of the $500 million notes in July of 2025. As a reminder, we do have a maturity coming due in December of 2026, and so part of that cash is sitting there to address that maturity. The bottom of the page shows the cash receipts, again, being consistent and coming back over $100 million in the third quarter. On our operating expenses on page 30, while we look at this also more frequently on an annual basis, and it is important to look at that, a couple of items I want to make sure to pull out. The first is when you look at the share-based and deferred compensation.

I've discussed this before, but that also includes the movements in our share prices that impact it both up and down, given the DCP program. Also, what's included is a one-time item related to a mechanical acceleration of tenure-based awards that vested in this period but have not been paid out. That is a one-time impact. With respect to the G&A overall for the year, you'll also see that is slightly up, and that is due to increased costs associated with policy and planning. On page 31, some highlights. In a couple of quarters, this page will actually change. I mentioned before the $235 million that is in U.S. dollars on this page that is outstanding for the 2026 maturity. As we look to address that, we are addressing that similarly to how we addressed this year's 2025, looking to potentially purchase in the open market.

As well as then addressing it at its final maturity. That is the last of the bonds that has the covenants outlined on the left-hand side of the page. We will then move to the covenants associated with the right-hand side of the page, that is with the 144A U.S. transactions. As you can see, at 0.9 times, we are well within our debt to tangible equity covenant levels, approximately five years average on the debt outstanding and a 7.4% weighted average cost. With that, I will turn it over to Chris to take us through Q&A.

Chris Bogart (CEO)

Great. Thanks, Jordan. Rather than doing yet more closing remarks, why do we not just go straight to questions, operator?

Operator (participant)

At this time, I would like to remind everyone in order to ask a question, press star, then the number one on your telephone keypad.

We will pause for just a moment to compile the Q&A roster. Your first question comes from the line of Mark DeVries with Deutsche Bank. Please go ahead.

Mark DeVries (Director)

Thanks. Appreciate all that new perspective on the YPF case. Just had a related follow-up on that. Could you just give us a sense of potential timing of the appeal to the Second Circuit on the order for Argentina to turn over its YPF shares?

Chris Bogart (CEO)

Sure. Although like everything in, as you've heard from us today, the timing of litigation is inscrutable to some extent. That appeal is going to be fully briefed, if I'm not mistaken. Jon, correct me if I'm wrong with this, by sometime in December. After it's fully briefed, the court will schedule it for argument. There is no argument date for it at the moment. As you know from.

The main appeal, that can take a long time. It does not always take a long time, but it can take a long time. After the oral argument of the appeal, there will be a court-authored decision about that. Again, that does not have any particularly fixed timing associated with it. It is certainly not a 2025 event. It is likely, but not certainly, a 2026 event.

Mark DeVries (Director)

Got it. Just a question on realizations. How are you guys thinking about the trajectory of that over the coming years, particularly as we think about the impact from the pandemic on courts and the backlogs that created? Are you still getting—are you seeing elevated realizations as courts play catch-up? What might the implications be for the next couple of years?

Chris Bogart (CEO)

You are sort of—we tried to show the data.

On a few different metrics when we did some of these slides. Some of the slides that we put together had some new information because we know people are focused on this theme. I think looking at the rolling three-year realization is kind of an interesting way to do it. As opposed to having sort of quarter-by-quarter up and down shocks. I do not know, Rob, if you want to put that back up again. That was slide 10. What that slide is telling us is there is quite a lot of activity going on. You have seen 61 assets so far this year have realizations. If you look forward to next year—and again, I do not want to use these kinds of numbers as predictors because courts change their mind about schedules all the time. If you look at where we stand today.

We have more events, more trials, more hearings, and so on scheduled for the next 12 months than we had for the 12-month period a year ago. What that says is there's this continuing velocity in the portfolio. The thing, of course, that drives settlement activity—cases really do not settle without a catalyst for themselves. When Jon was showing you the slide that we've used before that shows really a very high level of settlement activity in the portfolio, in the upper 70%, I think it might even be 79% now. How do you get that settlement done? The answer is you need some pressure on the defendant usually to get there. That pressure is a looming trial date. When cases get set for trial and when trial approaches, that's the most likely time for them to resolve by settlement.

I just think you're seeing. You're continuing to see forward momentum. At the same time, you have frustrating moments like we had this quarter where. We also saw courts not do things as quickly as we would have otherwise expected. When that happens, because of the relatively new valuation approach that we use, that can have a negative impact on our unrealized gain and loss line. Got it. That's very helpful. Thank you.

It looks like Julian Roberts is joining us by webcast today. His question is, "Thanks for the presentation. Are you able to give us any more detail on the change of expected or model timing of the case whose duration has been extended?" Jordan, do you want to try your hand, Paz?

Jordan Licht (CFO)

Sure. Thanks for the question. I'm going to answer that in a second.

First, just make sure everyone understands how we think about modeling. First and foremost, we look at all of our assets every quarter, and the assets are constantly changing with a variety of different inputs, whether that's an observable milestone event, whether it's expected proceeds or duration discount rate that I've mentioned. With respect to this, Julian, I'm not going to answer the part of saying, "Hey, which case or cases it was?" I think that would be inappropriate. Overall, if you looked at the impact of the duration change, it's somewhere in the $40 million-$50 million of impact when you look at that compared to the overall deployed cost fair value associated with the non-YPF book.

Chris Bogart (CEO)

We've got another webcast question. This is from Jonathan Alexander at Aberdeen, who says, "On the buyback, the logic that you have laid out makes sense.

If we anticipate a positive YPF return, isn't it merely a short-term levering of the business when the stock is cheap that will then be paid off when the YPF result comes through? The overall risk to the business has not increased. Again, as I said, we are not dogmatic and dug in on this point. It is something that we talk about a lot. I think, frankly, my partner, Jon Molot, would probably agree with you on that question. I think it all comes down to a question around the prudential management of the business. As we were just talking about in other contexts, we lack the ability to be able to accurately predict when cases are going to turn into cash. We have shown that we are pretty darn good at predicting whether they will turn into cash.

We've got a really long and successful track record of being able to do that. That doesn't answer the when question. Of course, that sits somewhat uncomfortably beside a world where public debt does come with a when. The interest on the debt has to be paid, and the principal has to be repaid on agreed timing, obviously. It doesn't work. The debt holders don't say, "Oh, well, the court delayed, so that's fine. We'll delay too." That's just not how it works. That's really the dilemma that we have always had, not even just in the context of a buyback, but in the context of how much leverage to use in the business in general, because you are not wanting to put the equity holders in the business at risk of the debt becoming.

An obstacle to be able to manage the business properly. Those are sort of the things that we weigh. Where we've come out thus far, and this has been talking to lots of investors and talking to advisors and talking to the board and so on, is to be on the prudential side of that equation. As I said, it's something that people are frustrated with the share price. Jon and I are frustrated with the share price. Our team is frustrated with the share price. It's something that we welcome continued dialogue and debate about. Let's see. There's another question. That's from Steve Thompson about buying and selling of shares. Let me explain how Jon and I largely buy shares in the business. We make use—this is a very common U.S. corporate practice, which is considerably less common in the United Kingdom.

What we do is we take cash income, and we put that cash income into a deferred vehicle. We could, in that deferred vehicle, buy something other than Burford stock. We could buy S&P 500 indexes. Jon and I do not do that largely. We principally have been taking that cash, in substantial quantity now, and using it to put against Burford stock. When we do that, it is disclosed publicly in securities filings. The stock itself lives within the plan, in the hands of a custodian as opposed to living in my own individual brokerage account. That is how the significant purchases are going. They are real-life purchases, and Burford typically goes into the market and makes those purchases to hedge the position as well. Another webcast question from Igor Pulic. Sorry if I messed up that name.

Has there been any impact from the U.S. government shutdown?" No is the short answer. In fact, and this is why the shutdown progresses. Living in the United States, you do not really notice that there is a shutdown going on except maybe when you go to the airport sometimes. It has not had any impact at all on our litigation portfolio. The courts are continuing to operate. The place in litigation it has impacted things is with respect to the U.S. government, but that does not really affect us. You have the U.S. government as a party. They have been asking for delays and accommodations and so on, but that is not a factor in our book. I am waiting for another question that is being typed from Thomas Feckle.

With several peers facing refinancing and balance sheet pressures, do you see opportunities for Burford to accelerate growth through portfolio or corporate acquisitions as part of broader industry consolidation?" I think the short answer is. We do not know. We have certainly talked about the competitive landscape before. You have seen a migration in what has been going on in the competitive landscape a little bit. If you went back some years, you would have found litigation finance mostly being done by smaller pure-play litigation finance specialists. Those firms, many of them, have struggled to grow. The financial—sorry, the COVID, really, the pandemic. Really caused them some distress because that really did slow down durations. Many of them are organized as 2 and 20-style funds. That really threw the ability to earn performance fees into some degree of chaos.

You have seen, as the question suggests, you have seen some level of distress among both of the other public peers that we have out there, the other public, much smaller players. Where that all shakes out at the end is a little bit unclear. We are always happy to look at things, but Jon has a pretty sharp pencil when it comes to things. Our team forms its own view about value, which sometimes is lower than the valuation expectations of others. We will just have to see how it all plays out. With thanks for another investor who says, "Not even as a question, just well-done to management, I agree completely on the view of not doing a buyback. Invest in the business." I think there is a question on the phone.

Operator (participant)

Your next question comes from the line of Mark DeVries again with Deutsche Bank. Please go ahead.

Mark DeVries (Director)

Yeah, thanks. Just a follow-up question on kind of the recent commitments, deployments, whether there's any kind of noticeable trend worth calling out on kind of the distribution of those among some of the shorter duration, lower ROIC versus some of the longer duration, higher ROIC.

Chris Bogart (CEO)

Jon, do you want to comment on that?

Jon Molot (Chief Investment Officer)

Sure. I guess what I'd say is. Our approach is to be all things to all people. It depends what comes in the door. We end up achieving diversification, not just of the sort that Jordan described geographically and by subject matter, but also in terms of duration and risk. I don't know.

I don't have the numbers at hand as to the portion of new deployments that are on the shorter or longer, although I would note Jordan noted that a sizable chunk of the new business that was done is in deals that have the capacity to generate higher returns and higher ROICs. Jordan, if you had the statistics more in hand than I do, I would just be talking anecdotally. We've put out, we've done some big deals that have very high profit potential. Of course, we do know as things can settle earlier, and you can end up with lower returns earlier with attractive IRRs. If they go as we would project, they're meatier investments with higher upside potential.

Mark DeVries (Director)

Okay. That's helpful. Just a follow-up for Jordan, I guess, on slide nine. Does the lack of kind of the larger.

North of $25 million commitment speak to the point that Jon just made? Are you less likely to put a lot of money out the door if you're not expecting a more immediate return, or is that kind of unrelated?

Jordan Licht (CFO)

I wouldn't necessarily correlate the two. We do see opportunities that are smaller but can also be more towards the monetization, in which we're putting more money out the door earlier. I don't want to necessarily equate the two.

Mark DeVries (Director)

Okay. Fair enough. All right. Thank you.

Chris Bogart (CEO)

We've got some more sort of capital allocation buyback-related questions and comments. If I sort of sum them up, one perspective was, will, over time, this dynamic change? If we're successful in meeting our objective of doubling the base portfolio by 2030, that obviously means we'll be doing a significantly larger number of cases.

One hopes at some point the law of large numbers kicks in and you get more predictable, steadier returns. I think that there's some truth in that. We have sort of not succeeded in achieving that thus far because of the way that the asset class has grown and the way we've been able to grow the asset class. We are doing much larger transactions than we were a decade ago. If we had stayed at our average ticket size a decade ago and had the business of the size it is today, then I think you would have that kind of greater predictability. At the same time, you'd have such a volume of business that I think the OpEx and the business model would be slightly challenged.

Because we have more than quadrupled the average ticket size, that has led to us having still this dependence on pretty large cases for a significant portion of the returns. We have not yet reached or even, frankly, come close to sort of the law of large numbers point. Will that change in the future? Will that result in us having a greater sense of predictability of cash flow such that we would expand our capital return options? I think that is entirely possible. Of course, we also have the dynamic of YPF sitting out there because assuming a positive return from YPF, that is a very large cash event for us as well that, as we have said repeatedly to shareholders, would require a discussion with shareholders about what to do in terms of capital utilization and capital return.

That's sort of where we are on the buyback front. I know that there are also people who are going to say, "But it's accretive," right, who are just going to do the corporate finance math and say, "Look at the book value. Look at the share price. Do the math. You should, instead of putting a new dollar into a new case, put that dollar into the existing portfolio." I understand that corporate finance math, which is why we keep on having this discussion. I think if you go back to the slide that we showed earlier, it is not as simple in a levered business that is not always reliably producing positive cash flow. I do not think it is as simple as just doing the corporate finance math. As I said, it is something that.

We do not claim a monopoly of brilliance on. It is certainly something that we are happy to hear from shareholders about as we continue to walk down the road. With that, I am told we are done. Thank you all very much for your time and attention. We enjoy being able to give you these updates, and hopefully, we shed a little more clarity on our views about what is going on with YPF and with the business as a whole. We remain bullish and fans. Sorry for my raspy voice. Thank you all for joining us today. We look forward to talking to you soon.

Operator (participant)

Ladies and gentlemen, that does conclude our conference call for today. Thank you all for joining, and you may now disconnect. Everyone, have a great day.