US threat lifted

The first catalyst for Burford’s rally was a significant legislative reprieve in the US. For weeks, investors had been on edge over proposed tax changes targeting litigation finance, which could have undermined Burford’s core business model.

The US Senate parliamentarian has now ruled that these tax changes cannot be included in the latest budget reconciliation bill. This effectively removes the immediate threat to Burford’s operations.

The company released the following note on Monday: “In revisions to the bill over the weekend, the proposed tax rate has been reduced to 31.8% (instead of 40.8%) and the withholding tax rate has been reduced to 15.9% of gains (instead of 50% of the tax rate applied to gross proceeds).”

Victory in Argentina-YPF case

Separately, Burford scored a legal victory in its long-running battle over Argentina’s 2012 expropriation of YPF, the country’s largest oil company. A US court has ordered Argentina to transfer its 51% stake in YPF into a Bank of New York Mellon account, and subsequently to Petersen and Eton Park. These are funds represented by Burford.

While Argentina is expected to appeal, the order marks a pivotal milestone in enforcing the multibillion-dollar judgment Burford is pursuing. The market is seemingly interpreting this as a concrete step toward monetising a high-profile asset.

Over the past 18 months, President Javier Milei has refused to negotiate with Burford. However, this latest development has created a $16bn problem he can’t ignore… or likely afford.

Burford’s business model revolves around funding complex legal cases in exchange for a share of any proceeds. Wins like the YPF case can result in windfall profits. However, they can be inherently unpredictable.

Valuation conundrum

The sharp share price move has also put Burford’s valuation in the spotlight. As of July 2025, the company’s forward price-to-earnings (P/E) ratios for the next three years are as follows:

• 2025: 10 times
• 2026: 8.1 times
• 2027: 5.7 times

Burford’s enterprise value (EV)-to-EBIT ratio is also projected to fall from 10.5 times in 2024 to 6.2 times by 2027, reinforcing the narrative of improving profitability and operational leverage. However, the company’s net debt is fairly sizeable at around $1.2bn, although this only represents around 20% of tangible assets.

The bottom line

Analysts are bullish on Burford with five Buy ratings and no Holds or Sells. What’s more, the average share price target is 38% above the current share price. However, it’s worth noting that institutional analysts can get things wrong. In fact, Wall Street analysts have underperformed the US market over the past five years. That’s pretty shocking.

Nonetheless, Burford certainly demands further attention. Its valuation multiples are enough to attract my interest. However, in all honesty, it’s not a company I know enough about. I think it’s one that I’m going to add to my watchlist for further consideration.

The post Burford Capital shares jump 20%! What’s going on? appeared first on The Motley Fool UK.

Three companies that could go either way

At any one time, however, there are a few shares around that seem resistant to fundamental analysis.
 
To oversimplify, we might call them binary bets.
 
I’m fascinated by these potential opportunities, precisely because the valuation seems to turn on much larger (or hairier!) outcomes than whether management is successful in reducing packaging costs by 3% or whatnot.
 
These are the cheap-looking companies under a cloud, distrusted by the market, and/or facing a future clouded in existence-threatening darkness.

Sure, you can tweak your discounted cash flow model to reflect the latest sales numbers.
 
But at the back of your mind you’re wondering whether you’re rearranging deckchairs on the Titanic – or, on the other side, haggling about the cost of a mule in a gold rush!
 
Here are three companies from the FTSE 100 that might fit this definition. 

British Land (LSE: BLND)

Putting money into property is even older than investing in shares. The business model is simple – build or buy a property, do it up if required and keep it maintained, let it out, and pocket the rent. Oh, and periodically ask an estate agent what it’s all worth.
 
It’s hard to think of easier cash flows to model. Yet shares in British Land are trading at a discount of 30% to net assets, suggesting the market has its doubts about the future.
 
Think about it… if you could buy your own home with 30% knocked-off the price, would you even hesitate? Or would you grab two of them?
 
British Land seems to be dogged by two factors – short-term worries about a collapse in demand for property in the event of a disruptive Brexit, and a longer-term existential question about the future of Britain’s struggling bricks-and-mortar retailers.

If you think you can make the right call here, then perhaps you could bag a bargain?

BP (LSE: BP)

As with all commodity firms, the volatility of the oil price has always made calculating the value of BP shares a bit of a cross between accounting and astrology.
 
If the price of a barrel of oil can be $100 one year and $30 the next, what on earth should you plug into your spreadsheet?
 
In practice, analysts found workarounds.
 
For one thing, integrated majors like BP have natural hedges in their operations. If energy prices fall, dinging the value of the oil it extracts, then other parts of the business that benefit from low prices can compensate. Even more importantly, the long-term price of oil has generally been assumed to be higher than today, and more stable.
 
After all, there are finite reserves of oil, and this stuff fuels the global economy, right?
 
Well, maybe.
 
Concerns over fossil fuel use and calls to shift to renewables long ago left the fringes of student politics to enter mainstream reports from the Bank of England. Massive funds are divesting their coal, oil, and gas assets. And the calls to do so are not only coming from environmentalists – analysts, too, warn of the risks of spending shareholders’ billions discovering new reserves that might need to be left in the ground, either to tackle the climate emergency or because they’re no longer economical compared to wind and solar power.
 
It’s left BP shares yielding a whopping 6.7% and priced no higher than 10 years ago.
 
You can dig deep into BP’s accounts to figure out the breakeven price for extracting a barrel of oil and you can study global demand. But if future governments legislate fossil fuels out of existence, then all your hard work could be moot.

Burford Capital (LSE: BUR)

Litigation financing outfit Burford Capital has long been a controversial stock.
 
On the face of it, the high internal rate of return it enjoyed on the money it uses to back claims through the courts make it a dream for those who like numbers to underwrite their investment thesis. Fans also point to a quality and engaged management team, and the ease with which Burford has been able to raise new money for funding.
 
The company’s accounts were always quite opaque, however, which led to worries it was overstating its gains by prematurely booking profits. Things reached a climax last year when the short seller Muddy Waters released a report alleging Burford was deliberately misleading investors. The share price crashed 50% over the next few days.
 
As I write, Burford shares are priced just below £7, compared to around £15 the week before the short report was released and near £20 in summer 2018. Burford has defended its accounts, gone to court alleging market manipulation, and made various changes to its management team. But evidently the market is not yet convinced.
 
You could spend a lot of time creating a discounted cashflow model for Burford. But whether you enjoy a successful investment return from here will depend on whether the short-seller’s allegations have any merit.
 
How can investors make their mind up? A future secondary listing on the US NASDAQ market – under the eyes of US regulators – might help, but that’s been a while coming…

The lowdown on the down low

I’m not here to tell you to buy these three companies – nor to avoid them.
 
I just mean to highlight the need to determine what’s influencing the price of any company that appears to you to be cheap.
 
Because if you only look at the numbers, you might just be missing an existential crisis.

The post Binary bets: Bargains or basket cases? appeared first on The Motley Fool UK.

Heading into 2019, the company was something of a market darling. However, after Burford came under attack from the noted short-seller Muddy Waters in the middle of the year, the stock plunged.

The company has been struggling to rebuild its reputation ever since. After a modest recovery towards the end of 2019, the stock price has resumed its downtrend this year.

A “quiet” 2019

According to the company’s latest trading update, after a “quiet” 2019, Burford’s profits for the year will now come in below expectations. In the update, management is forecasting $20m to $30m less in net realised gains for the year. Meanwhile, the group is also expecting $50m to $70m less in net unrealised gains. That’s current cases that have been marked up in value.

Nonetheless, while these figures are disappointing, management notes that the business has improved significantly since the end of 2019. The company claims that if its January trading update were delayed for a month, results would have been better.

Burford insists it has achieved several “litigation successes” in January. These could generate more than $150m in profit across the group in a single month as well as $100m of balance sheet profit.

This trading update seems to suggest that Muddy Waters’ attack on the business last year has not had an enormous impact on its underlying performance. The company still seems to be racking up profits in this niche area of the financial markets.

That being said, the stock continues to trade at a low valuation. It is currently dealing on a price-to-earnings (P/E) ratio of 5.1. This seems to suggest that the market still doesn’t entirely trust Burford’s figures, even though the company has gone out of its way to try to improve transparency.

Further progress needed 

As such, it looks as if the next 12 months could be vital for the firm. Burford needs to prove to the market that the short attack has not had a significant impact on operations. While today’s trading update does go some way to meeting these concerns, further positive updates will help reinforce the fact.

If the litigation finance provider does continue to grow throughout 2020, the stock could offer a wide margin of safety at current levels. Historically, the shares have commanded a valuation of more than 20 times earnings. That suggests they could be undervalued by as much as 75%. Also, the shares support a dividend yield of 1.6%.

Therefore, this might be an attractive holding for those investors with a higher risk-tolerance. The risk-reward ratio looks highly attractive at current levels, but it could be some time before the market starts to trust Burford again.

The post The Burford Capital share price: here’s what I’d do now appeared first on The Motley Fool UK.

The reason for the extraordinary slump was the publication of a scathing report on the company by renowned short-seller Muddy Waters. Burford has since fought back with a series of return volleys, the latest released this morning, and sent its shares as much as 7% higher in early trading.

There’s further upside potential of 75% if the shares were to get back to their pre-short-attack level. Do I think it’s time to snap up the stock?

Attack and defence

The Muddy Waters short dossier on BUR had a number of planks. Its key claims were:

• “Enron-esque mark-to-model accounting… aggressively marking cases in order to generate non-cash fair value gains”

• “Net realized returns have relied on a very small number of cases”

• “Liquidity is risky, and it is arguably insolvent”

• “Governance strictures are laughter-inducing”

Burford has responded with counter-statements, a conference call with investors and analysts, and by taking action on governance. We’ve also seen one of BUR’s institutional investors, Caro-Kann Capital, publish a point-by-point rebuttal in an extensive report titled ‘Muddy Waters Dreams of a Black Cat That Just Is Not There’.

Favourable impression

Overall, I think Burford and its ally have done a decent job of addressing the areas of legitimate criticism/questioning in the Muddy Waters report, as well as exposing a number of factual inaccuracies in it.

Today’s publication from BUR – titled ‘Briefing on Fair Value and Return Computations’ — adds to my favourable impression. And, as already mentioned, the market has responded positively.

The investment case for the company is that it’s the market leader in a growth industry, where returns are uncorrelated with the performance of the wider economy. This is clearly an attractive set of attributes for investors. What’s less clear to me is how to assign a value to the company.

Valuation matters

At a current share price of 850p, BUR’s market capitalisation is £1.86bn. Net assets at the last balance sheet date of 30 June were $1.57bn (£1.26bn at current exchange rates) and the company’s trailing 12-month profit after tax was $388m (£273m).

We’re looking at a valuation of 1.5 times book and 6.8 times profit. The former (an asset valuation) would be appropriate for an investment company, such as a real estate investment trust. The latter (an earnings multiple) would be appropriate for an operating business.

For an investment company, 1.5 times book value would be pricey, but for an operating business 6.8 times profit would be cheap. The problem is I think Burford falls somewhere between the two stools, making it difficult for me to decide whether the current share price represents good, fair, or poor value.

I don’t go along with the line of thinking that “the share price has fallen a lot, so it must be cheap.” I want to be confident I have a good idea of the intrinsic value of a company before I invest. Unfortunately, in Burford’s case, I don’t. It’s just the way it is sometimes.

The post Is Burford Capital share price set to recover from Muddy Waters’ short attack? appeared first on The Motley Fool UK.

After falling to a low of 600p shortly after the publication of the report, the stock rallied back up to 880p in the weeks after. However, since peaking at this level on August 15, shares in the litigation finance provider have struggled to move higher. They are currently changing hands at just under 800p.

Exchanging blows

Burford and Muddy Waters have traded blows over the past few weeks, with neither party managing to establish a lead over the other. The firm continues to claim that it has done nothing wrong. Although it has tried to clean up its image by replacing the finance director who was the CEO’s wife.

Unsurprisingly, Muddy Waters said this doesn’t go far enough. The hedge fund has also declared that it is not finished with Burford, and could have further evidence to present to the market about the firm’s business practices.

And this is what leads me to conclude that shares in the firm could fall further from current levels. The company relies on third-party financing to fund its litigation cases. Burford then takes a cut from the management of these funds. If this battle with Muddy Waters has impacted the enterprise’s ability to raise capital, then its entire business model could be under threat.

Legal action

The company is also facing pressure over its debt recovery efforts. Last month it emerged that the business had traded sexually explicit material with a third party. Burford made the trade as part of a deal to get its hands on documents relating to a judgement it is enforcing.

It has since been reported that the unidentified woman in the video is looking to pursue a case against the business. Under the revenge porn laws introduced in England and Wales in 2015, trading sexually explicit material of a person without their knowledge is illegal. Burford claims it was acting on the right side of the law, but this isn’t going to help the company’s reputation.

Too much risk

Only time will tell if all of the above will prevent it from raising additional capital and pursuing further court cases.

I’m not an investor in the shares, but if I were, I wouldn’t want to wait around to find out. At the time of writing, the stock is trading at a price-to-tangible book value of 1.4, which implies that in the worst-case scenario, the shares could be worth 566p or less, around 30% below current levels.

That’s assuming that the figures on the balance sheet are reliable. Muddy Waters claims they are not. If that is the case, the potential downside could be substantially higher than the published tangible book figure.

So, that’s why I think the Burford Capital share price could fall another 30% from current levels. In my opinion, it is so difficult to tell what the future holds for the company from here.

As a result, even though the stock could double from current levels if it returned to its historical average P/E of 11.5, I think there’s just too much uncertainty surrounding the future of the business.

The post Warning! I think the Burford Capital share price could fall another 30% appeared first on The Motley Fool UK.

At the beginning of August, the company had a market capitalisation of £3bn, but this has since crumbled to £1.8bn following Muddy Waters’ attack. 

Muddy Waters initially claimed that Burford’s accounting and governance practices are all wrong, and the company could be insolvent based on its analysis of the accounts. Soon after the report was released, Burford fired back. The litigation finance provider issued a rebuttal document disputing all of the claims against the hedge fund and threatening legal action. 

In the days since, Burford has intensified its attack against Muddy Waters. On August 12, the firm issued a news release saying that after conducting a “forensic examination” of trading data from August 6 and 7 — the days when Muddy Waters published its dossier — there was evidence of “trading activity consistent with material illegal activity.” Muddy Waters immediately refuted these claims.

Posting on Twitter, the hedge fund wrote that it has “absolutely no trading capability” to make the kind of market manipulating trades alleged. It also called the accusations “preposterous” and promised to “smack” Burford down hard if the firm brings this evidence to court.

With Burford and Muddy Waters both digging in, it doesn’t look as if this spat is going to end any time soon.

Two choices 

The way I see it, investors have two options here. They can either stick with Burford or sell the shares. The question is, if you stick with the firm, how low can the stock go before staging a recovery?

The answer to this question isn’t simple. In reality, any share can fall to zero if the underlying company goes bankrupt. Muddy Waters claims that Burford is insolvent, but the company disputes this.

Burford might claim to be solvent, but the company has historically relied heavily on third-party finance to fund its operations and provide capital. For example, during the first half of 2019, the company recorded $751m of new investment commitments from investors, and this is where problems could now emerge.

Third party confidence 

Muddy Waters’ attack on the company has undoubtedly shaken investor confidence, which might make it harder for Burford to raise capital going forward. 

Unfortunately, the longer the fight between the two parties continues, the more likely it is that investors will avoid the firm. The one thing the market hates is uncertainty, and if Burford does take Muddy Waters to court, I think investors will sit back and wait for an outcome before committing new capital to the business.

This could have a severe impact on Burford, but at this point, it is impossible to tell how much of an impact.

So overall, while it seems unlikely that the firm is insolvent right now, the company’s operations are likely to be hurt substantially by the short attack. 

Only time will tell if the business will be able to recover from this reputational damage. With so much uncertainty surrounding the business, I think it is probably best for investors to sit on the sidelines here and watch the battle between Burford and Muddy Waters play out. 

The post How low can the Burford Capital share price go? appeared first on The Motley Fool UK.

The volatility has continued today, with Burford releasing a statement, outlining what it claims is “evidence of market manipulation in Burford shares.” The share price moved as high as 916p in early deals, before dropping as low as 741p within two hours. It looks like it could be another extraordinary week. Could this be an opportunity to buy one of London’s hottest growth stocks?

Too hard

Burford listed on AIM in 2009 at 100p a share. The shares reached an all-time high of 2,045p (giving it a market capitalisation of £4.3bn) less than a year ago. Big growth stories like this tend to get a fair bit of coverage here at the Motley Fool, but in contrast to the likes of Boohoo and Fevertree, which have been written about many times and by many of our writers, only a few of us have ever felt the urge to pen articles on Burford.

I’ve never covered the stock before. I’ve looked at it from time to time, and it’s always gone back on my ‘too hard’ pile. These are companies where I’m not sufficiently confident in my understanding of the accounts and/or how to value the business to consider buying the stock. Equally, while they may have one or two characteristics that I consider potential ‘red flags’, they’re insufficient in number to give me a strong conviction the stock should be avoided.

Has the Muddy Waters report or Burford’s rebuttal clarified matters one way or the other, or does the company go back on my ‘too hard’ pile?

Management promise

One of the central difficulties with understanding Burford’s accounts is that part of its revenue at any one time, comes from writing up the value of disputed court cases that haven’t yet concluded. The company says it employs accounting standards that are “used widely across the financial services industry.”

However, in the wake of the Muddy Waters attack, other litigation funders have been vocal in their implied criticism of Burford’s accounting. Australia’s IMF Bentham said it carries its claims at cost throughout and “does not record any unrealised gains.” Likewise, London-listed Litigation Capital Management told the Financial Times, “there is no fair value accounting in our numbers.” Meanwhile, Institutional Investor reported: “The firm uses different accounting procedures than most in the industry, according to [US litigation finance consultant] Charles Agee, who said Burford is unique in its approaching (sic) to accounting and asset valuation.”

I was partly, but not wholly, satisfied by Burford’s explanation of its business, accounting and corporate governance in its written response to the Muddy Waters report and on a subsequent two-hour conference call. However, a theme on the call — even among City analysts supportive of the company — was a plea for further disclosure and transparency in its financial reports.

Management has promised to take on board the concerns and suggestions of analysts and investors. I would welcome that, but for the moment Burford has to go back on my ‘too hard’ pile.

The post The Burford Capital share price is under attack. Here’s what I’m doing appeared first on The Motley Fool UK.

The shares are still more than 50% below last year’s record high of 2,075p, but the company’s response to last week’s shorting attack seems to have reassured many investors.

In today’s article, I want to give my view on last week’s events and explain what I’d do with BUR stock now.

Aggressive accounting?

I’ve now had a chance to go through the Muddy Waters shorting report on Burford and the company’s own rebuttal document.

There isn’t time or space here to go through every item in detail. But overall, I think both sides make some good points, while also having areas of weakness.

Broadly speaking, I agree with Muddy Waters’ view that Burford is quite aggressive in the way it reports profits from valuation gains on cases that are still in progress.

I’d prefer a more conservative approach, where legal cases were valued based on the money invested until a final settlement was reached. But without commenting on individual cases highlighted by Muddy Waters, I think it’s fair to say that Burford’s accounting treatment is within the scope of accounting rules for financial assets.

“Arguably insolvent”

The Muddy Waters report suggests that Burford is “arguably insolvent” and “frequently raises capital”. In my opinion, this is a weak and contrived argument.

I agree that Burford has debt and raises funds from outside investors for new litigation investments. But in my view, this is consistent with its business model and historic growth rate. I wouldn’t describe Burford as insolvent.

I’d also say that my reading of the firm’s accounts suggests that it does generate plenty of cash from its litigation investments.

For example, in 2018, the company reported cash proceeds from investments of £629m. However, all of this cash and more was swallowed up by new investments of £738m. As far as I can see, the company’s rapid growth is the main reason why it doesn’t generate any free cash flow.

I’m worried about these things

I don’t want to sound too positive about Burford, as there are a lot of things that worry me about this business.

The Muddy Waters report suggests that 66% of Burford’s net realised gains since 2012 have come from just four cases. If that’s correct, then it suggests that most of the firm’s other cases are far less profitable.

In some ways, I’d expect this. Not every case can be a blockbuster and as more money flows into litigation financing, economic theory suggests average returns will fall. But I think there’s a real risk that profit margins could be lower in the future.

I am also uncomfortable with the increasingly complex financial structure of Burford’s investments. In my view, some of these arrangements may be designed to magnify the value of wins, while risking larger losses.

As a rule, I think complexity is a bad idea in investments. My experience suggests that it increases the risk of misunderstandings, errors and surprise meltdowns.

Buy, sell or hold? For me, Burford is too complex and too much of a black box. I’m not prepared to put blind trust in management. I’m going to continue avoiding the shares.

The post Is it time to buy the Burford Capital share price? appeared first on The Motley Fool UK.

The reason the shares in the litigation finance company fell so far earlier in the week is that US research firm Muddy Waters, which is run by prominent short-seller Carson Block, released a damning research report on the AIM-listed company.

So, what does this mean for Burford shares? Is it is a stock to be avoided or has the huge share price fall created a buying opportunity?

Muddy Waters’ report

The report from Muddy Waters makes a number of claims in relation to Burford. I won’t list them all here, but to summarise, Muddy Waters alleges that:

• Burford manipulates its metrics to create a “misleading picture” of investment returns.

• Burford is “financially fragile”, at “high risk of a liquidity crunch”, and “arguably insolvent.”

• Profits since 2012 have been based on just four litigation cases, one of which was a loss and was bailed out by Invesco.

• Burford’s corporate governance is “laughable” as the CFO is the wife of the CEO.

Burford hits back

Unsurprisingly, Burford has hit back at the report. On Wednesday, it released an announcement stating that its returns are “robust” and that it had over $400m in cash and cash equivalents at 5 August. Then, yesterday, the group issued a formal response which stated that Muddy Waters’ claims are “false and misleading.” It rebutted all of Muddy Waters’ points and advised that the group is solvent, generates strong cash flow and that its accounting is transparent. It also said it would consider a share buyback. In addition, CEO Christopher Bogart bought 123,747 shares (a substantial purchase) yesterday and two more directors have purchased shares since. 

What’s the best move now?

So, what should investors make of this unusual situation? Are the shares a bargain after falling so far?

My own personal take is that Burford shares should be avoided for now. The main reason I say this is Carson Block – who was listed in Bloomberg Markets’ 2011 ‘50 Most Influential’ list, which features individuals with “the ability to move markets or shape ideas and policies” – has a strong track record. For example, he bet against Irish biotech company Prothena (another Woodford stock) and this lost 70% of its value last April. His firm Muddy Waters is best known for spotting fraud at Sino-Forest Corp, a Canadian-listed Chinese company whose stock fell nearly 75% before it filed for bankruptcy in March 2012. Given his track record, I wouldn’t want to bet against him.

Yesterday’s announcements from Burford – particularly the large insider purchases – suggest that Muddy Waters may not have got it right this time. However, all things considered, I’d leave the stock alone for now. Burford shares could continue rebounding if Muddy Water’s claims turn out to be incorrect, however, in my view, there is too much risk for now.

The post Burford Capital shares just tanked. What’s the best move now? appeared first on The Motley Fool UK.

If you haven’t done so already, I urge you to read my Foolish colleague Rupert Hargreaves’s summary of the company’s current situation after coming under scrutiny from US investigative research firm Muddy Waters.  

Unfortunately, Burford’s decision to issue a statement designed to counter the latter’s claims that its investment returns were misleading has backfired. The share price declined 54% yesterday as investors fled for the exits and traders joined Muddy in betting against the company.

But Burford isn’t the only Woodford holding that’s been a target for short-sellers. Another has been breakdown recovery provider and insurer AA (LSE: AA) — currently the joint second ‘most hated’ share on the London Stock Exchange.

Road to recovery

Releasing a pre-close trading update to the market this morning, AA predicted that earnings over the six-month period to the end of July will be “ahead of last year”, although FY2020 performance will still be weighted to the second half.

Positively, the company stated that its paid personal membership base was stabilising (falling roughly 0.5% compared to the 1.1% over the same period in 2018) and that it would start growing again in the next financial year. Elsewhere, AA’s Insurance arm was performing as predicted with its motor and home books growing by 10% and 1.3% respectively.

Looking ahead, the small-cap said that it’s on track to deliver full-year earnings growth in line with what the market is expecting and “strong” free cash flow of around £80m. 

Having declined over 80% in value over the last three years, AA’s shares can be picked up today for just 5 times forecast earnings. That might appear screamingly cheap in light of today’s numbers and recent developments (including a deal with Admiral to offer breakdown services to its customers), but I’m still wary.

Regardless of its ability to throw off cash, few would deny that the company’s net debt (£2.7bn at the end of the last financial year) is still nothing short of terrifying for a company only valued at £300m. Moreover, I’d want proof that recent, substantial investment is paying off and membership numbers are actually growing, especially as the competitive breakdown industry could become even more so in the event of an economic downturn as more of us hunt for bargain cover.

AA may be spluttering back to life but it remains firmly in my ‘avoid’ pile until there’s clear evidence of it moving into a higher gear. 

Too risky

Returning to Burford, it seems likely that the share will remain under pressure until the company has a) taken formal action against Muddy Waters, b) management has taken advantage of the share price collapse to top up their holdings, or c) both. The fact that the shares aren’t bouncing as one might reasonably expect following a huge fall and investors’ collective love for a bargain is an ominous sign.

Taking a contrarian stance when presented with all the facts is one thing, but I think there’s simply too much uncertainty at the current time for Burford to be considered anything more than a punt. And that’s not the Foolish way.

The post The Burford Capital share price isn’t the only Neil Woodford disaster stock I’m avoiding appeared first on The Motley Fool UK.