BUR
Burford Capital Limited
$3.29
Banks, Insurers & Asset Managers
85%
P/Tangible Book × ROE Quality
Strong
·
Conviction
Undervalued
Trading 69.5% below fair value
You pay
$3.29
Bear
$7.56
Fair
$10.80
Bull
$14.04
Bear
$7.56
+129.8%
ROTCE 4.0% → 0.30x TBV
Fair
$10.80
+228.3%
ROTCE 2.7% → 0.30x TBV
Bull
$14.04
+326.7%
ROTCE 3.1% → 0.30x TBV
Adjust Assumptions
2.7%
10.1%
Key Value Driver
ROTCE (2.7%) vs. cost of equity (10.1%)
Implied Market Multiple
0.31x
Summary
With ROTCE of 2.7% vs. 10.1% cost of equity, fair P/TBV is 0.30x on $10.54 tangible book, implying $10.80 per share. DDM cross-check: $11.79.
Warnings
Traditional cash flow models don't work well for banks — lending activity distorts how much cash the business actually generates.
Common valuation shortcuts don't apply here — for banks, interest payments are a core business cost, not overhead.
Return on equity (2.7%) is below the minimum investors require (10.1%). This means the bank is worth less than the net assets on its books.
Key Risks
- Book value quality matters as much as level — check loan loss reserves
- Interest rate sensitivity creates non-linear earnings surprises
- Insurance reserving is actuarial, not financial — errors emerge slowly