BUR
Burford Capital Limited
$4.53
Banks, Insurers & Asset Managers
85%
P/Tangible Book × ROE Quality
Strong
·
Conviction
Undervalued
Trading 72.2% below fair value
You pay
$4.53
Bear
$11.40
Fair
$16.28
Bull
$21.16
Bear
$11.40
+151.6%
ROTCE 4.0% → 0.30x TBV
Fair
$16.28
+259.4%
ROTCE 2.7% → 0.30x TBV
Bull
$21.16
+367.2%
ROTCE 3.1% → 0.30x TBV
Key Value Driver
ROTCE (2.7%) vs. cost of equity (10.3%)
Implied Market Multiple
0.43x
Summary
With ROTCE of 2.7% vs. 10.3% cost of equity, fair P/TBV is 0.30x on $10.56 tangible book, implying $16.28 per share. DDM cross-check: $11.02.
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 (10.3%). This means the bank is worth less than the net assets on its books.
Dividend-based valuation: $11.02 (32% below our primary estimate). Large gaps suggest the dividend may not fully reflect the company's value.
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