Burford Capital Ltd — Earnings Call Q3 2026

Operator: Hello, everyone. Good day, everyone. Thank you for joining us and welcome to the Burford Capital Third Quarter 26 Financial Results Conference Call and Audio Webcast. After today's prepared remarks, we will host a question-and-answer session. To withdraw your question, press 1 again. If you have logged in via the webcast, please use the Q and A button to submit your questions. I will now hand the conference over to Josh Wood, Head of Investor Relations. Please go ahead. Good day, everyone. Thank you for taking time to join us to discuss Burford's Third Quarter Results On the call, we have our Chief Executive Officer, Christopher Bogart our Chief Investment Officer, Jonathan Molot and our Chief Financial Officer, Jordan Licht. Earlier today, we posted a detailed earnings presentation, which we will refer to during The call, and we also filed our Form 10 Q. If you have not already accessed them, you can find those materials on our investor relations website at investors.burfordcapital.com. 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 information regarding these risk factors, please refer to our earnings materials relating to this call posted on our website on our filings with the SEC. We will 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. Without further delay, I will turn the call over to Christopher. Christopher Bogart: The top line here obviously is that it was a strong quarter. And you see the you see the numbers sitting on the slide. Revenues up strongest year to date. More than double the revenues that we posted in the comparative period last year. And that was notwithstanding some real headwinds from adverse discount rate moves that affect our non-model results. And Jordan will take you through that in a little bit more detail. But without those headwinds, we would have been north of $200 million of capital provision income, well north of $200 million of revenue. Even with those headwinds, we posted an ROE of 13.4% annualized. Without the interest rate headwinds, that number would have instead been well into the forties. And it was a solid it was a solid quarter for cash. So we are well pleased with the quarterly performance. And in a minute, we are going to talk about a further success that happened after the quarter end. The other thing during the quarter that feels a little bit like old news now, but was very significant for us was the beginning of our delevering campaign. So we took a $100 million of debt off the balance sheet. We eliminated our 2028 maturity. We had an extremely successful new issue that pushed that pushed the timing out. So we are well pleased with that as well. Jonathan T. Molot: And before I turn some pages, I will just mention a couple of other things of notes during the quarter. These all have been sort of out there in the public, but it is worth it is worth just rolling them all together. First of all, on YPF, while YPF is likely to go through an arbitration process, It has not completely finished in the US courts. And in fact, Monday was the deadline for the filing of what are called amicus briefs. So those are briefs by third parties who want to express their views to the US Supreme Court about the case. And we saw the filing of a significant number of amicus briefs, 9 in total, which is which is an unusually large number for a case like this. And they included, among other things, 15 US states and territories, a US senator, market participants, and a bunch of policy institutions and legal academics. So that was a pretty significant development in the process of that case. We also, as you know, from public statements during the quarter, had a couple of big sort of first instance litigation activities. We had a successful arbitration win, in a case involving an African mining matter against Cameroon. That was a $600+ million tribunal award. Burford entitled to something around a third of that. That obviously has to go through now some more proceedings and some enforcement. That was certainly a nice strong result. And we also saw a very large. In fact, the largest US patent verdict in history a very large patent verdict in a case that we had been involved in against Apple. So those all are coming down the road. We will see what happens with all of those individually. Christopher Bogart: Turning to slide 9. I want to use this slide for several purposes. This, at bottom, is another strong success from a case resolution. And this is a resolution that has already been completed. We have already got the cash in the door from this. This has been paid in full. And I want to use this to make a number of points. First of all, obviously, just the success itself. We are very pleased with outcomes like this. This is a very significant ROIC. As you can see here, we made more than 11x our money. So it is a nice high return matter with, as I said before, the cash already paid. But I would really like to use this to underline a very important point as well. Lots of investors talk to us about old cases and I think they. And they talk to us with some skepticism about them. And I think that is probably a hangover maybe from private equity where if you start seeing things that are a decade old, a private equity fund, you know, the odds of that going well are probably not very high. And so there is a little bit of a sensation out there that old cases, you know, might be bad cases. I think this really. And we have always said that is not our view at all. That age in litigation usually means either the case is trundling down the road on a fairly long procession towards trial. Or that there have been procedural, you know, machinations along the way. But that in our world, old does not mean bad. And I think this case is really absolutely proof positive of that adage. it is also a good case study for the. Showing the real world impact of court delay. You know, if you look at the chronology that we have we have set out here, we won this case. We won an important point on appeal in 2020. And that set the case up for trial. Sure. There needed to be a little bit more stuff to happen first, but not that much. And in the normal course of things without COVID, without the pandemic, that you would have reasonably expected that case to be teed up for trial not too long after that 2020 appellate outcome. And instead, it took 6 years. That is just too long. it is aberrationally long. The courts are working hard to reduce those timelines. Think we are going to be the beneficiaries of those timelines coming down as we go forward. It does illustrate what we have seen in this post-pandemic period as well. And the final thing I would point out here is we are also using this as an illustration of how our fair value accounting works. And you can see that it goes up and down, and it follows the events in the case. But also it also comes out in the right place at the end. So we are very pleased with that and with the ability to share that information about that case with you. Turning to slide 10. I would really just make the point here. This is this is a slide about the volatility of interest rate movements. And the consequent impact of that on our noncash fair value P and L. You know, you really just have to underline this. I have been underlining it for 17 years, and I. And I am not going to stop doing it. This stuff has nothing whatsoever to do with cash results in our portfolio. This is all just interim accounting along the way that all gets washed out when we get to the end of the case and we get to a result. But, you know, because of the way the accounting works, and it is not something we have any choice about, You know, there is obviously market volatility as you see interest rate movements. And we saw, you know, basically, the largest negative impact of interest rates that we have ever had with 90 basis points of impact in the quarter. that is obviously already been turned around and reversed in the fourth quarter. But that is why you saw a very strong quarter somewhat negatively impacted by these noncash charges. And finally, for me, on slide 11, the balance sheet. We have talked to you a number of times about our focus on the balance sheet. Over the last 6 or 9 months. You have seen us engage in, you know, very focused and active management of the balance sheet and the capital structure. We are committed to delevering started that process. We took $100 million of leverage off the balance sheet in the quarter. That took a, you know, our debt equity ratio down by a third of a turn. As I said at the outset of the call, that enabled us to retire the entire 2020 maturity debt in full. We had a very successful offering in the market. At. You know, given where interest rates were at the time, at competitive satisfactory rates for us to issue a new round of 2029 paper Credit rating agencies, debt ratings, all satisfactory around that. And this is just the beginning of us continuing to work on and manage actively the balance sheet. So in summary, we are pretty pleased with how the quarter went. We are delighted to be able to give you, in addition to just some strong numbers, some actual data points so that you can have a little visibility and see what is going on inside the business. And with that, I will turn you over to Jordan and John. Jordan Licht: Thank you, Christopher, and thank you everyone for joining us this morning. I am going to start on page 13, which goes over some of the financial KPIs for the quarter and for year to date. As a reminder, it is hard to compare year to date between the years given the activities associated with YPF. In the first quarter. So bear with me when I jump around between some quarter numbers and some year to date numbers. Overall capital provision income, which Christopher just highlighted, was impacted by the movements in interest rates. $116 million. That compares very favorable to the year-to-date pace. That we saw last year. Overall, realized gains is just shy of where we were last year. A year-to-date basis, 82 million versus 93 million. The flip to that is asset management income, which is correlated neatly with our assets as they move $29 million versus $21 million. Overall, cash receipts, I wanna point out while Christopher walked through that case study, just a second ago, that case study actually concluded both the settlement and the realization in the fourth quarter. So when I am walking through these numbers, you do not see them appear in it, but the $63 or $64 million that we received on that settlement puts us in a nice place compared to year to date cash receipts for last year. The other portfolio metrics I will hit on, and as we talk more about the principal finance segment and the asset management segment. Overall, though, earnings per share at $0.10 took us to just slightly below $4.00, and Christopher already hit upon a number of the debt ratios I am gonna jump forward then to the principal finance segment Remember, 2 segments. Principal finance is when we are investing for our balance sheet, asset management when we are investing on behalf of the funds that we manage. On page 18, you look at you know, the fair value of the assets on the balance sheet compared to the deployed cost And that is $500 million compared to the $1.9 billion, and you see that ratio and you then compare that to our historical ROIC, you know, that is somewhere around 30%. Versus a 80+% historical ROIC. And that demonstrates that there is a lot of you know, revenue to come on the existing assets. I know I have mentioned that before, but the reason why I harken back to it is actually the look at the most recent example of the case study that Christopher outlined. And when you look at that example, you actually see that most of the revenue associated with that asset occurs at the tail end. And if you go back to investor day, 2 years ago, we actually talked about the fact that around 50-ish percent when you do some sample sizes of revenue associated with concluded assets, happens within the last year or towards the very tail end, and that is the nature of the assets and the valuation model. The right hand side shows the diversity of the portfolio. You have seen these pie charts before. They do not change significantly from period to period, and it just continues to demonstrate the global platform when you look at the geography as well as the skill sets that we have when you dissect the different asset types of which we are invested. But how did the fair value move forward The page 19 demonstrates how that balance sheet, how the capital provision income and then just how the asset changes over the period of the quarter. You know, deployments is straightforward. When we deploy, we look to capitalize the cash that went out the door. You have the impact of duration as we get closer towards the conclusion of an asset. The change in discount rate, which I will not go into too much, Christopher already mentioned, that you can see that is been a headwind not just in the third quarter, but on the right-hand side, you have the year-to-date bridge, and it demonstrates the headwind that it is been for the year. Then you have milestones and other impacts. These are the favorable outcomes that occurred in trial or negative. All in accumulation across the models and the other inputs. And that represents itself in the next green bar. And then, of course, you have realizations. And so that is the progression of our assets. You can see how it moved from 2.3 to just shy of $2.5 billion of fair value at the end of the quarter. On page 20, we outline new business. Key to new business and to getting realizations is also putting the money out the door. We consistently put out around a $100-ish million of deployments per quarter, and that you can see on the bottom, it is goes up and down. that is been fairly consistent. Undrawn commitments, slightly larger than where we had finished the year. Where we sit right now, and that shows that we have a healthy book of business to continue to deploy to. As well as the discretionary undrawn commitments, which is like right of first refusal or a partnership with either a law firm or a corporate. You then look at the year to date new definitive commitments. Obviously, there is a slight decline when you compare that to year to date last year. We tend to look at things more broadly than just the quarter. But what that also represents is a little bit of our focus in the most recent quarter and our decisioning around prioritizing deleveraging and liquidity. When we compare that to moderate expected returns that was in the pipeline at that moment. And with that, I would like to turn it to, John. Jonathan T. Molot: Thanks, Jordan. Thanks, to you all for joining. So turning to slide 21. And then the slide confirms what we have always said that there is period to period unpredictability to the business. For example, Christopher mentioned that case that came in after the quarter that would have changed the numbers for the quarter. We are consistently generating positive cash flow and case realizations, and I focus less on the quarter than longer term activity, and there is a ton going on. If you turn to slide 22, you see that over time, that has translated into us passing, you know, quite a remarkable milestone that we have taken in $4 billion of cash realizations. Like, I think back to when we started this business from scratch 17 years ago and to think that it is now generated more than $4 billion in cash with desirable returns and consistently low losses like, it is a great business model. And as Christopher said, we have-- there was a period with COVID where things backed up and it took longer, but that stuff is in the portfolio moving through and some of the stuff where we see activity is much more recent vintages as well. Turning to slide 22-- you have seen this as well. I mean, to slide 23. You have seen this as well. this is how it happened, that there is sort of a natural spread of possible outcomes to matters with asymmetric return profiles, and that makes it a very attractive business class if you have got the right team to do it, which we do. And we have built a pretty good mousetrap. And with that, I will turn it back over. Jordan Licht: Thanks, John. I am on page 26 to talk briefly about the asset management segment. 2 key numbers to look at both the GAAP income number, which is on the left hand side, which shows increased year to date of $29 million versus $21 million. And then when you look at the cash number that we received year to date, generally in line with where we were over the same period last year. Overall, $14 million versus around $16.5 million. Obviously, you can see in the bottom, we continue to enjoy the partnership on BOF-C, and that is what represents the profit sharing income. Those assets are quite correlated to the assets that we have on balance sheet. Then you see the runoff of the other funds as we continue to manage those down. Moving to page 28, which highlights the you know, liquidity and our capital bridge, started the year at $621 million, and now we are at $500 million. And that, of course, includes the redemption associated that Christopher just highlighted of the 28 bonds and as part of that redemption, a $100 million in our total debt outstanding. So we sit strongly in the liquidity position. From a cash perspective at the end of the quarter, and a $120 million in our due from settlement. Balance as well, and that does not include the case study. Right? That was fourth quarter event. That. of $64 million that has already paid out. Page 29 outlines our operating expenses Here again, I am going to mention that some of these numbers get distorted a bit when you try and look at the year-to-date comparisons. And there is a couple of items to make sure that you know, we describe so that people can digest the numbers. First and foremost, when you try and dissect the long term incentive compensation, the negative number in the year-to-date, positive numbers obviously in the quarter, When you push that together and then try and strip out the YPF related mark, what you do see is that the long term incentive comp was approximately 10% of our non YPF revenue, and that is generally in line with the guidance that we have historically given around the range of the carry program. The other piece you can see is the large number in the year-to-date case related expenditures that $31 million represents or $28 million of the $31 million represents deployed cost that is not able to be capitalized in the investment. But from our vantage point, it is deploy costs just like every other asset, and the given some of the accounting rules, we cannot capitalize it. We will continue to outline that number for you so that it can be tracked and appears appropriately in our investment table. And $18 million of that was a reversal associated with some deployed costs from previous periods, and so obviously, that number distorts a bit of the income statement. You can see our G&A is tracking, below where we were on a year-to-date basis. Compared to last year. And with that, I am going to move then to wrap up on our capital structure. Normally, I get this slide, but Christopher took a little bit of my thunder early on in the conversation here. So I will not repeat all of those activities except to say look. We are in a great spot. Considering our debt to tangible book value ratio having come down a third of a turn since last quarter. The other piece, when you look at our weighted average cost of debt at 8.2%, that compares very favorable to a 25% historical IRR. And then you look at the debt outstanding and the weighted average life of it, and you compare that to the average life of concluded assets, or even the active deployments that we have, and we feel as though we have built a capital structure that puts us in a good place and a good position. So with that, I would like to turn to Christopher to handle any closing remarks before we get to Q and A. Christopher Bogart: Thanks, Jordan, and I am on slide 31 just to wrap up. So just to go back to where I started, very pleased with the with the robustness of the quarter. Not only in terms of the operations of the business, and its cash generation and case progress, but also in terms of the work that we did on the balance sheet. I will echo John's amazement at getting over the $4 billion threshold that is $4 billion of cash. Those are not accounting numbers. That we have realized on successful investments while being able to continue for a long period of time to generate, you know, desirably high positive returns and desirably low losses. We are we are leading this industry that keeps on growing. We have got a large portfolio that is going to throw off cash for years to come as we continue also to originate new business. And we are pretty excited as you can probably tell about where we are. And with that, we would be delighted to take your questions. Operator: We will now begin the question-and-answer session. To withdraw your question, press 1 again. Ask that you pick up your handset when asking a question to allow for optimum sound quality. If you are muted locally, please remember to unmute your device. If you have logged in via the webcast, please use the Q&A button to submit your answers and questions. Please standby while we compile the Q&A roster. Your first question from the line of Timothy D'Agostino with B Riley. Timothy, your line is open. Please go ahead. Timothy D'Agostino: Hi, good morning, and thanks for taking the questions. I guess to start on the focus for deleveraging. Could you maybe just talk through the priorities when you approach deleveraging? Is it handling the closest maturities? Maybe, paying down the highest coupon debt, or looking out to the deepest dis. Like, the deep. The deepest discount for long term debt where it is trading at. It would be great to just kind of understand your priorities around, you know, handling deleveraging and, you know, maybe how you rank those 3 initiatives or with the way you look at that. Thank you. Christopher Bogart: Yeah. I think. And Jordan can talk in more detail about this. I think the answer is sort of all of the above. Those are all things that we take into consideration. And the other thing, of course, that we are taking into consideration is the business opportunities to be able to put new capital to work as well. So the goal, as we have as we have said consistently during the course of this year, is to do both of these things, is to deleverage the balance sheet while also continuing, to grow the business. And growing the business, of course, is its own form of deleveraging. Because as we as we drive in returns from the portfolio, those build equity value and delever the business as well. So it is a. It really. We sit in a pretty active capital management world where we are considering all of those dynamics, pretty much real time all the time. Jordan, do you have something to add there? Jordan Licht: I think you hit the points well. I will add just a little bit, which is we purposely built a long term capital structure for a reason to match the assets that have unknown duration. That being said, you are right. We have got some higher bars in some of the earlier maturities. You get the most gain to equity if you buy back a little bit of debt in the long term. So I think when you when you take all of those, Christopher was right in saying it is a little bit of everything. Timothy D'Agostino: Okay. Got it. that is helpful. And I guess, just thinking about deleveraging while still growing the portfolio and having that kind of dual mandate to help deleverage the business. Could you just-- can you help us give us some commentary on where you think what you think about cash Maybe what is the minimum cash balance decrease quarter over quarter? Obviously, we have purchased $100 million in Debt and putting money to work. But just where. Like, what is the minimum liquidity that you wanna hold just to get a better sense? Christopher Bogart: Go ahead. Jordan Licht: Yeah. So I do not think there is 1 number that we look at in terms of minimum liquidity. And I think it varies based off of a number of different factors. So we have good visibility to the portfolio in terms of what activity is going out the door on a regular basis. Given the fact that these are not revolvers and that we understand where the cases sit. We have visibility not as close, but some visibility onto where we expect cases to resolve and when. Just given all the activity. While we cannot predict each case, we do with a large diversified portfolio, feel comfort in the fact that things will resolve throughout the year. And then we have new business and opportunities. And so unfortunately, it is difficult for us to sit here and give the market a direct answer to say, hey. what is the minimum amount of cash that we would see on the balance sheet? I do feel that we have a little bit of extra compared to where we normally have, and you can see that based off of our historical balances and how much we have carried. But we do not give guidance on the exact number. Timothy D'Agostino: Okay. Thank you so much. Operator: Your next question from the line of Henry Coffey with Wedbush. Henry, your line is open. Yes. Please go ahead. Hal Potter: Good morning, and thank you for taking my question. I hope I do not seem too stupid here. I was trying to straighten out some of the moving parts You were talking about the cash case related expenditures and you said there was a reversal in there. Jordan Licht: Yeah. So when you look at the case related expenditures, overall for year to date, we had originally deployed that capital. We had originally deployed that capital and capitalized it into the balance sheet. So overall, case related expenses year to date is 31 million. 28 million of that is we view as a debt Oh, excuse me. Hang on. Hang Okay. So overall case related expenditures Yep. And I am on With 31 million. Yeah. I am on page 29. And so there were 31 million Of that 31 million, 28 is related to what we call a deployment. Right? Those are deployments, unfortunately, though, that we cannot actually put out and capitalize when it comes to an expense. Of that $28.17 to 18 million of it was from the previous year. And so we had cap. So those were not deployments of cash that we had put out this year. They were from a previous year that we had capitalized but that we unwound and expensed this year. Hopefully, that helps. Hal Potter: What about as it applies to the 3 months of 2026? Are there any work that is in No. Jordan Licht: There. This. No. I was just looking at here to date to see. Yeah. I was I was reverting to the year to date numbers then. The we have a little under 4 million of case related And Right. Now we took. That. that is just regular white. Okay. Hal Potter: And then So then you talked about I cannot really understand the. How the numbers work. Okay. Okay. Go ahead. Jordan Licht: Yeah. They do not let you do certain things. I could if we had. I do not know. If we could maybe do 5 or 6 hours, and I will tell you what I think about Gap. Hal Potter: So the case studies, the 64 million what was that? Jordan Licht: Is that a realization this quarter? Yeah. So It did. This was a fourth-quarter event. What you can see on looking at that page is we outlined how the asset has moved forward over time. What will happen in the fourth quarter Right? What happened in the third quarter, you can see there is a little bit of unrealized gain. That occurred based off of. I cannot get into too much details because of confidentiality, but based off of some occurrences and developments associated with the case, there is a little bit of unrealized bump that you see in the third quarter, And then in the fourth quarter, you see. What you will see is the subsequent realization. If the quarters were happening on days that realization would turn into a due from settlement, but it immediately went from a due from settlement into cash. Okay. Hal Potter: So that is a positive. And in terms of sort of outlining where you stand, we will call it, soon or today or where you stand during the fourth quarter, how much liquidity and funding capacity do you have right now? Jordan Licht: I mean, Yeah. Hal Potter: How much business could you. Jordan Licht: You know, how much Yeah. Hal Potter: If you are. Jordan Licht: Think about our business. 1, we sit in a similar liquidity position. I am not gonna give an exact cash number of how much is on the balance sheet today, but it is similar to where we were at the end of the third quarter. The. In terms of how much business could we do today, I think the answer is, you know, our cases majority of our cases are drip capital. And they are capital that goes out the door over time and not a large monetization immediately and so. And those over time over multiyear periods. And so, you know, we have plenty of room to continue to invest in new assets and continue to grow the portfolio as the historical portfolio rolls off. So you. Yeah. You have 446 million in cash right now. 60 million in marketable securities, So that gets you to $5.60 or so 540. What? Yeah. Yeah. The marketable securities are the marketable securities are very short term. So, you know, we practically treat them as cash. Okay. So you could fund 500 and something million of business with what you have got on hand today. Hal Potter: And it is. Christopher Bogart: that is not how the business works. Business does not they do not. Nobody calls up and says, I need 500 million now. But you do have that. Hal Potter: Could you. What about additional debt capacity? Jordan Licht: What. Yeah. We fairness, we have had people call up and say, I need a couple 100 million I am not sure. 500 million. And we have historically done some large monetizations. In terms of debt capacity, right now, we are at our covenant levels. There are VARs that we could use to do some incremental items, but our goal is to actually see the debt to equity ratio improve. As opposed to taking on any more debt. Hal Potter: Would there be an appetite for preferred or something if you needed or would you rather go to the third party market and, you know, out do a managed deal? Jonathan T. Molot: I do not know that we see the need to do that at all. Like, the thing-- think of us. The When you think of the business, we have you know, we can control the amount of new business that we take on. And so our goal is to continue to grow the business, but also, as Jordan said, to reduce the level of debt that we have. Or to reduce the debt equity ratio. And so, I think that we would we would opt to. If we if we all have a sudden had an onslaught, of, you know, a billion dollars of client demand, you know, in the fourth quarter for business, I think the simple answer is we would not do all of it. Hal Potter: If increasing and improving your debt ratios some of that obviously will come from earnings. How much cash would you be willing to commit to that over the next 3 to 6 months? Christopher Bogart: I think it depends. it is a fluid as we said in response to Timothy, it is a it is a fluid issue for us because we are we are so constantly looking at 3 different dynamics at the same time. Right? We are looking at you know, how much deleveraging we wanna do, how much new business we wanna put on, and then in the existing portfolio, what the. What are the net flows from the existing portfolio? Much capital is coming in from cases that are resolving and how much cash is going out to the cases that we have already taken on and are underway. And so that we sort of engage in a real time basis in that triangulation. While also maintaining a liquidity cushion. As we do that. Hal Potter: Okay. Thank you very much. A great quarter. Good accomplishment. Thank you very much. Appreciate it. Operator: Your next question from the line of Hal Potter. Bank of America. Hal, your line is open. Please go ahead. Hal Potter: Hi, gents. Thanks for taking my questions. Just 2 quick ones from me. The 1 is on your operating expenses. You have called out $10 million of annual compensation savings from changes to your management teams. You just give us a bit of color on where in the business those have occurred? And you expect any impact on performance of those business lines? And then secondly, it is about modeled realizations. Would just be great to get a sense of how those are tracking. You obviously had your 5.2 billion at Q2. It would be good to get a sense of how those are shaping up. Particularly in the context of your new business and you have got new definitive-- your new definitive commitment mix, is mainly in the less than 10% model risk category? Is that a deliberate shift? And does that impact your return expectation? Thanks. Jordan Licht: Jordan, do you wanna do those? Sure. I will try and hit all of them. And if I miss a little bit, tell me. Look. We talked, I think, a little bit more in detail in the last quarter around some of the moves around the expense savings. Those were predominantly in middle management and do not really-- we do not see them affecting our ability to execute against the portfolio as well as to see new growth opportunities And while we have 1 or 2 retirements, and we wish some of those folks well, they have been with the company for quite a long time. Again, I think we feel very well positioned in order to execute against our goals around the portfolio, both seeing the existing portfolio and new growth. With respect to the $5.2 billion we give an update on an annual basis, not on a quarterly basis. Of what are expected what the models produce with the model-- model realizations. And so when you saw that referenced Q2, that was actually referencing the year to date. Now the excuse me, the end of year number from the previous year. And we will give an update on where that stands again, in the next in the next quarter. And in terms of the mix of new business, I think overall, there is probably there is always deliberate decisions around each of the deals that we do and what we see. I think that overall, we see a good mix that will allow us to produce along our historical returns. I think we are conscious of as always, but continuing to be conscious of larger deals that potentially have longer duration. But outside of that, I think we still continue to see healthy pipelines, and I have not significantly changed the way in which we view new business. Hal Potter: Thank you very much. Thank you. Operator: Your next question from the line of Mark DeVries with Deutsche Bank. Michael, your line is open. Please go ahead. Analyst: Hi. Thanks for taking my questions. I just had 2 quick ones as well. The first, I just wanted to ask you about the really strong fair value gains related to milestones and confirm the timing around the Apple patent case. Christopher Bogart: I know you put out a statement on the verdict really late in the quarter, and, could you just confirm if any fair value milestones related to that verdict would have been captured here this quarter as opposed to Q4 given that was right on the cusp. So Jordan can talk to the accounting. Let me maybe just say a word, but the. Your question, though, about the case progress. Like, so when things like that happen, you know, that is just the first act of the play, if you will. And so unlike the, you know, the case study that I took you through, which was a which was a resolution by settlement, which means you can both finish the case and get the cash in. In a in a short period of time. You have a contested piece of litigation, especially 1 that has a very substantial trial win like that, there are going to be a series of steps that need to be gone through thereafter. So you start with staying in the trial court, and doing post trial proceedings. Where 1 side is trying to knock out the verdict and the other try. Side is trying to keep it or add interest to it or add some other embellishment to it. And then, if there is not a settlement along the way, then a case like that is obviously gonna end up going up on appeal as well. And so, you know, as I said, we are. We have got a number of acts still to play. In a case like that. And then Jordan can talk to the accounting. Jordan Licht: Yeah. When milestones occur in the quarter, they. We would look to account for them in the quarter they occurred. I think but as Christopher outlined, there is a lot more litigation risk and procedure associated with the case. Analyst: Got it. Thanks. that is helpful. And then just a follow-up on new business as well. You called out and applied the conscious pullback in new commitments to prioritize delevering in the short term. I realize this all depends on the opportunities coming in and how attractive they are, but is there a ballpark range for the amount of new commitments you might expect to take in on a quarterly basis over the next, you know, 12 months or so? Jonathan T. Molot: No. We do not really think of it in quite those terms. We you know, we get a meaningful flow of potential opportunities and we close on the ones that we like calibrated by where we sit with liquidity, deleveraging, and our sort of our risk tolerance for price. And so what you know, if you look at the bands that we put out, you know, what you see is that in 2025 we were doing considerably more business in the. What we call the 10% to 25% risk band than we did in 2026. And so what I am gonna say is not hard and fast. Because cases fit into lots of different buckets. But as a as a general rule of thumb, you can sort of think about the lowest risk band being sort of multicase portfolio, multi-case, cross-collateralized portfolios. Can think of the middle band as being relatively low risk larger transactions that are often including a monetization element. And you can think of the upper band as being more likely to contain traditional litigation, like a single risk case. And so the middle band is where you see us doing less work. Right? We are we are pretty much on top of the low risk band, and we are actually a little bit above on the high risk band. And what that suggests is us saying, well, gee, if somebody shows up with a chunky, low-risk ask. And therefore, because it is low risk, they are only prepared to pay a comparatively low return to us on the capital. We might more this year than last year we might say, you know, maybe not. Maybe we will instead husband that capital and use some of it to buy back debt or put it towards the deleveraging that we did this quarter. that is sort of the decision tree that you see us going through. Got it. Thank you. that is really helpful. Travis D. Lenkner: We have some questions from the webcast as well. The first being with respect to the 2016 and 2017 vintages. Do you have expectations that these vintages will realize gains beyond merely covering deployments And when can we expect to see significant upside on these vintages? Christopher Bogart: So these are probably. If you if you think about the pace of litigation, these are your very classic COVID vintages. And I know that seems strange because they are 2026, 2027. 2026 team, 2017. But when you think about the cadence of litigation, if you are starting down the road with a case in 2016 or 2017, you would have realistically been thinking that you would be getting to trial in and around 2020. And welcome to COVID. And so those are vintages that have seen real pandemic related delay. But just as we showed you with the case study, that does not in any way mean that we have lost faith in what the vintages are gonna perform. what is happened is delay. Sometimes that is corrosive to IRR. But in terms of their ability to produce well above the deployments, there is no reason to believe that the performance is going to alter on a cash basis for any, you know, any particular vintage of cases. Each vintage course, does perform differently. But there is no. there is nothing about those vintages when you look at them that makes you say, oh, gee. You know, there is something went badly wrong there as opposed to looking at them and saying, gee, those are cases that should have been done by now. Travis D. Lenkner: The next question also from the webcast The debt to tangible book value multiple is 3.2x. Do you have a target? I think we sort of went through that before. Operator: Go ahead, Jordan. Jordan Licht: Yeah. No. I did not mean to cut you off there. What I was gonna say is there is not. The first piece is that obviously, we have covenant ratios. But those covenant ratios were set at a time where we had 1 single large asset. And so, you know, while we have historically talked about a 1.25x or 1.5x ratio, I do wanna highlight the fact that we have actually a very diversified portfolio when you think about the gap numbers and the fair value associated with that compared to the debt. I do not think. Christopher, you are probably gonna say, I do not think we have an exact number or an exact target except to say we understand that it is higher right now. And there is 2 ways to attack it, which is to continue to have positive quarters from a milestone standpoint that helps produce incremental equity. And then continue as the portfolio resolves to use some of that cash not just to new business, but also to help delever. Yeah. Travis D. Lenkner: And the last question also from the webcast Do you believe Burford Capital's shares are fairly valued at the current market price? If not, where do you believe the gap between market value and intrinsic value comes from And what events do you expect could help close the gap? Christopher Bogart: Well, you know, it is obviously for the market to value the shares instead of for me to do so. I probably belong pretty firmly in the club of CEOs who are unlikely to say anything other than I believe the business is worth more than the market does. Why do I believe that? I believe that because of the track record that we have developed over 17 years of being able to produce high returns, with, as I said earlier, with consistently high returns with moderate loss rates. And I think that warrants the combination of being able to do that and the growth that we have shown over time. I think that warrants a higher valuation than the market is presently according us. You know, that being said, we are all very conscious of the fact that this has been a turbulent year. And that has both taken some time to settle down, and it also has involved the rotation of a number of investors. And so I have a. You John and I, as you know, are the. Individually, the largest shareholders in the business. And we have a longer term perspective on it. But it is obviously our hope that continue to show-- that continuing to show performance of the way that we have been and continuing to have a focus on the balance sheet. We will close that gap and see continued share price improvement. Travis D. Lenkner: And now the last question, 1 more from the webcast. If the Q4 case win of $64 million is not in the due from settlement, component, is still accounted for on the balance sheet and capital provision assets. Jordan Licht: Yes. that is exactly how to think about it. If you look at page 9, you will see. And we actually outline what the fair value was. It would have been as of the end of the quarter accounted for in capital provision assets at just under $31 million. Christopher Bogart: And I think that brings us to a close. And for those of you who were curious, the dulcet tones of our question reader, that was Travis Lenkner, our COO. Who came along for the ride to help us out managing both the phone questions and the website questions. So thank you, Travis. And thank you all for joining us today. We were very pleased with the quarter. And we will look forward to pushing through to the end of the year and reporting some interesting numbers to you when we talk to you again in February. So thank you again.