Profits are writ large

BURFORD Capital specialises in funding complex litigation cases so that companies can finance long lawsuits. Based in the US, it is listed on AIM and is number one in its field.

The shares have soared in response to several factors. In March, the group delivered a 62 per cent rise in 2016 profits to $110million (£87million) and a 37 per cent increase in the sterling dividend to 7.4p. The company also increased its commitment to new litigation deals by 83 per cent to $378 million and bought its largest rival.

Chief executive Chris Bogart this month raised $66million by selling 15 per cent of the possible future proceeds from a case between an investment company, Petersen, and the former Argentine government. Burford is financing the case and the proceeds could run into hundreds of millions of dollars.

However, Burford has not just been a good investment for shareholders. The company has been active in the Stock Exchange’s retail bond market and last month issued a £175 million bond, maturing in 2026 and paying a 5 per cent dividend. Launched at 100p, the bonds are now trading at 102p.

Midas verdict: Burford has had an extraordinary year and investors might feel inclined to sell 25 to 35 per cent of their stock to bank some profits. But litigation is a growing industry, costs are soaring and Burford provides much-needed support. The shares will almost certainly keep rising and the global nature of the business provides some protection against any economic slowdown here.