Burford Capital Limited Stock

Hello, and welcome to the Burford Capital Second Quarter 2026 Financial Results Conference Call and Webcast. [Operator Instructions]

I would now like to turn the conference over to Josh Wood, Head of Investor Relations. You may begin.

Thank you, Sarah. Good morning, everyone. We hope you're all enjoying a nice summer. And thank you for taking time to join us today to discuss Burford's second quarter results. On the call, we have our Chief Executive Officer, Chris Bogart; our Chief Investment Officer, Jon Molot; and our Chief Financial Officer, Jordan Licht.

Earlier this morning, we posted a detailed earnings presentation, which we'll refer to during the call, and we also filed our Form 10-Q. If you've not already, 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 and our filings with the SEC. We'll 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.

And without further delay, I'll turn the call over to Chris.

Thanks very much, Josh, and welcome, everybody. Just before we started, I was reflecting with Jon that we've been doing earnings calls now for 17 years together at Burford. And I think on probably almost every single one of those calls, we have said that we run this business on a cash basis. That cash is what's important to us. And litigation, at the end of the day, meanders through its process until it ultimately gets to cash.

On that basis, we had a really good quarter. We brought in a good amount of cash, significantly more than we've done in the recent past. We have lots of liquidity and that translates into real flexibility for us on the balance sheet with more than $700 million in the bank.

I'll talk a little bit more, and Jordan will as well, about the balance sheet later in our presentation. But what that does, the combination of cash on hand and cash generation gives us real optionality for this business. And what you'll see on this slide, and I'm on Slide 8, what you'll see on this slide are our priorities. Cash generation from the portfolio. We're excited that the portfolio seems to have some momentum. And after various periods in the doldrums; still recovering from the pandemic, unbelievably; we see some real progress, strong liquidity and balance sheet management and continued growth of the business. We're excited about where we are and about what the months ahead portend for the business.

On Slide 9, we've given you a few developments that have happened since the official close of the quarter. We've done this from time to time, a snapshot of developments when there have been some significant levels of activity after the formal close of the period. And so what you see here is what I was talking about in terms of us having some excitement around momentum in the quarter.

We had a strong arbitration result in a mining case that has been public and that people have been following for a while. This is a couple of African arbitration matters. The arbitral tribunal gave us an award, gave us -- our client an award of more than $600 million. If that award were paid in full by Cameroon, we'd be entitled to $200 million or so of it. And what that also does is effectively rightsize that entire portfolio. That was a 2-case portfolio of cases against Cameroon and Congo. The Congo case, somewhat bizarrely from our perspective, didn't succeed in arbitration, although there's a pending appeal for that case. So that's a cross-collateralized portfolio where the win will, if paid, make a huge difference to Burford.

We also -- and the rest of this hasn't been publicly announced. We have a sizable U.S. jury verdict during the month that, again, if paid in full, would come close to $100 million for Burford.

In Germany, we are a significant player in the German legal finance space, as many of you know. And we've been operating in Germany for quite some time. It's our largest market in Continental Europe. And there has been a fair bit of sort of litigation in Germany, litigation and consideration in the civil courts of just exactly how litigation finance and group claims are going to work. And Germany is not the fastest place in the world in terms of making things through the court process and getting to decisions. And so we're delighted that after some years of litigation, the German Supreme Court, which is the highest court in Germany, released a decision resolving in our favor the ability to bring a series of cases using what is called the early assignment model, which opens the door to cases that are already on file and already have been percolated there with damages claims of more than $0.5 billion and giving us a really valuable future precedent.

And then back in the U.S., we have -- as many of you know, we have a number of portfolios with large law firms. We've had one that has had quite a bit of activity this year. And not only has it had cash activity, but we've had better-than-expected outcomes as we've been going through that portfolio.

And then, this we didn't even make the slide, but just yesterday, and this has been covered in the press today, you'll see it on Bloomberg and on Reuters. The English court, the Competition Appeal Tribunal, certified a $5 billion claim, a GBP 5 billion claim, I should say, against Google on behalf of U.K. businesses that were overcharged for their search advertising. It's been publicly disclosed that we're funding that claim on a multiple basis. And so that will take some time now to go through the rest of the process, but that's a major step forward in that case and you'll see news about it in the press.

I'm not highlighting these to say that these are the only things that have happened in the portfolio. They're not. The portfolio remains active and active in both directions. As ever, we have successes and we have disappointments. But happily, the successes continue to outnumber the disappointments considerably. The core point from all of this is to show that we have a big diversified portfolio of litigation that is in active operation in court systems all over the world. And that portfolio is diversified. It's hundreds of cases, not just a few large cases.

And if you turn to Slide 10, you'll see an example. You'll see some data about that diversification. So what we've done here, and I don't think that we've done this before. But if you look at the graphic on the right, we have taken our modeled realization numbers that you've seen in the past. And we've segmented them effectively by size.

And what you can see there is that we're not dependent on any one big asset that instead, we've built this rather remarkable global portfolio that has many different things moving through the process. And many of those can be significant contributors to cash and liquidity here. It's just somewhat vexing that in addition to the usual unpredictability of litigation timing that we have had a somewhat slower-than-average approach to this. But that level of diversification that you can see in the graphic, I think, is really very compelling. Now, when people see that modeled number there in the middle of that circle, the 110% ROIC, and then they see the actual 82% performance that we've generated historically, they reasonably ask about that disconnect.

And if you turn to Slide 11, we've done a little snippet of analysis that goes beyond the basic historical data that we have historically shown you, because the reality is one number does not tell the story in this business. And so we thought we would dive a little bit deeper to show you why we remain optimistic about this portfolio and its future performance.

So this is just one component of what's in there. But what you can see there, if you look at the chart on the left and the graphic on the right, is that very large deals tend to produce lower returns on invested capital, lower ROICs. And that's not surprising, because we price to risk. And we're generally unwilling to put massive amounts of capital to work in very high-risk cases. We're just not enthusiastic, quite obviously, about putting a couple of hundred million dollars out the door and losing it in a binary risk case.

And so when we do big cases like that, while they may well produce nice nominal cash profits and strong IRRs, they do have a tendency to bring down our aggregate ROICs because the ROICs are a little bit lower than our sort of historical averages and they're quite large in the computation. So if you just take these 6 assets alone out of the historical ROIC computation, it goes from 82% to 99%. So you can't just, I think, look at the one historical number representing 17 years of history. And you do have to look at the size of the cases, a whole bunch of dynamics. As many of you know, we provide extraordinarily detailed data about the portfolio in our website table and that's where we get these kinds of insights.

Now, when we're talking about these large and somewhat lower returning deals, while we remain very committed to growth in this business, I will say that one thing that we have done in response to the YPF events earlier this year and the market feedback around liquidity is we have somewhat reduced our willingness to do some of these very large but only moderately profitable deals just with an eye to balancing growth on the one hand and liquidity and deleveraging on the other.

Turning to Slide 12. This is our usual slide about new business. And you can see some of the impact of what I've just described on the mix of new business. So if you just look at the headline commitment number, which, as I've said before, is not the number that we look at internally, but that number is below the 2025 run rate. But you have to look at the mix here.

And if you look at the red bar, which is presumably the most profitable thing that we do, the red bar there has well more than doubled, while the blue bar went down very significantly. So if you were to look at our internal metrics, you would not see a decline of the visual kind that you see on the right-hand top side of this graphic, because the relative profitability of those bars is significantly different.

And so as you can see there, we've well more than doubled the size of the red bar while significantly reducing the size of the blue bar. So that's consistent with what I was just describing before. And also probably, I would say, a little bit of firm stasis for a little while after the YPF decision.

And Jon is going to chime in now and have a little bit more commentary about the portfolio.

Thanks, Chris, and thanks to you all for joining. I'll be brief. I really just want to hit 2 of the themes that Chris introduced and flesh out what they mean from my perspective for the state of the portfolio and the state of the new business machine. As Chris said, he highlighted a few successes we've had in July with the jury verdict and arbitration win, the German Supreme Court ruling and another law firm portfolio and then yesterday, a U.K. ruling. Those are just examples of things that we're seeing a lot of activity in the portfolio. And so looking historically, would people rather that cash had come more quickly and there hadn't been delays? Certainly, that's the case.

But when I look at the portfolio today and see what it's poised to deliver in the future, it really is active and a lot of stuff is happening. As Chris said, there could be negative as well as positive developments, but the positive ones continue to outweigh the negative quite significantly. And the underwriting teams and the case management teams are just very busy with all the developments, many of which are quite positive. And so I'm pretty bullish on the portfolio and happy that we're able to share some examples of why there is that sentiment.

The second thing is on the new business machine. Chris mentioned that we have been able to put on very attractive from a risk-reward perspective, new deals over the past quarter. And I want to hammer home why we are positioned to be able to do that. We have developed deep relationships with law firms, with counterparties who continue to bring us their opportunities where they need financing for litigation portfolios or for individual litigations. And having those relationships means we are the go-to provider of finance in a number of markets.

As Chris mentioned, we have activity globally across various jurisdictions. And having spent the years building up those relationships, that know-how and repeat client base, we have the ability to attract and close these deals that, from my perspective, are quite attractive. So the team is very busy, both with an active, productive portfolio and with some great new opportunities that we continue to add into the portfolio. So on both fronts, I'm very happy with where we are today.

And with that, I'll pass it back to Chris.

Thanks, Jon. Just to carry on that theme for a second. For those of you who are Financial Times readers, you'll note that one of the top stories in the FT today concerns law firms, law firm structure and the desire of U.S. law firms, many of them, to have some sort of more flexible equity capital structure. And this is a theme that has been running for a while. And one of the themes you'll take away from the article is that while there's a strong demand for these kinds of solutions, they're not really appearing in the market quite yet. And that we've talked about that in the past and that's consistent with our experience.

But the reason I raised the article is because you will note that there is only one legal finance firm mentioned in that article at all and that's Burford. We have reached the point where we are the undisputed market leader, standing head and shoulders above anybody else in the commercial legal finance area. And that's why we see the kinds of opportunities that Jon was just describing.

Let's turn to Slide 13. We regularly get the question about older investments. And the question basically is, what's going on with these? Are these ever going to produce anything? Or are these just sort of dead in the water waiting for, ultimately them to become and killed off. And so we thought we'd do a little analysis for you to show why that's just absolutely not the case.

So what this graphic does is that on the black bar on the left-hand side shows you the state of the portfolio in terms of deployed cost at the end of 2022 as to pre-pandemic vintages. And at that point, we had almost $1 billion deployed in those vintages. And since then, a lot has happened, as you can see. We've continued to put money into these cases, more than $0.25 billion more. We've taken out close to $1 billion in realizations. This is all in this middle 3.5-year period. And we still have a fair bit of deployed capital to go.

So we think that those cases, that portfolio, that portion of the portfolio is still very strong and is continuing to produce. It's just regrettable that it's -- the duration has lengthened because of the systemic delays that we have seen across the court system. But we're still a lot faster than the average private equity deal. And the reality is those cases are going to come to an end. They are not at all just sitting there waiting to be put out of their misery.

The other thing I would highlight for you and this is reflected in the last bullet point, brief, in case, it's too cryptic, let me just amplify it. When we do portfolio deals with law firms, we basically sign law firms up to a world where we will then do a series of cases down the road with them. Sometimes those portfolios are in existence when we close the deal, but often they come into existence later. And they're often cross-collateralized in structure.

So what that means is that if we have signed a portfolio deal with a law firm in, let's say, 2019, and that law firm came along in 2023 with a further case to put into that portfolio, that 2023 case is going to show up as part of the 2019 vintage because of the cross-collateralization element of it. And so it's just not the case that these are sort of old and cold assets, which is what some people occasionally ask us about. We're very bullish on all components of this portfolio.

So let me switch gears on Slide 14 and talk a little bit about liquidity and the balance sheet. I'm going to start with the statistics on the left-hand side. The basic message here is that we are very comfortable with our liquidity and with the ability of the portfolio to generate robust levels of cash. We're sitting with $733 million in the bank. We have only $400 million of debt due within the next almost 4 years. So we could theoretically just turn around and pay that off tomorrow if we chose to do that.

We have -- if you think about this in terms of coverage, and again, this reflects my focus on cash and not on arcane GAAP balance sheet metrics, we have a significant amount of what I think of as asset coverage for that debt. We're anticipating a significant flow of cash realizations from our portfolio. And that number that you see there does not include anything from YPF.

So we are covered, if you want to think of it in those terms, 2.3x on the existing debt. And we're pretty comfortable with that state of affairs, especially when you consider the level of cash that the portfolio generates even in years that we have found to be somewhat annoyingly slow.

And when you talk about slowness, you see those bars at the bottom, slowness, I suppose, is all relative. On the one hand, this represents a not insignificant increase in the average duration of our matters. On the other hand, it's still pretty fast compared to lots of asset classes out there. It's just that you and we have been accustomed to things being faster still.

So my conclusion from all of those data points is that we're pretty happy with where we are. That being said, we are certainly aware that the YPF decision was a shock. It was a shock to us inside the business and it was a shock to the market. We're aware that, that has resulted in market anxiety. And it's not an ideal time for the portfolio to be moving somewhat more slowly than one would wish, when at the same time, we have somewhat more leverage than we might wish.

And so even if we disagree with the level of appropriate anxiety over that, the fact that it exists comes with real-world consequences for us. For example, the implied yields today from trading in our long-dated debt are higher than we would wish to see and that we think are actually appropriate for the level of risk associated with that debt.

But nevertheless, we are creatures of the market and we're responsive to what the market thinks. And so that means it is prudent for us to do a bunch of things to husband cash, to focus on our operating expenses and our cash outlays and to drive a deleveraging program that will sit alongside our growth.

So we've shown here on the right, a couple of things that we've done in terms of reducing operating expenses, husbanding cash. And those continue to be priorities for us inside the business when set against the very comfortable level of liquidity that we think we have. So we're pleased with where we sit. But no one should be under any misapprehension that this is not central to the management team's focus every single day, the balance sheet and our liquidity and what we're doing about that.

Let me sum up on Slide 15 before turning you over to Jordan. So as I said at the outset, we've been doing this for 17 years. We've developed, I think, a demonstrable and enviable track record, both of performance and of leadership and innovation in this industry. We've got a very large, well-diversified portfolio, that under any reasonable set of circumstances is going to produce a very significant amount of cash going forward.

We've already produced almost $4 billion of cash out of that portfolio. And we've done so with a high degree of performance and with stable and desirable loss rates. And we have demand for our capital and an origination platform just all over the world, which continues to be driven by the fact that law firms are getting away with enormous increases in their pricing declines, which is just a call to arms for people to pick up a phone and call us.

So with that, we appreciate your interest in the business and your forbearance. And Jordan will take you through some numbers and then we'll take some questions.

Thanks, Chris, and thanks, Jon. I'm going to jump to Slide 17 and walk through some of the high-level metrics. I know Chris talked a lot about the quarter, but we'll still go into a little bit of more depth with respect to the Principal Finance and Asset Management segments.

But overall, on Page 17, you can see the summary. We had a breakeven quarter, just slightly profitable. It's important to note not to try and compare the year-to-date between this year and last year, obviously, given the impact of YPF in the first quarter. So we're going to focus a little bit more on the second quarter results directly as the comparative.

You can see on the net realized gains beating last year same time, same with Asset Management income. Chris talked about new business. Deployments remained steady on the existing book. And our realizations were $94 million compared to $62 million in the same period last year. On the right-hand side, just hitting again on liquidity is strong at $733 million and then you can see our debt ratios.

I'm going to jump straight to Page 22 and talk a little bit deeper about the portfolio. This page has had a slight different makeup in terms of how we used to show it. This is now in its totality. It includes YPF when you look at the total portfolio of about $4.1 billion. The way we break that down is the fair value of the portfolio that you see on the balance sheet and then our undrawn commitments.

Recall our undrawn commitments are split into 2, both definitive and discretionary. Discretionary is similar to the way Chris actually described portfolios in the sense that we -- while we've entered into a partnership with a law firm or a corporate client, there's no obligation to take on the next case if the underwriting proves that it's not worthy. Whereas discretionary is allocated specific to the cases that we've already financed.

Taking that fair value, though, and breaking it down, you can see our deployed cost of $1.9 billion and then $400-ish million of unrealized gain. That's about a 22% markup, so to speak, on the deployed cost. And that is quite favorable when you think about future earnings power. And you compare that to the potential modeled realizations or our historical ROIC, there is plenty of room for incremental revenue to come through as we may see milestones and ultimate conclusions.

The right-hand side is a similar graphic to what you've seen before, which is just the breakdown of the geography as well as the asset type. And it just goes to show the breadth of the portfolio and pairs neatly to the comments Chris had made when showing the modeled realizations and the diversification that we have there. The portfolio is quite large and diverse by a lot of different metrics that you review.

Flipping to Page 23. This is the breakdown of how the balance sheet asset moved in the quarter. The income statement up above. I'm going to focus, though, first on just the left-hand side, which marches the asset forward. You can see deployments pretty much offsetting realizations within the book and moving the asset balance. And then you have 3 other items that we historically talk about.

First, there's the passage of time. This is the natural movement forward as assets get closer to their ultimate realization. And we recognized a portion of value associated with that. The offset to that is changes in discount rates since they're essentially a DCF. Interest rates for this quarter were pretty benign and limited movement, so you didn't see a lot of movement in the asset value.

And then finally, you have milestones and other model impacts. These are the recognizable events or other changes to models that we see -- excuse me, to cases that we see that then is reflected in our models. I think we've covered a lot of the other content in the Principal Finance section during Chris' remarks.

So I'm going to jump quickly to the Asset Management section, Page 30. Overall, Asset Management continues to perform. It produced around $5 million year-to-date in cash. When you compare the Asset Management income, though, on the left-hand side, I'd say we're pretty much right on track with where we were last year year-to-date.

The reason for the difference is, one, as we mentioned, many of our older funds have been running off. And so I wouldn't expect, and as we mentioned before, to continue to see management fees. And the big bump in performance fees we saw last year was actually the flip over of the Advantage fund hitting some hurdles and then the first set of performance fees coming in. And then that will be a steady intake as that fund continues to perform. And then you can see, obviously, the parity in the relationship that we have with our partner in the BOF-C fund.

I'm going to now move to cover some of the other content related to our capital structure and the balance sheet and expenses. So on Page 32, just real quickly, hitting up on cash. The $157 million of cash was the largest in the last 5 quarters. And obviously, one of the peaks as we continue to generate cash from the portfolio. We still also have a due from settlement balance with $122 million outstanding as of the end of the quarter.

On Page 33, to quickly hit expenses, I want to go a little bit deeper into some of the comments that Chris had made. The first is when you compare the year-to-date salaries and benefits, and you can see there's a jump in terms of the overall nominal amount.

What that reflects predominantly is the fact that we actually did a bit of cost cutting and some changes associated with senior and middle management. That captures approximately $10 million of annualized compensation expense and that's across salaries, cash bonuses, stock, et cetera. The onetime impact of that shows up in a variety of different places, about $5 million, there's a onetime impact that shows up in salaries and benefits. There's an offset to that in other line items with the reversal of some accruals. So the net cost was only about $2 million to achieve that $10 million of annualized compensation expense.

The last piece that I want to touch on, on this page, you can see -- well, 2 pieces. G&A has remained steady if you look year-over-year, in fact, slightly lower this year compared to last year. And the last piece is the case-related expenditures ineligible for inclusion.

What that is, in layman's terms, those are deployments that we no longer believe can be capitalized into the asset. That doesn't mean that the case isn't active or healthy. It just doesn't get put into the asset value and unfortunately comes through the income statement. We talked about that briefly last period in which we had to take -- which we reversed previous expenses.

So when you look at that 27 -- or excuse me, previous deployments. When you look at that $27 million in its totality, $25 million of that actually represents costs that would have been directly associated with funding the active portfolio.

Finally, I'm going to finish on Page 34, just to hit on a little bit of the debt piece and just reiterate some of Chris' comments. We have ample cash and marketable securities sitting at $733 million. Our leverage ratio is outlined on the right-hand side.

And then when you look at the debt outstanding, the weighted average life of the debt is 5.2 years. And that compares favorably on a lot of different metrics, whether it's the pace of concluded assets or relative to the pace of active deployments. And as Chris and Jon mentioned, we're excited and still feel confident in the portfolio and its ability to continue to generate a healthy cash flow to manage through the debt load.

That concludes our prepared remarks. And at this point, I'm going to hand over to the operator and Chris to open up for questions.

[Operator Instructions] Your first question comes from Timothy D'Agostino with B. Riley Securities.

I guess thinking about the updates regarding the portfolio, whether it be the mining arbitration, the U.S. jury verdict or the German Supreme Court. While these cases are obviously the timing around, it's very hard to kind of tell.

Could you just provide us maybe some color on how you internally think about the time lines of those proceedings forward just so we can think about it until year-end and as we look towards the third quarter?

Yes. The purpose of giving those kinds of portfolio updates is really to show people that there is momentum in the portfolio. So in other words, to dispel the notion that things are just sort of sitting stagnantly. And as Jon talked about as well, they're just not.

So it's not just those handful of examples. But there is a very significant amount of activity going on across the multi-hundred casebook that we have. We're not putting them out there to suggest that those things are the things that will turn into cash between, for example, you said now and the end of the year.

Each of those things has some further stages in litigation to go through. But the thing that drives settlements in litigation, first of all, are catalysts. And so, it's certainly reasonable to think that as you get catalysts in matters, that also opens the door to settlement discussions in a way that the absence of a catalyst seldom does.

And it's not necessarily that we have our eyes on those cases that we talked about as settlement candidates, but rather other cases where there are settlement discussions going on right now because there were prior catalysts. So it's not -- this whole thing is a continuum from the beginning of a piece of litigation to the end where there are points along the way that increase the likelihood of resolution. And that's what our business is all about.

As you'll remember, we're close to 80% of our matters ultimately resolving by settlement instead of by final adjudication. But the thing -- you can -- this is just for common sense. If I'm suing you and I'm looking for a big check from you. The mere fact that I have sued you is not likely to have you reaching for your checkbook in a way that you wouldn't -- that you weren't prepared to just a few weeks before.

So something needs to happen in that lawsuit to make you think that your vulnerability is greater than you perceived it to be when you refused to pay me before we commenced litigation. And so that's what we're -- that's what so much of this is all about is using the litigation process to get to those catalysts that ultimately drive the settlements.

And so a jury verdict is a great example of that. It's relatively uncommon for cases where we win a jury verdict to go all the way to the end of the litigation process and appeal and try to go to Supreme Court and then enforce against assets and get paid by enforcement against assets. That's pretty uncommon. It's not never, but it's pretty uncommon.

What's more common is that, that act, that event will cause a recalibration of the other side's position and that will drive an economic outcome.

Okay. Great. And if I could just ask a second question. On the streamlining operating costs, noted on the save to comp. I guess, is that the start of broader cuts? Like I guess, do you see more potential operating cost savings going forward, whether it be through the senior to mid-management cuts? Or is what we're seeing right now kind of the ceiling of what you plan on doing?

It is a pretty lean business. And so it's not as though we have sort of armies of people that like a -- like -- you see all these cuts happening at Google and Meta and so on. That's just not the kind of business that we are. We only have somewhere between -- somewhere around 160 people right now. And so no, it's not our intention to engage in sort of serial waves of layoffs.

But what we did do here on a onetime basis was we encouraged some retirements. We streamlined a few functions and so on. But I would say the other thing that we pay careful attention to is the extent to which growth requires hiring. And that's a combination of just general operating leverage. And it's also a question of our continuing ability to use technology efficiently.

And both of those things enable us to do more with a smaller rate of growth in headcount than might have been the case even just a year or 2 ago.

Your next question comes from Henry Coffey with Wedbush Securities.

When we talk about cash flow a lot, I was looking at and I did this in my head, so if I got some numbers wrong, I apologize. It looks like your net -- your cash went up significantly, as you pointed out, your liquid assets went up significantly, as you pointed out.

But when we look at net debt, it actually went up over the last 6 months by about $100 million. Is that correct? And maybe you could comment on what the more sequential March to June numbers look like.

Yes, sure. Jordan can certainly chime in there. We did issue debt in January, though. So looking at December to January numbers is going to reflect that. Jordan?

Yes. No. I mean, I think there was a lot of activity in the June time frame in terms of cleaning up the historical U.K. issuance and then also doing our issuance in January at that moment in time. And so I think in looking at those numbers, if I recall, I'm doing this by memory, so forgive me as well, Henry. But I think we're around $740-ish million of cash and marketable securities at the end of the first quarter. So give or take, then $10 million difference when you look quarter-over-quarter. And obviously, then our debt balance would have been the same if you're looking at the end of the first quarter versus the end of this quarter.

Okay. So there's more balance there. And then this is a much more general question that we can get into over time. But -- you talked about the annualized return over time of the portfolio. How can we adjust that? And I assume that's a gross number, net of -- based on net realizations. How can we adjust that to account for capital costs, financing costs and the actual administrative costs and direct costs associated with that very large number?

Yes. I think it's -- I think -- and investors modeled this according to their own process basically. The challenge, obviously, with any business like this, especially a business where a significant amount of our cost goes into making an investment decision in the first place. So we're not -- we don't play an active role in these litigation cases once we invest in them. We certainly are engaged in a case management and monitoring role, but we're not litigating the cases.

And so a significant amount of our human resource activity is sifting through the funnel of cases that are coming in the door and deciding which ones to invest in and making those investment decisions. And then there can be relatively long periods where those cases take no staff time at all. So what that does is create a fairly significant timing mismatch between the incurrence of OpEx style expenses and the cash resolution.

And so in a growing business like ours, it's hard to -- you can't just look at it on a period-to-period basis. And that is the easy response as well to the people who come along and say, "Gee, you don't actually generate that much net profit." You have to look at -- you have to sort of assign costs in some methodological way to the back book effectively.

Cost of debt is easier because the cost of debt is public. And you can make your own sort of temporal assumptions along the way, influenced by the fact that you can do it pretty accurately because we give you case-by-case resolution data and time to resolution data.

I don't know, Jordan, if you want to add anything to that?

Yes. Look, I think the only piece is that if you go to our Investor Day about 1.5 years or 2 years ago now, we outlined the way in which we think about unit economics. When we're underwriting today, obviously, there's a duration associated with the back book in the case that it's taken slightly longer than one would have anticipated.

Some of those deals, many of them have protections on the back end in terms of rising multiples or back-end fee arrangements or interest rate components and so forth. But duration has extended. That thought process around duration of those go into the underwriting of new cases.

And so we do think about unit economics on a very similar basis on a go-forward basis. And so there is that -- that's generally how we think about how to apply the cost of debt and our OpEx into how it flows down into return on equity.

Yes, I'll jump in here. We do have a question that's come in on the webcast, which I'll pose for the team.

Can you confirm that the cost of deployed capital on the pre-pandemic cases means that realizations relating to such have produced little or no net profit?

No, I think that's not the right way to look at that dynamic at all. If you look at the return profile of those pre-pandemic cases. And you can sort of intuit it from the slide that I had up earlier and you can go deeper into the data if you so choose. The return profile of those cases is exactly comparable to the overall portfolio return profile.

So we're not seeing a degradation in ROICs for those cases. We may be seeing a little bit of an IRR degradation just because of the passage of time and we've talked about that before. And obviously, when you're generating those kinds of high returns, the associated cost certainly does not eat up all of those returns. Our historic weighted average cost of debt is well down in the single digits.

So I think it's a quiet August morning here in New York. And I think that brings us to an end of both the oral and the webcast questions. So thank you, everybody, for your time and attention today. We look forward to reporting to you later this fall on not only the third quarter, but on our continued progress with respect to the balance sheet. And in the interim, we encourage you to be in touch with us if you have any specific or individualized questions that we didn't touch on today. Thanks very much and enjoy the rest of the summer, everybody.

This concludes today's conference call and webcast. Thank you for joining. You may now disconnect.

Hello. This is Rob Bailhache, and I run Burford's Investor Relations outside the Americas. I and the whole team of Burford welcome you to today's 2026 Retail Shareholder Audio webcast with Chris Bogart, Burford's Chief Executive Officer; and Jordan Licht, Burford's Chief Financial Officer. Thank you for your interest and in many instances, long-standing investment alongside Burford's employee shareholders who own today around 10% of the company. We hope you find this forum useful.

Before I hand over to Chris Bogart, some housekeeping. After some brief opening remarks from Chris, we'll move to Q&A. You can ask a question at any time by submitting it in the Q&A box that you see on the webcast dashboard on your screen. This is discreet to you. If you have any technical questions for the production team in our virtual green room, you can use the same private Q&A box for that purpose. We'll try to get through as many questions as possible, but due to the fixed time available, we likely won't be able to respond to each of them.

A selection of the questions we've already received are grouped by topic. We plan on getting to each topic that's been raised. If there are any new subjects from the live Q&A feed, we will certainly try to get to those as well. Finally, a replay will be available to registrants a short while after today's event using the webcast registration link you've been provided with. And with that, I'd like to turn the call over to Chris Bogart, Burford's Chief Executive Officer.

Thanks very much, Rob, and thank you all for joining us today. I really enjoy doing these and interacting with individual investors. We get some of our best questions, and we get some of our most sustained and long-term engagement, as Rob said. A number of you have been on this journey with us for quite some time. It's been 17 years now since we started Burford. And so we're very grateful for your support and for your interest and for your enthusiasm about the company.

As Rob said, we've had a number of excellent questions. And so I'm not going to go on at any great length in advance. You all had access to the earnings call that we did recently. And so that's when I gave quite a long presentation about the company, what we were thinking about our market and liquidity position following the YPF decision. And so to the extent that you haven't listened to that, I would encourage you to do so and to look at the slides that accompanied it because there was really quite a lot of information there about where we are heading and how we're navigating the dynamics that exist.

I would just sound the note, though, that we remain very enthusiastic about the state of the business and the market. This is a growing business and a growing market, and we'll talk with some of the questions about just why that is. And we believe, notwithstanding the disappointment that happened in the Second Circuit with YPF and the consequent negative impact on the share price, we believe that there's a lot of future runway here, and we're excited about being able to capitalize on it. And so with that, Rob, maybe we should just go to the questions because you've told me that many questions you've already received will really cover the waterfront for the kinds of things that I would otherwise take people through.

Absolutely, Chris. So let's move straight away to our first area of inquiry, which is around growth. And we've obviously had several questions about this topic, specifically the outlook for continued strength in new business, the funding of that growth and Burford's 2030 growth target. To bring the crux of these together because we really have had many and with specific thanks to shareholders, , there are 3 questions. First, what are Burford's growth prospects as we stand today? Second, will organic cash generation be sufficient to meet the funding requirement of this growth? And third, do you still view the doubling of the portfolio base between 2024 and 2030 as achievable?

Great. Thank you very much for those questions. So what are our growth prospects? Our growth prospects are strong. The business has been growing steadily over time. And really, the catalyst for that growth comes from 2 places. The first place is that law firms just cannot help themselves from significantly increasing their fees every year. If you look at the large U.S. law firms, what are sometimes called the Am Law 25, which refers to the 25 largest law firms by revenue in the United States or the Am Law 10. You see them both here on the chart that Rob has just put up.

You'll see that they have been increasing both their revenue and their profits by double-digit numbers year-over-year-over-year. And the way they're doing that, of course, it's not as though these firms are becoming more efficient. They're doing that by raising their prices to their customers. And so if you are a business and you are needing to avail yourself of legal services as basically every business in the world does, you're paying more and more and more every year for what is something that is really collateral to your operating business.

And that is the fundamental reason that there is a strong market demand for Burford services. Because if you're running a business and you're now confronted with the idea that it's going to cost $10 million or $20 million or even more to go and pursue a single claim. We're now seeing claim costs going up to even as much as $50 million. Those kinds of numbers even for large, well-capitalized businesses are very distracting from their core business. They would rather take those pretty substantial sums and invest in growth or frankly, these days, invest in AI as opposed to investing in litigation. And so the opportunity to offload those costs onto a specialist balance sheet like the one we have is attractive to companies, and we've seen no pause in the growth of demand for our services globally.

So I think there are strong growth prospects. That's reason number one. And I said there were 2 reasons. Reason number two is it just makes good sense from a public company, especially for public companies, from a public company P&L perspective. Getting legal costs off the P&L is a shareholder value-enhancing choice. Paying for legal costs on your P&L is a shareholder value destroying choice. And so an increasing number of companies are recognizing that dynamic. Now the second part of the question, if I remember correctly, was what is that -- what is the consequence of being able to fund all of that growth from organic cash generation?

And the answer to that is, of course, to some extent, a will see answer. We -- months before we had an outcome in the YPF case, and we've said this publicly before, we had moved the business onto a footing that we were no longer going to solve gaps between the resolution of cases and the generation of cash proceeds from them on the one hand and the financing of brand-new matters on the other with debt. So for several years, what we were doing is we were basically saying, gee, we've got a lot of growth coming along. And we really want to do all of that growth. And because of -- mostly because of the pandemic, realizations have been slower, and so we'll close the gap with some debt. And we had alerted the team that we had reached the end of our tolerance for doing that with the most recent debt issuance that we did in January.

And so we have been for a while moving in the direction of wanting to be self-financing. The question of how that's going to go is really a question of a pretty obvious one. It's a question of what's going to happen in terms of cash inflows in any particular period and what's going to happen in terms of cash outflows. The good news is that we are completely in control of that dynamic. Just like any other investment vehicle, we can simply not do the next new opportunity that comes to us if we don't think that we have the available cash to finance it.

Obviously, we would like to do every desirable opportunity that comes to us. But there's no adverse consequence on the business other than foregoing the opportunity if we feel as though realizations have not kept pace with growth. And we're hopeful that, that we won't find ourselves in that position. And as a result, we haven't seen any suggestion at present that we can't continue to fulfill this target that we laid out at Investor Day.

Thank you, Chris. Our next question is on the subject of growth and leverage, and it comes from Ilea Ethimof . Following the YPF write-down, leverage metrics increased materially despite substantial liquidity and having no significant debt maturities until 2028. What are your capital allocation priorities over the coming period, including target leverage? And what milestones would indicate leverage has returned to a level where you can focus aggressively on value creation rather than balance sheet management?

Well, I suppose I don't entirely accept the premise of the question because I don't think that we have pivoted away from value creation and towards balance sheet management. I think that there needs to be a balance between those things. We would like over time to delever the business, and we would like to continue to grow the business. And our hope, and we've laid out previously in the Q1 call, our hope is that we will be able to do both of those things. And as I just said a moment ago, we have the levers available to us to manage the possibility that there will be mismatches, timing mismatches along the way.

But the reality is we've got an enormous portfolio of existing litigation matters. Billions of dollars worth, hundreds and hundreds of cases. And the simple fact of the matter is those cases are going through the process. We're not seeing degradation in our loss rate. And so that implies that those cases will turn into cash. The question simply has been in the business, when is that cash realization going to occur? And as we all know, that's been happening somewhat more slowly in the last few years as we've come out of the pandemic with significant backlogs compared to the pace of the system before the pandemic.

And I think over time, that has to repair itself because the simple reality is that our business and civil society, frankly, rely on having a viable court system. And if it takes simply way too long to get cases through the court system, that starts to call into question the viability of those dispute mechanisms that are really essential to the functioning of business and civil society. So I don't think this is a sustained long-term issue, but I do think it's an issue in the current year, and I think it's an issue in the immediate future. And so we'll just have to manage through that by being prudent on both sides. Jordan, do you have anything you'd like to add there?

Sorry, Chris. No, I think the simple answer with respect is this is, as you mentioned before in the answer to the first question, which is we never operated the business with a day in which YPF was going to resolve or with respect to using the YPF cash flows to address the capital structure in the immediate term. And so when you think about how we operate going forward, there isn't -- obviously, there is a constraint on the incremental leverage, but that wasn't something we were planning to do to begin with. And so as the business continues to perform, the generation of cash flows as well as the building of the book and retained earnings will bring the actual GAAP leverage number back into normalization.

Thanks, Jordan. So the next question is actually related to realizations and also comes from Ilea Ethimof . Many investors understand Burford's value depends on the conversion of portfolio assets into cash rather than on any large single matter. Can you help us understand how you view the pace of realizations and cash generation over the next 12 to 24 months? And specifically, what key indicators should shareholders monitor to determine whether the portfolio is performing as expected?

Thanks. I think that there are a few things that I look at, which is -- which include, obviously, the pure actual amount of cash that we're generating from divestments. I look at the weighted average life of matters, both the concluded weighted average life and also the weighted average life of active deployed capital. And you'll see that those numbers have moved up slightly. And that's because it takes -- because the portfolio is so large that you need even slight movements require a fair bit of underlying activity. The fact that you've seen those numbers move up is certainly suggestive that there is delay going on in the system.

And so what we do is we don't look at this on an aggregate basis when we operate the business internally. We get to an aggregate number by literally going case by case and assessing in each particular case, what the prospects are of that case moving towards an ultimate realization during the period that we're analyzing. Now the problem with that, and I call it a problem, but bear in mind that the reason a number of people are invested in Burford is because our cash flows are uncorrelated to markets. And not only are our cash flows uncorrelated to markets, stress in markets is usually good for us on a long-term basis.

So the price of that lack of correlation is a lack of predictability about cash flows because we are effectively takers of timing. We are -- we cannot control timing. And often, our clients can't control the timing either. As a general truism, plaintiffs are eager to get to a result in their cases and defendants are eager not to have that happen because getting to a result usually means a defendant is paying money. Bear in mind the defendant pays money in around 90% of the cases that we do. So it's not surprising that you have that tension. And then on top of that, you've got the operation of the court system.

So when you have a case that is running through the court system, the question is, a, is the defendant at some point going to decide that it's in its interest to settle that case instead of continuing to litigate. And you can see from the chart on the screen that our settlement rate is floating in the high 70s. So what that says to you is that most of the time defendants are going to settle these cases, but the timing of when they do that is in their hands, not in ours. And if they don't settle the cases and the 20% of the time that they don't or so, 22% of the time they don't, those cases are going to be subject to whatever is going on in the court's calendar.

When can a judge have -- find time on the docket to have enough time for trial? When can the judge find time in their busy lives to go and write the opinions that are necessary. And it's not like -- I sometimes use the analogy of -- to try to express delay about 4 lanes of traffic merging into 2. But it's actually a little bit more complicated than that because our cases tend to be larger and more complicated than the average piece of litigation. And so if you're a U.S. federal judge today, your docket is full of immigration appeals because of the political dynamic in the United States. They're full of criminal matters and so on.

All of those matters are much easier and faster to resolve than ours are. And so an immigration case comes along and says, okay, we need a 3-hour trial. That's pretty easy to fit into the docket. We come along and we say, we need a 3-week trial or we need a 3-month trial. And that's much harder to fit into a congested docket. And that explains some of the reason that you see this unpredictability. So -- but the simple answer is that this stuff will ultimately resolve. And as it resolves, it should produce cash because we've got, as you can see here, pretty consistent outcomes.

We have a question from on portfolio returns. Is it fair to expect that the trend of the last 4 to 5 years being a small proportion of adjudications relative to settlements, combined with lower ROIC adjudications will continue? Alternatively, do you see reasons why adjudication ROIC should trend back towards the higher levels of the past? What actions is Burford taking or can take to reverse the recent settlement adjudication trend?

Well, I don't think there's anything that we can do. Again, we are takers, not creators of the litigation dynamics. The question that we've raised publicly a number of times, though, when you look at the chart on the screen and you look at the increase in settlement rate, the question is whether that is a -- is that a permanent change in our portfolio? Or is that a temporary change affected by backlog? And there's obviously a correlation between settlement and return. If I have a claim for $100 million against the company, that company -- I could go to trial. And if I'm successful, I could win $100 million. If I settle the case, there is no way that the defendant company is going to pay me $100 million in the settlement.

They're going to apply a meaningful litigation risk discount. And so the settlement value of that case will be materially less than $100 million. So the more cases that settle, the -- on the one hand, the lower the returns are compared to going to trial. On the other hand, settlements tend to be faster and they completely derisk the case. And so there are pros and cons to both. But candidly, it doesn't really matter where we sit on the pro and cons dynamic because we're not the decision-makers there. Ultimately, the decision of whether to settle or not is a decision that's being made by the defendant more than anything else, although our clients certainly has something to say about that.

And we'll see where that all ends up. But I don't know the answer today. But I would not -- I would encourage you not to be focused the way the question was on the headline number. The reality is I'm happy with either outcome. I'm happy with a higher settlement rate and lower returns because I also am taking less risk, less duration and I'm turning my capital faster. And I'm happy with cases going to trial because we like the quality of the portfolio. So I'm happy with cases going to trial and generating higher returns. And historically, we've had a mixture of both.

Thanks. Next question is on duration. Weighted average life of active capital has increased from around 2.3 years historically to 3.4 years today. To what extent is this driven by temporary factors such as court backlogs and slower litigation compared with a deliberate shift towards larger and more complex cases. More importantly, should investors expect capital duration to trend back to historical levels? Or is 3.4 years or thereabouts the new normal?

Well, as I was saying earlier, I think the delay that has crept into the system is unacceptable systemically. It will drive people out of litigating disputes, which is not where we want them to be as a society. You need an effective dispute resolution mechanism. So I don't think that it can be a long-term trend. I think courts and governments are going to need if they can't bring that under control fairly soon, are going to need to take alternative steps. And those are fairly easy steps to take. They involve just hiring some more judges and so on. And you've seen that happen in other areas of the litigation system that we don't touch.

So I referred to U.S. immigration a moment ago. You've seen the government hire a whole batch of new immigration judges. And so it's certainly the case that if we are seeing systemically unacceptably long durations in litigation that there are ways to address that structurally. So I don't believe this should be a new normal. I also don't think that it's necessarily the case that just because the case is larger and more complex, it necessarily takes longer. I think it's a question, again, as I said earlier, of docket management and availability of resources.

So -- and there is also not necessarily a correlation between complexity and size on the one hand and court time on the other. And the poster child example of that is YPF. YPF only ever occupied 3 trial days of court time because the underlying merits of the case were very straightforward. There were legal issues that needed to be briefed. But in terms of what needed to be resolved in a trial, which is what really takes that court time, that was quite a straightforward case. Whereas we've seen cases where tiny fractions of the amount at stake compared to YPF would take many multiples of the number of court days because there were complex contested factual issues. So there's not the kind of direct correlation that the question might suggest.

Thanks, Chris. We got a related question, which you've answered in part, Chris, but I think it's an interesting one. And so I'll persevere with it, and you can see whether you think you have answered it to the extent you'd like to. And it relates to effectively risk asset selection and duration. And it comes from Nam Yung Koo . Since the reference to trying a few more Petersons in Burford's 2023 shareholder letter, would we -- sorry, we would expect the share of definitive commitments to higher-risk assets, particularly those in the 25% plus risk of model risk of loss band to have increased. As the weight of these assets grows, our riskier assets, is there a material possibility that the overall portfolio weighted average life will rise meaningfully above current levels?

No. Again, I don't think that you can point to that kind of correlation. And I don't -- that's not how I think about the dynamic. There is -- certainly, we look at those issues when we take on cases. So if a client shows up with a case that is very complicated and is going to require very significant effort to take it to trial and it also isn't worth very much money. That's a case that we're less likely to be inclined to do even if we think the case might be quite strong. So -- but on the other hand, you don't often see cases like YPF where the claim was very straightforward and the damages calculation was very straightforward. So I think I've sort of largely addressed the point before.

Thanks, Chris. Okay. Let's take a drill down into the next layer, and we've got a question on the protein claims family. It comes from Denny Jaspers. Can management provide a definitive update on the trial time lines for the Sysco antitrust protein cases? If an outsized settlement or treble damages award occurs in late 2026 or 2027, is that single realization large enough to unilaterally cure the current book equity deficit?

Well, the short answer to the first part of the question is no. The -- when you talk about the Sysco cases, you're really talking about a series of different proteins. There's chicken, beef, turkey and pork. And each of those proteins has been assigned by the multi-district litigation panel to a different court. And so each of those cases is being supervised by a different federal judge and each of them is moving at its own schedule. And the other thing that makes these kinds of cases, these kinds of U.S. antitrust cases a little bit more complicated is that the way these cases tend to start is with a class action.

And so -- and the way class actions work in the United States and increasingly in the United Kingdom with the Competition Appeals Tribunal is they happen on what's called an opt-out basis. And so you start off and one representative plaintiff will get together with one set of lawyers, and they will file a case on behalf of every similarly situated plaintiff. So every person who bought bananas in the year 2026, that's going to be a class of people for whatever reason.

I'm making this up, obviously. And so that case will go along. And ultimately, that class case will proceed to adjudication or settlement and the members of the class will share in the damages that are awarded. However, there is the prospect for individual claimants to opt out of being part of the class and to bring their own parallel proceeding. And it's quite common in large U.S. antitrust cases for corporate plaintiffs to exercise that opt-out right. And the reason that they do that is that if they have significant damages, they are more likely to be able to achieve a higher settlement level, a higher recovery percentage of those damages than the class will just because of the vagaries of the way these things are litigated.

And so it's not only that we have 4 proteins proceeding in different courts on different schedules, it's also that we have the class cases sometimes proceeding separately from the opt-out cases. So for example, in Turkey, there's going to be a trial this fall in the class case, but that there's not going to be a trial at the same time in the opt-out cases. And in some instances, the opt-out cases actually go back to their home courts to be tried. So the whole thing is a reasonably complicated matrix of what's going on. And the question really in those cases is, is there a catalyst that will bring the plaintiffs and the defendants together in some kind of settlement negotiation? Or will you need to go through some sort of bellwether style trials where you're trying 1 or 2 of these claims to see what juries think of them to be able to ground a settlement dynamic more reasonably. So I think the -- no pun intended, I think the jury is still out about how and when these cases resolve.

Thanks. A couple of questions on YPF. The first from Bruce Anderson. How can the Second Circuit decide the YPF case should not be heard in the United States courts and ignore the fact that in 2018, the Supreme Court refused to interfere with the Second Circuit's prior decision to allow the case to proceed in the Southern District of New York.

Well, if you didn't -- if I didn't know otherwise, I would have thought that, that was a planted question from somebody because it completely expresses my view. I think that the decision was outrageous. I think it was unjustified. Unfortunately, we caught the very low odds but very high-impact idiosyncratic outcome that sometimes occurs in litigation. It seems pretty clear from the face of the judgment that the panel of the second circuit was affected by the size of the judgment and its impact on the Argentine economy. And that, in my view, colored their legal analysis. So I don't think that there's a good way of rationalizing the strands that Bruce just brought together. I think that was quite a poor decision, and it's been the subject of some public criticism.

The second YPF question, Chris, is as follows. Following the Second Circuit decision, the firm has signaled a pivot to international treaty arbitration given that ICSID proceedings against sovereign nations routinely take upwards of a decade and carry substantial legal fees, what is the specific forward-looking budget allocated to this arbitration? And what is the expected drag on operating margins?

Well, again, I think I don't really agree with the premise of the question. So going in reverse order, a couple of points. First, there's no drag on operating margins here because this is an investment in litigation like anything else. So it doesn't hit our operating margins as it's happening. Second, the cases -- every ICSID case is against a foreign sovereign. And so it's not as though there's a special category, and that's all ICSID cases. ICSID takes an average of 4.4 years to get to an award. And so I'm not -- by the way, I'm not certainly suggesting that this is a speedy process, but I am suggesting that ICSID proceedings don't take as long as a decade as a general proposition either. And the cost associated with bringing an ICSID arbitration is really squarely in the norm of the kinds of cases that we fund.

I think if I can read the little tiny print here, I think somewhere or other, there was something about the average cost of one of these cases. But it's not -- we're talking millions, but not hundreds of millions of dollars or even many tens of millions of dollars. So I think it's a perfectly rational thing to be doing. And look, to the question earlier to Bruce's question, what should have happened here if the second circuit was going to end up in this place if they should have done it in 2018, and we would have been arbitrating and we would have been done by now. So that's the aggravating part of it, but we've always contemplated a world in which we might be in arbitration here. And I think it's perfectly supportable by the economics of the case.

The next question relates to AI and efficiency comes from Gabriel . How is Burford deploying AI? Do you see significant cost reductions? Do you think it could lead to even better returns on capital?

So as a number of you know, I ran a technology venture capital firm before founding Burford. And so I am a firm fan of technological advances like what we're seeing out of AI. And the recent enhancements in some of the models have been for legal work, quite extraordinary. John Lowe and I were both active users of Fable 5 for the few days, last week, I guess it was, before the U.S. government closed it down. And it was notable that the step change over Opus 4.8 just in that one model evolution. And so I think you're going to see very considerable additional growth there.

Now what are we doing at Burford? We're doing a number of things. So Burford has been engaged in data science and advanced technology for years. When you talk about AI specifically, what we do is every employee has access to a mainstream AI model, whether that's ChatGPT or Claude. We also have deployed function-specific AI models, things like DeepJudge and Legora for legal activity. And we make active use of AI in all sorts of different ways in the business, ranging from assisting with the investment process itself to making the research component of what we do either better or more efficient. And I do think that AI has the potential to continue to enhance what we do and increase our profitability.

A question on operational efficiency from Peter Richmond. It would be useful if you could say something about the split of costs between running the existing book and developing new business, i.e., the extent of new business strain. How do you think about cost management, including interest expense?

And Jordan should chime in here as well. We have always been very focused on cost in this business. And our business is a relatively straightforward one. Our costs are largely human cost with some G&A off on the side. And so we're conscious of making sure that we are efficient and that we have rightsized our cost base, and we'll continue to do that, and you'll hear some more about that from us at Q2 earnings. In terms of the split of cost between the existing book and new business, that's a harder question because of the way that we operate the business.

So there are a few people in the business who are devoted solely to new business activities. There are a few people in the business who are devoted solely to managing existing cases. But the bulk of our people do both. They build a relationship with a client. They get a deal from that client or often multiple deals from that client, and they stay involved with that client and with that deal as it goes through the process. And so it's not as though I have sort of -- it's not as though I'm running sort of a sales organization over here and a management organization over here, and I can point to one box and say, okay, well, that's $20 million for sales and here's another $30 million for management. And so if you said, okay, we don't want to do any more sales, there's $20 million. It's not nearly that easy to unpick. But Jordan, do you want to add anything here?

No. I've always said the -- one of the allures of our business and how we do retain people is that they are not billing by the hour and tracking every 6 minutes. And so it's something that we don't do. And I think, Chris, you described uniquely the way in which our business operates. And so obviously, we are conscious and using internal metrics to understand where we're spending our time and if we're spending our time efficiently, but we don't have a kind of public breakdown of new business versus old.

Thanks, Jordan. So the next topic is valuation. A question from Bruce Anderson. While Burford is larger and stronger than it was before its U.S. listing with share price halving versus its closing price on the eve of the New York Stock Exchange listing, the company clearly isn't more highly valued after listing in the U.S. In fact, the valuation gap, the difference between the underlying value of the business and the market capitalization is wider than ever. Why is that? And how do you plan to address it?

Well, you're the market more than we are. And so you're probably better able than I am even to answer that question. But the -- I'll give you a few thoughts from my perspective. We have just been through a very dramatic series of events spanning several years now. And those events relate to YPF. And they had, I think, a profound impact not only on the share price, but on the shareholder base of Burford. So we've always had this YPF case, but it really did not spring into prominence until the case really got going post pandemic. And when it started to look like there was going to be a meaningful award in favor of the plaintiffs.

And once that started, in addition to a number of historic long-only traditional Burford shareholders, our stock started to move a lot into the hands of event-driven investors. That only increased further once Judge Preska actually rendered her judgment, $16-plus billion, the largest judgment in Second Circuit history. And then we entered an era where the -- frankly, from my perspective, the underlying value of the rest of the portfolio in the core business really took a backseat to a whole lot of investors who were playing stock based on Argentina and YPF.

Now obviously, what has happened is those investors have largely exited in one fell swoop following the Second Circuit's decision. And so now, while I regret where the stock price is, and Rob said at the beginning, this group of shareholders is roughly equal to the management shareholders. So this is something we live with and are very affected by on a day-to-day basis with the team. Now the task is to refocus the market on Burford, the traditional value of Burford's diversified portfolio and the cash that it's capable of generating. We were -- there was a reference to New York Stock Exchange listing. We were successful before in getting the market to focus there. And I think we are -- we have signed up to do the shoe leather work to try to get the market to focus on that again.

Thanks. Next question is on dividend. It comes from -- actually a couple of questions, Trevor Griffiths and Colin McFee. While I agree the priority is to reduce leverage, the probable passing of the dividend, which is being flagged sends the wrong message to shareholders. Directors and staff have been very well remunerated and shareholders don't seem to be sharing in the successful deployment of their capital, cutting the dividend feels like shareholders remain very much at the back of the queue. Please comment.

Well, the dividend is, I have to say, one of the things -- and this is not a recent issue. The dividend for years has been one of the most divisive issues in our shareholder base. We have a number of shareholders, and I think they're probably overrepresented in this population. We have a number of shareholders who are dividend focused. They like dividends. They think that paying dividends is an important thing for companies to do. I don't need to recite for you all of the arguments in favor.

We have an equally vocal cadre of shareholders who are strongly opposed to Burford paying a dividend and believe that we get no credit for the dividend that we pay and that the capital that we are diverting to a dividend would be much better used either by reinvesting in the business or by delevering. And it has been -- again, without regard to the events of the last few months, it is -- there has never been a way to bridge those dueling viewpoints. And so what we did for quite some time is pay -- to try to make everybody as happy or at least, least unhappy as possible, we paid a small dividend that we did not increase.

And I think when you look around at the level of leverage on the business and the yield of the bonds that leverage implies, which is more expensive than we would like it to be when it comes time for us to go and refinance the debt, which is still some considerable way off, of course, we would like that yield to be lower, and we think that it is a net positive for all equity holders if we can achieve that. To do that means that we want to do some delevering. And it just to us, while we haven't taken a final decision about this, we've certainly signaled the direction of travel, it just to us doesn't make sense to pay a small dividend for which we're not really getting any credit as opposed to having the overall equity benefit associated with making that capital available for delevering.

And Jordan showed you, I think, a slide last time of the impact of not paying a dividend for a relatively short period of time on the leverage ratio, and we think that's probably a prudent thing to be doing. But as I said, we'll come to a landing point on that before the next dividend would otherwise be declared.

Question on share buybacks from Lucas Amaro. I understand that the primary strategy is to deploy capital to fund growth with the objective of doubling the portfolio base to 4.8 billion in 2030. However, there must be a valuation threshold at which share buybacks become more compelling. Could you please provide insight on your framework regarding this trade-off and outline any potential plans to capitalize on buyback opportunities?

Jordan, do you want to take that?

Sure. Sorry, Chris. Well, look, I think obviously, we have historically talked about the opportunity to buy back shares and to use capital to do that. And one of the things we've been consistent about is deploying capital into the business to continue to fund new assets and build shareholder returns in the retained earnings of the business through the asset growth and not taking on leverage to go buy back shares. I think given the question that Chris just previously answered, we do live in a world where there are GAAP covenant levels. And I don't want to say never because that would be inappropriate. But we do want to make sure that we are in an appropriate position to maintain the capital base. And so buying back shares at a certain stock price, while it could be attractive, also has the reverse impact on the GAAP leverage covenant levels. And so we have to be mindful of that in the near term.

We have 2 questions on new initiatives from Gabriel . You've mentioned that because non-lawyers aren't allowed to own law firms in most of the United States, this prevents some business owners from monetizing their lifelong investments. And this is painful when the AI revolution will require increased investment to stay in the game. Acquiring law firms at attractive multiples would be a logical step for Burford. Is Burford lobbying for change on U.S. law firm ownership rules? And how could Burford exploit such an opportunity? And relatedly, also, how are Burford's investments in law firm PCB Byrne and legal consultancy, Kindleworth performing?

So taking those in reverse order, PCB Byrne has been a great investment, performed very nicely and continues to do so. Kindleworth is quite a new investment for us, just some months old now. And so I think it's premature to talk about how it's performing, but we certainly have been enthusiastic about working with the Kindleworth team and seeing the future prospects that, that business has. For the -- going to the broader question, are we lobbying -- the people who need to do the lobbying and who will be most effective at lobbying for change are the law firms themselves because those are the people who will be the direct beneficiaries of those kinds of regulatory changes.

We will look, I think, frankly, a little bit too much like a grasping capital provider. And so I think our lobbying message will be -- is less potent. Mr. legislature, please change the law so that we can make some money here. But I think that there is widespread discontent with the current capital structure of law firms. John and I both have said publicly for some time that we think that structure will change over time, just like the structure of other industries has.

Law firms today are effectively identical in structure to investment banks a few decades ago. Investment banks today are, of course, not even recognizable compared to their structural roots. And I firmly believe that you're going to see change dynamics like that occur in the large global law firms as well. I think it really is just a question of time and momentum. I don't think that it's a this year thing. I don't even think it's a next year thing, but I also don't think that you're going to look out a decade or 2 and have the same law firm structures that you see today.

So I think that's just going to ultimately move. And I think we are very well positioned as what is effectively the largest capital provider to the legal industry today, I think we're very well positioned to be able to continue to meet the capital needs across the legal spectrum. We might meet those needs with different structures. I get a lot of questions about why would you defer balance sheet capital to investing in a lower returning law firm deal than a higher returning litigation finance deal. And so I'm not necessarily suggesting that we're going to do that, that we're going to take half of our balance sheet and put it towards law firm investments. But I think that we have a unique market position that will enable us to capitalize on profit from what I think is an inevitable trend.

We have a question from Jonathan Wellam on regulation. Given the growth and interest in legal finance, is Burford well positioned for potential increases in regulation such as the recent push for federal legislation in the United States to mandate transparency of funding and restrict funders from directing settlement strategies?

Well, look, I think that we have always lived in a world of a degree of regulation. Law is a regulated industry. And unlike lots of regulation, it's tightly regulated by judges. So if you think about -- if you compare law and securities, for example, securities regulation happens on a sort of audit basis. It's not like every securities transaction is reviewed by a regulator, but every piece of litigation is reviewed by a judge. And so I think there has always been a level of regulation that has worked just fine. I'm not particularly concerned by the concept of additional regulation, and I would sort of quarrel a little bit with calling the push recent. There's been a push for further U.S. regulation by corporate defendants for literally Burford's entire existence, and it hasn't amounted to very much since 17 years ago.

Thanks, Chris. Our next question and looking at the hour, probably this ought to be our final question, Chris, is on international growth. It comes from Peter Richmond, and it's as follows. As a global business, could you comment on Burford's international market plans and your views about the optimal level of geographic diversification for the business?

Sure. So Burford is indeed a global business. And the reason that we are a global business is because our client base is global. And when I talk about our client base, I mean not only the individual corporate clients that we serve who are located all over the world, but the law firms that represent them. And those law firms increasingly are structured as multinational organizations. This is a trend that has been going on for a number of years, and it's a trend that we have adapted the business to meet. And what I mean by that is really going back more than -- well over a decade, we've designed our business to be able to meet the needs of the large global law firms wherever it is that those needs arise.

So we can do every kind of law that they do, and we can deploy capital for them in every place that they're active. Now they're not active in every jurisdiction. The big law firms don't have offices in Chad, for example. And so we don't do any business in Chad as a result. But they certainly do do business in the places where we're present, and we continue to expand to meet those needs, Madrid being the most recent example of that, where we have one person on the ground in Madrid and another one on the way there, a transplant from Burford in New York because Spain has basically welcomed in the branch offices of the large global law firms as well as continuing to have Spanish firms.

And that means that when we go to one of our traditional client relationships, they have the expectation that if a partner from Madrid calls up with a client in tow that we'll be there to serve that client in just the same way that Morgan Stanley is there to serve a Spanish client who wants to go public or wants to raise capital. And so that's really how we think about it. And I don't have in my mind a sort of allocation that says, well, we want to be 40% U.S., 20% U.K. and 40% rest of world.

I think that number ebbs and flows depending on what's going on at any given time. There is more litigation activity going on in Continental Europe of the kinds of things that we have historically done right now than there has been for some years. Is that a trend or is that a blip? We'll see. But you get blips like that all over the place. And we just design ourselves to be able to provide service to the law firms that are our clients.

So Rob has told me we have to bring this to an end. But my gosh, what a thorough and thoughtful collection of questions. We're really grateful for that, for the extent to which you follow the business, the extent to which you keep us on our toes and for your support as we work through a set of share price challenges that are very front of mind for us to address with a very large and continuing -- very large and growing portfolio. So thank you again for your time, your interest and your support.

Thank you, Chris. And if I could just issue one reminder, which is replay facility -- sorry, excuse me, replay facility will be available shortly after the event via the same webcast registration link that you use to access today's audio webcast. As always, we encourage you to reach out to us with any follow-up questions through the usual channels or you can e-mail [email protected]. Thank you again for participating, and enjoy the rest of your day.

Hello, and welcome to Burford Capital First Quarter 2026 Financial Results Conference Call and Audio Webcast. Please note that this call is being recorded. [Operator Instructions] I'd now like to hand the call over to Josh Wood, Head of Investor Relations. Please go ahead.

Thank you, Ali, and good morning, everyone. Thank you for joining us to discuss Burford's First Quarter 2026 results. On the call, we have our Chief Executive Officer, Chris Bogart; our Chief Investment Officer, John Molot; and our Chief Financial Officer, Jordan Licht.

Earlier this morning, we posted a detailed earnings presentation, which we'll refer to during the call, and we also filed our Form 10 Q. If you've not already, you can find these 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 and 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.

With that, I'll turn the call over to Chris.

Thanks very much, Josh, and thanks to all of you for joining us today. We're going to do things a little bit differently than our usual quarterly earnings calls today. And I'm starting on Slide 8.

First of all, we're going to talk about YPF, give you a full update there. And then I'm going to take you through an update on the core business. We're going to talk about liquidity and debt and give you some thoughts about what lies ahead. John and Jordan will then go on and talk about the quarter. We may go a little longer than usual in our remarks, but we can reserve lots of time for questions, and we're able to go beyond an hour if people would like us to do that.

Let me start, though, by framing just the key message that I think it's important that everyone take away from today and this presentation and this set of results. Burford is the clear acknowledged market leader in a growing, high-return, uncorrelated industry. We have a very large portfolio that is generating meaningful cash. The YPF loss is disappointing and it's something that we expect to turn around, but it is an entirely noncash event. And in fact, we have made a nice cash profit from it.

So let's start by talking about YPF on Slide 9. So as I said, YPF was obviously disappointing, and it was very frustrating to us. Judge Preska, the trial judge in the Southern District of New York, who wrote the judgment a couple of years ago, is a very fine judge and has a 4% reversal rate at the Court of Appeals. And we should have been in that 4%. Unfortunately, we had a divided panel, the 3 judges split 2:1 against us with what we believe is quite a weak decision with poor reasoning.

Later today, we're going to be filing our en banc petition, which asks the entire court to take a look at the case again. And in our briefing later today, which will be public when it's filed, we go on what we call that decision egregiously wrong and indefensible. But the reality is that that's litigation.

Every case, every lawyer has one case that he or she should have lost. And every lawyer has lost cases that he or she should have won. And frankly, it's that idiosyncratic risk of litigation that lets us generate high returns, and that creates barriers to entry against potential entrants who don't have tolerance for that kind of risk. And look, our process does a very good job of screening in bad cases, but that doesn't mean that we can forever forgo that level of unpredictable risk. That's simply the way that litigation works.

And while we will try hard to get a different result in the U.S. courts, statistically, that's something that is realistically difficult to obtain. So that takes us to arbitration. Arbitration here is a process that will let us advance essentially the same claims for the same damages. And the case is very well set up for arbitration. We are experts in doing this. We believe that we're the largest provider of finance to international arbitration in the world.

We have, in fact, arbitrated successfully against Argentina before in a case involving the expropriation of two of Argentina's flag carrier airlines. Argentina loses very regularly when it goes to arbitration. 86% of the more than 50 cases brought against it have been -- have resulted in a pro investor outcome. And once there is an arbitration award, the vast, vast majority of arbitration awards are satisfied. So this is not something that is pie in the sky. This is a very real alternative.

And for those of you who have been following this case since its beginning, we will always go back to 2015 when we first started this litigation. We said at the time that keeping the case in the U.S. courts is a significant risk and that if we were unsuccessful in doing that, then we had this arbitration avenue available to us.

It's just disappointing that we had to go all the way through this U.S. court process before turning and going to arbitration because this is also going to be a process that will take some amount of time. We've had a fair number of questions about the process here. And so in addition to this one slide that you see on the screen, there are several slides in the appendix that have more granular detail about the process and how this works. And the other question we get a fair bit is around cost. A bunch of the costs that you have seen us invest in the YPF case were structural, in other words, costs to obtain the interest in the first place. It wasn't litigation cost.

Those structural costs don't need to be repeated. And so going forward, the cost of this case will be consistent with any other complex arbitration case. There's nothing close to $100 million to spend here. Historically, we've spent in the $10 million to $20 million range on arbitration matters. But that's really where we sit with respect to the next steps on YPF and its litigation. And they're going to be kind of quiet because arbitration is an inherently confidential process, and there's not a lot of updating that goes on during it.

So let's turn to Slide 10 and talk a little bit about YPF and money. So as you've all seen, and as you were expecting, given the guidance that we gave right after the decision came out, we have applied our valuation policy, and we've taken a very substantial write down of the YPF asset value. But I really would continue to emphasize that that's entirely a noncash matter. If you look purely at the cash side of YPF, this has been a very successful investment. We've made a cash profit of more than $100 million.

But as you can see from our comments here about how going forward this affects our financial statements, there aren't many milestones in arbitration. And so you're not likely to see for the next several years much financial statement activity in the case.

Let me give some details here that you can read for yourself, and Jordan will be happy to take questions on it. But that's sort of where we are. We're at the -- we have a high level of confidence that some time from now in the future, we're going to be coming back to you with good news from an arbitration award, good news from an arbitration tribunal. But it's something that's going to take a little bit of time and require some amount of patience.

And so what that really does for us, while we're obviously unhappy about the YPF result, is it changes the narrative around Burford. For the last few years, YPF has really dominated the Burford story. Many of my meetings with investors would open with YPF, and lots of those meetings never really made it past the discussion of the case. And that was understandable. It was very public, it was very large, it was complicated, and it required a fair bit of effort to properly understand.

But now, while we believe the case will resolve in our favor, as I said, it's going to take a number of years, and there's nothing really to discuss in the interim. So that lets us, I mean, close that chapter, to turn the page and start thinking more about Burford and its core business.

And let's start doing that on Slide 11. So we're happy now to be able to focus you on the core business because we've got an amazing core business and it, quite frankly, has been neglected by the market for some time. So before we turn to quarterly results, I want to spend a little bit of time refocusing on that core business and trying to get you to understand and share our excitement about it.

One of our largest shareholders wrote to us recently and they said the business ex YPF is performing really well, and we see the stock as wildly undervalued. And that's a sentiment that the management team agrees with. The core business that we have is a gigantic portfolio of litigation matters globally, hundreds and hundreds of them. They move along the litigation comparable to maturity fairly rapidly, and they generate substantial cash flow and strong returns. And because we have the market leading global origination engine, we add materially to that portfolio every year.

So let's turn to Slide 12 and take a look inside it. We say that we have 237 active assets, but many of those are multicase arrangements. In actual fact, we have somewhere around 900 cases. And a case for us means a substantial complex piece of high value litigation. We're not counting plaintiffs. If we did, because some cases have many clients, we would be in the many thousands. So in short, this is an enormous collection of high value litigation, by far the largest in the world, we believe. And we expect that it's going to produce billions of dollars of cash over time. The cases are widely diversified across any metric you'd care to use, as you can see from the graphic here.

I'd make a couple of important points on this slide. First of all, looking at the bar on the right, 35% of that portfolio is from 2015 to 2019. Those are old cases. But for the pandemic, we believe many of them would have resolved by now. But they will resolve over the next bit of time, and they will be a desired source of cash as they do. And let's also look on the left at those undrawn definitive commitments, more than $1 billion now. That's basically something approaching another $2 billion of future cash proceeds as that capital flows out in the cases and then returns at our historical rates of return.

And we already have those cases. We don't need to do any work to find them. So it's a very interesting portfolio from a financial perspective.

Speaking of returns, let's have a look at Slide 13. And let's just remind ourselves of what Burford has already been able to achieve. $3.8 billion of cash for the balance sheet, and in fact, more than $6 billion group wide, at high returns. So in short, we know how to do this. And we have been brought. We have a large portfolio, as shown on the right, and that translates into accelerating realizations, as shown on the left-hand graphic. So the all important question here is around cash.

And let's have a look at Slide 14. So this year is going nicely. We have sight of $280 million of cash already this year. But let's step back from short term quarterly numbers, and let's look at the basic model. Most of you have heard me describe litigation before as a conveyor belt. What I mean by that is that it is a rules based process that doesn't permit cases simply to sit and gather dust. Once the case is filed, the system moves it forward through a set of consistent activities and ultimately gets it to a resolution.

Every litigation case comes to an end. Unless they're abandoned, and we have never had a client abandon a case, they're simply too large, these cases that we do. The conveyor belt takes each case to trial unless the case settles along the way.

Now of course, one of the possible outcomes in litigation is that you can lose. But our full business is designed to help us minimize losses and pick good cases. That is literally the thing we spend the most time on. And we do that with scores of experienced lawyers around the world, with a substantial data science and quantitative analytics function, with proprietary data, and applying our very considerable judgment and experience. And as you can see on the right hand graphic here, it works. Our loss rate, that blue line, is low and stable. So if you don't lose, you're going to make money from a case.

There are just two how much and when. The how much question depends on whether you settle or whether you win at trial. When you settle, you make somewhat less money for obvious reasons because you're not taking trial risk anymore and a defendant expects a discount for derisking the case. So there is a direct correlation between settlement rates and returns, as you can see on the graphic in the middle of the page.

As we've said before, we're not sure if the increase in our settlement rate is pandemic driven, with courts pushing cases to settle to try to reduce the pandemic backlog, or if it is more permanent because the cases we are doing are ever larger and thus present more trial risk for defendants. We'll see as time passes.

But we're not complaining about that because settlements happen faster than trials and they derisk our positions.

In short, this is a very good business, but it is not an easy business. We spent a lot of time building a high quality, unique moat, and we are now seeing the benefit of it.

Turning to the when question, this is the vexing part to public investors who like predictable quarterly results and forecast models. And this business just can't provide them the way that we would like to. We can provide a lot of predictability around outcomes. But as to when the conveyor belt will do its thing, there are a number of variables at work, including today the question of how clogged up the road in front of us is.

But our concluded weighted average lives, as you can see, have been pretty consistent and pretty short. And the weighted average life of our active capital is longer, as you can see in the bullet on the slide, over 3 years instead of in the middle of the 2 year range, but it too has been relatively stable.

So there isn't really any question that a lot of cash is going to show up, and it's going to show up in a reasonably short period of time, but precisely when is harder to say. It would be easier for you and easier for us if that were different, but then commercial banks could do this business as well.

Slide 15, you've seen before, and it tries to give you some insight into that important how much question. How much cash are we going to be able to generate? And our modeling says the answer to that question is more than $5 billion. And again, this is not including YPF.

Now the obvious question is why we are modeling 110% ROIC when our historical ROIC is 82%. And the answer is in two parts. First, the mix of the current book is different than the mix of the historical book. We have learned some lessons along the way and we are better investors today than we used to be. As one example, we have learned not to do small cases. Our ROIC across a significant number of small cases turned out to be pretty weak and certainly dragged down our overall returns.

And second, we don't yet know if the settlement rate changes we have seen in the last few years are permanent or transitory. But whatever the precise number will end up being, it still represents a massive amount of incoming cash in a world where we have only $1.7 billion in net debt. There really isn't any plausible scenario in which the portfolio's output isn't meaningfully greater than the debt.

And if you then not only look at the freeze frame portfolio, the existing portfolio, which is what Slide 15 tells you, and we turn to Slide 16, this shows you the next level of this story because the portfolio isn't static. We've been growing the business significantly, as you can see on the left, a 17% 5 year CAGR. And new business generates yet more cash.

So what we've done here on the right hand side of the slide, it was a quick and dirty calculation to illustrate the point. If we have sort of an $800 million of new commitments a year, and that's perfectly within range for us, ultimately we'll deploy somewhere around 80% of that commitment. And if you apply a ROIC to that, which is consistent with history or our modeling, you can see the outcome.

In other words, every year, we're adding well over $1 billion of future cash flow to the mix. So we have the big static portfolio and then every single year, we're growing the incremental cash that we expect to get out of this. I will talk about leverage in a little bit, but the simple answer is that growth delevers this business pretty darn quickly.

So turning to Slide 17. Everything that I have been talking about until now is cash. I run the business, and I'd like to talk to investors on a cash basis, not an accounting basis. And many of you have heard me say that for years, with, frankly, a somewhat critical view of accounting terminology at the same time. There are two reasons for my critical eye. One of them is, I suppose, that I've been in and around complex litigation for 35 years now. And that has taught me that accounting numbers are often disconnected from reality.

But the second is more specific to Burford. There aren't yet comprehensive accounting standards for this asset class. And a number of the current accounting choices seem to me to be not very sensible or not very helpful to investors. So I focus on cash and not accounting. But here's an accounting slide for those of you who want to look at the accounting numbers. And this slide makes a very important point.

Our balance sheet is only carrying our assets at a 22% return. That is 60 points less than our historical returns, almost 90 points less than our modeled future returns. So on an accounting basis, there is an enormous amount of runway here to generate P&L income that will grow shareholders' equity. So that's the portfolio.

Let's turn to Slide 18 and touch very briefly on the origination engine. We have the leading origination platform in the industry. And we've just laid out a bunch of the data points here. I'm not going to go through them in detail. You've heard them from us before. We have lots of people. We have data. We have strong relationships. We have global presence, marketing and business development. And what all that translates into is the kind of growth that you see in the graphic on the right.

Turning to Slide 19. It's not just that we have been successful doing this and that we're good at doing that. It's also that there is a structural dynamic going on with corporations that drives the acceleration of their adoption of our products. And so this data might be interesting to you. This is from The American Lawyer. So these are statistics about the very largest of the law firms, the Am Law 10, so the 10 largest law firms by revenue, and then the Am Law 25. And what you can see there is basically an explosion of revenue and profits. The chart on the right, just a lever on that.

That is the millions of dollars per partner in law firm profit. So these big law firms have gone from sort of $3 million and $4 million of profit per partner to $6 million, $7 million of profit per partner. That's an average of every partner in the firm. And how have they been doing that? They've been doing that by being able to push through double digit increases in their billing rates to their corporate clients.

Now that's great for the law firms, but what does it do for the corporate clients? Well, it has an extraordinary consequence because it means that corporate clients who want to use those law firms are having to divert more and more capital from their operating businesses, which generates for them a return and a multiple, to a collateral activity like litigation, which does neither of those things. It's, in fact, injurious to their business to do it. So they do it because they need to, but not because they particularly want to. We are the solution to that problem. And that is why our business has grown the way that it has over time. And this trend shows no signs of abating. And that is why every single year, we have more frustrated corporate clients come to us and use our capital for this very reason.

Now let's turn to liquidity and leverage. I'm going to start on Slide 20. We've had lots of questions about the topics, and I want to lay out our position very clearly to dispel any market uncertainty. Our liquidity position is very strong. We consciously raised $500 million in January to buttress our position, and we sit today with more than $700 million of cash in the bank. We have historically brought in much more each year in cash than we need to cover our cash costs, including OpEx and interest.

Moreover, as I've laid out in earlier slides, we believe our cash realizations are likely to increase over our historical levels. And by the way, not to keep beating the accounting dead horse, but our reported GAAP operating expenses are generally a good deal higher than our actual cash operating expenses. For example, compensation is our largest expense, and a significant portion of our compensation is through share based or carry based long term incentive programs. Those produce current levels of GAAP OpEx, but are largely noncash.

Jordan will detail some other items on the P&L that don't have any cash impact on us in a few minutes. I would also underline that we have not been reliant on cash from the YPF case, nor was YPF included in any of our forward looking cash flow modeling. There was simply too much uncertainty around it. As you can see from the graphic in the center, the last time YPF produced any cash for us at all was in 2019, 7 years ago.

We have, in the past, tapped the debt markets to fund gaps between new business opportunities and organically generated cash flow. But as we reported previously, we had already concluded before the YPF outcome that the business no longer needed to do that going forward. And the team has been operating on the basis that we need to fund new business organically.

That does present the occasional risk to our ability to do as much new business as we would like, as if we are short on organic cash flow, there is a world in which we would have to constrain new business. But that is only a risk to our future growth rate. It is not a challenge to our liquidity, as the solution is simply not to do the new business if we don't have capital available to do it.

To be sure, we would like not to face that issue, and we believe our accelerating cash generation will permit us to avoid it, but it is not a liquidity risk.

Slide 21. In a few minutes, Jordan will spend some time on the nuts and bolts of our debt arrangements. But let me speak about leverage strategically. We believe strongly that balance sheet investing, including the use of debt, is the right way to engage in this business and that it is substantially preferable to the use of third party investment fund capital. We've described in detail in the past the reasons for that view. The exception to that view is our strategic relationship with our sovereign wealth fund partner, which has a different economic structure. And that is a relationship we expect to continue.

With the sharp decline in the balance sheet carrying value of YPF, again, notwithstanding our long term confidence in the ability of the YPF case to produce a very substantial cash return, we now have a higher debt equity ratio than we would like, and we are going to work over time to address that.

When we have spoken before about leverage, we have made the point that the management team are the largest shareholders of this business, and we are very conscious of the ability of some debt funds to behave badly if they obtain the ability to do so. We have always been very alive to trying to ensure that our--and thus your--equity value was not at risk that way through sensible levels of debt, laddered maturities, long dated issuances, and through the design and structure of the debt instruments themselves, all of which are unsecured and all of which are free of any meaningful maintenance covenants.

We've previously spoken of having a comfort level of a debt equity ratio around 1.25x. However, that was in the context of more than 40% of our assets being in a single matter. With the effective elimination of that concentration, our asset base is now widely diversified, as I demonstrated earlier, and is capable of supporting a higher level of leverage.

We have not yet settled on a precise leverage target, as we would today be above whatever that might be, but the fact that our incurrence covenant is at 2.0x is certainly a relevant criteria.

But the bottom line message here is the following. We intend to delever over time, but we are not alarmed by the current posture of the business. And we'd remind investors that the rating agencies agree. Moody's did not alter our debt rating after the YPF event, keeping us at Ba1, and S&P lowered us in March to BB with a stable outlook.

So how are we going to do that? Slide 22. The core answer is that we are going to continue to grow the business, and we're going to be even more focused on harvesting cash from the existing portfolio. I spent quite some time earlier demonstrating the cash generative power of the current portfolio. And while equity investors may find our quarterly volatility frustrating, any reasonable view of the timing of cash flows from the portfolio would be considerably faster than our debt maturities. And I also showed how significant the cash generative impact of even routine levels of new business can be.

We will also look hard at cash conserving actions. We've been in discussions with shareholders for several years about the dividend. And while no decision needs to be taken today, there is a genuine market question about its benefit. We don't trade on its yield, and many investors do not particularly value us and do not run their portfolios for income. So while we appreciate that some investors do attach significance to a dividend, we would also note, as the slide shows, the delevering impact of not paying it.

We also reiterate our longstanding position that share repurchases are not appropriate at this point. We also have in mind a number of ways to manage operating expenses. We have announced this morning the departure of Craig Arnott, our CIO International. That was his choice, not ours, as he seeks out an unrelated final chapter, but it nevertheless reduces our compensation expense. We have some other streamlining in mind as part of both a more streamlined structure and a demonstration of our deep bench. Travis Lenkner is going to become the Chief Operating Officer and work hand in hand with Jordan on those initiatives.

Slide 23 talks about growth. As I've indicated, the best way to delever this business and to enhance its equity value is to continue to grow it. We have the people, we have the market position, we have the know how, and we have real demand for our offering. And we believe that we can make the financial construct work. So as we say internally, onwards.

And while I've gone on for quite a long time, I will now turn it over to Jon and Jordan for some brief remarks about the quarter, after which we'd be happy to take your questions and happy to stay on past the hour if there's a desire for us to do so.

Thanks, Chris, and thanks to you all for joining. I'm going to talk about three things that were in Chris' presentation, but I just want to focus a little more on them. One is new business, which is proceeding at a steady pace, as Chris said, and is the driver of growth and replaces the matters that come off and generate revenue. Second is the portfolio matters that are positioned to deliver the higher levels of realizations Chris referred to. And third, a word about just a reminder of how strong the portfolio is, as demonstrated by the track record we've experienced over time.

So first, new business. The new business reflects a steady pace. The business development team is humming. We did $133 million of new business commitments, which is a solid start to the year and consistent with the recent first quarter average. The $100 million of deployments are likewise consistent with the recent pace. And as Jordan noted, if you look at the average over the last 8 quarters, you'll get a sense that that's right on target.

We have, as Chris mentioned before, $1.3 billion of unfunded definitive commitments, which continue to drive deployment. And because Chris said, we don't have to go out and find the matters, we found those matters, we've underwritten them, we're in them, and the money will go out to generate returns going forward. And that balance, that number is up by more than 40% if you compare it to 5 quarters ago, at the end of 2024. So we have grown the portfolio, and that's a significant amount of capital that's going out to deliver returns for us.

And while we tend to focus on deployments, it's important not to forget about discretionary commitments. We have $600 million or more of unfunded discretionary commitments. Well, what are those? We don't have to put that money out. We still underwrite additional matters, but they reflect strong relationships we've built with counterparties, corporates, but particularly law firms, and the opportunity to grow through adding new cases, new matters to portfolios.

And you find it is much more efficient. We end up with much better matters, closing more easily when you have an existing relationship and a portfolio set up. And when we see something good, we work together with our counterparty to bring it in. And we continue to expand our business development globally. We've added people on the ground in Spain and Korea. So I'm very excited about how the new business machine is turning basically on all fronts in each of our pipelines in each of our geographic locales.

So the second question then is what about the portfolio, what is delivering, what is poised to deliver. We had $97 million in realizations in the first quarter. It's not a big quarter, but it still exhibits to the diversification of our business. There were 25 assets contributing into that quarter. We said that 6 of those 25 generated $5 million or more. Two of the 6 generated $20 million or more. Nine of them are from pre COVID vintages.

Remember, Chris talked about the slide of the pre 2020 stuff, demonstrating the older book is moving. Even if it's taken longer and COVID slowed it down, it is happening. One thing that's noteworthy is the number of trials and hearings that are projected to take place or are in a position to take place this year because those are significant catalysts for settlements or resolutions. We have - when we look at the book, 36 trials and merit hearings scheduled during 2026 across those various portfolios. And that's up significantly. If you look back same time last year, there were 23 scheduled for the remainder of the year versus 36. It doesn't mean that's all going to happen, things get pushed, but it's a positive indicator.

And slicing it a different way and stepping back, like we look at our portfolio, we see 23 different assets that have the potential to generate double digit millions or more in realizations in '26. And for comparison, in 2025, there were 14 assets that generated $10 million or more, and in 2024, there were 16. And again, I'm not saying that all 23 will deliver. We find sometimes things that could deliver don't, and sometimes things that we weren't expecting to deliver end up resolving earlier than expected.

But there's a lot going on. As Chris said, we have a mature portfolio with a lot of great stuff in it. Stepping back to the track record over time because, as Chris said, there may be quarterly volatility in this business, but the portfolio over time has delivered on a consistent basis. You've had $3.8 billion plus of cumulative realizations. I think that's more than doubled since 2020. Over that time period, the realized loss rate cumulatively has remained remarkably consistent in that 10% range.

We've noted how the interplay of ROIC and settlement rate in recent years is how those two are related to each other, and time will tell if that's temporary or is a more structural feature. But the takeaway is we continue to add new matters fueling our growth and the potential for the future. We continue to see the portfolio turning, and we have lots of matters that are mature enough to be delivering results in the near term. And the overall portfolio is very strong, and I'm very excited about it.

So with that, I will turn it over to Jordan.

Thank you, Chris and Jon, and thank you to everyone for joining us this morning. I want to reiterate, but without repeating, I see many of the same strengths in the Burford origination platform and portfolio that Chris and Jon just spoke about. We spent a good portion this morning discussing our disappointment with the recent activity in our YPF related assets, and as you would expect, the judgment reversal had a significant noncash impact on our financial results.

Those numbers understandably overshadow much of the first quarter activity. Rather than walking through each page of our two segments, the Principal Finance and Asset Management segment, I'm going to focus on the key highlights and themes associated with the quarter on Page 25. I'll also call out several noncash items that affected the income statement on some different lines, and I'll make sure to note what those impacts were as we go through it.

And then at the end, we'll open up for Q&A. Jon just spoke about his excitement around the global origination franchise, and let me add some perspective by walking through some of the related figures.

New definitive commitments were $133 million, which is 25% higher than the first quarter average of '24 and '25. That's a strong start to the year, and we expect healthy demand and a strong pipeline as we move throughout 2026. Definitive commitments naturally translate into deployments. We deployed $108 million in the first quarter, broadly in line with our quarterly average.

Realizations were $97 million in the first quarter. That's lower than last year's start, which benefited from a nearly $100 million single asset realization, but it's still an encouraging beginning to the year, reflecting, as Jon mentioned, the diverse set of cash generating assets, including two that produced $20 million or more realizations. Realizations become receivables, receivables ultimately convert to cash.

As Chris noted at the start of the call, we believe we have visibility to more than $280 million in cash receipts so far this year. And as Jon mentioned, there's a significant amount of anticipated court activity still to come over the balance of 2026.

Capital provision income had a few headwinds through this period. First, discount rates used to net present value of our assets increased by nearly 50 basis points, accounting for about half of the negative impact. As I mentioned before, under our fair value accounting, changes in rates in the broader rate environment affect our assets in a way that can resemble a bond portfolio.

In addition, capital provision income was negatively impacted by changes in duration and certain observable milestones.

Turning to operating expenses. There are a couple of items to highlight. You'll see movement in the long term incentive line, or what we call carry, that naturally tracks changes in the fair value of assets. In addition, our deferred share based compensation was impacted by the decline in our share price during the period.

But I want to spend a few moments explaining the $19 million charge related to case related expenditures. These expenditures relate to previously deployed costs that have been capitalized into the fair value of our assets. Given our ownership position, these costs should have been expensed. Going forward, we'll continue to track the cumulative amount of expenses associated with these assets and provide continued visibility into whether they relate to active assets or concluded cases. These are all active cases when looking at the $19 million of costs. And these costs will also be treated as deployed costs when we look at our ROIC and IRR metrics.

We raised $500 million of incremental debt in January and redeemed the remaining outstanding U.K. issuance. Before I say more about the capital structure, it's worth noting that the redemption did impact the income statement. More than $12 million of the $60 million of foreign exchange impact recorded in the income statement related to this redemption.

Overall, GBP rates have increased mostly since when we first issued these bonds in 2017. And historically, that rate impact was recognized below the line in other comprehensive income, or OCI. This period, with the redemption, it was crystallized in the first quarter, but it's been recorded over time in OCI in the prior periods.

And it's also important to note that over the life of these bonds, with rate movement, our GBP denominated assets in the portfolio, as well as some of our marketable securities, have also benefited on the positive side with pound depreciation.

Overall, liquidity remains strong with $740 million of cash and marketable securities at quarter end.

Let us switch to Page 43 and wrap up with a few comments on our capital structure and then turn to Q&A. A few key points to highlight. We have an unsecured laddered maturity schedule that's been deliberately constructed to support our portfolio. As discussed, we've had no maturities due until 2028 following the proactive redemption of our 2026 maturity earlier this year.

Weighted average life of our debt capital is 5.5 years compared to the weighted average life of concluded assets and asset deployments of 2.6 and 3.4 years, respectively.

The redemption of the 2026 bonds also eliminated our remaining maintenance covenants. Our outstanding debt now consists entirely of 144A

notes with incurrence covenants only. In practical terms, that means we're limited to how much additional debt we can incur at certain debt to equity levels, but we retain flexibility to refinance existing issuances and a variety of other flexibility under various baskets created under the debt indentures. All of that is public and available on our IR website.

The incurrence test is 2.0x debt to equity compared to our current level of 1.35x. And while, as Chris mentioned, we intend to delever over time, we remain comfortable that a balance sheet model supported by leverage is appropriate for this asset class. We believe our current leverage is manageable given our mature and diversified portfolio.

With that, I would like to turn it back to Chris for any closing remarks, and then we can open up for Q&A.

I think we've gone on for more than 45 minutes. And so rather than me prattle on for longer, I think it would be better for us just to go ahead and take your questions. We are--as you can tell from all 3 of us--we are excited about what lies ahead and the ability to showcase the strength of the core business to you, and that's really where we're going to be focusing on in the years to come.

[Operator Instructions] Your first question comes from the line of Timothy D'Agostino of B. Riley Securities.

I guess thinking forward, when you all think about approaching larger cases or unicorn cases such as YPF. Given the process of YPF, how does that change your approach to those larger cases especially ones that again are kind of in -- I guess, that [uniform] bucket that are way larger than what you quantify as large cases. I know it's usually around $100 million.

Sure. I guess I would divide the world into two pieces a little bit because YPF was large in the sense of its potential outcome. But it wasn't especially large in terms of what it cost us to acquire the ability to provide financing and then the financing itself.

And so yes, we've got, round numbers, $100 million invested in YPF, but that's over an 11-year period of hard-fought litigation. So I don't think that I would regard another EUR 15 million investment, which was our original disbursement. I don't think I would necessarily regard that as a unicorn-type case, even if it came with the potential of a very high asymmetric return. And we are certainly open to doing cases like that from time to time when they present themselves.

The reality is, as you can see, because YPF was effectively the largest judgment in American history, there aren't that many of those cases. The other side of the bucket is when we have clients who want us to put very substantial amounts of capital to work in their cases. We've done transactions for clients that have exceeded $300 million in size. But those cases don't necessarily have the same kind of asymmetric returns, they may simply be strong cases that clients want to monetize and our approach has always been the same.

We set whatever our balance sheet risk tolerance is for the case or for the category of cases that we're pursuing. And to the extent that there is client demand for more capital than that, we have tended to meet that extra client demand using [separate] vehicles. Most recently with our sovereign wealth fund partner and previously with some other private investors as well. And I think that's how we would continue to look at that slice of the market.

Okay. Great. That's super helpful color. And then just a second one, if I can ask. Over the past couple of quarters, obviously, it's been talked about the backlog to recover from COVID cases. I guess as we think about going forward, could you just remind us of, I guess, the change in case realizations from the pre-COVID time to where you stand now? Like how much longer is it taking on average for cases to either settle, adjudicate to win, or be lost compared to the cases that were maybe back in 2017? Just to get a better understanding.

Yes. It's -- so the actual number is -- you see it on Slide 14. And what that shows is that the concluded weighted average life has gone up a little bit. It's now sitting at 2.6 years, up from 2.3 years before COVID. But if you look at the bullet that I pointed to earlier, the weighted average life of the active deployed capital is now 3.4 years.

And presumably, that will continue to go up a little bit as we -- because we haven't, of course, resolved all of those cases. So even though it feels anecdotally like things are slower and taking longer, and I think there are certainly anecdotal examples about, as I pointed out earlier, we've still got a decent percentage of the portfolio in pre-pandemic cases, when you actually look at the hard numbers, we've added a year or so right now to weighted average life.

Your next question comes from the line of Mark DeVries of Deutsche Bank.

First one of the questions are around the $5.2 billion of kind of modeled realizations. I think you just referenced it for February, I'm assuming the expectations are still there? And could you just confirm that? And also, could you discuss what kind of the assumed weighted [outlook] is for that?

I'm going to defer to Jon and Jordan on this. I am not certain that I know the weighted average life -- and if I do, I'm not sure that it's something that we've said publicly. But Jon or Jordan, do you have any comments on that?

Yes, we don't -- as you know, we don't actually disclose a duration estimate associated with our cash flows.

It sort of goes back to what I said earlier, how much versus when in the business. We're comfortable talking about how much, and we're pretty good at it. We're less able to do a good job on the when part.

Yes. No, understood. But is there a reason to think it's meaningfully different than, I guess, the 3.6 years you assume in the fair value of the capital provision asset?

Well, what we do when we model that stuff is we model a very wide range of outcomes. And so in every case, you're going to have outcomes that include early settlement, later settlement, trial, appeal and so on. And so what that does is it gives you actually quite a wide range of sort of scenario outputs that we then weight by probability.

And so the reason I don't have that number to hand, and the reason that Jordan doesn't either is because there's such variability in case type and in throughput of where you're headed. Like obviously, if you have a case that files and then goes through class certification, which is going to take less than a year, loses class certification and then settles, that's a very different dynamic than the case that you think is going to go -- well, let's take arbitration. I think the ICSID process has got a 4.4-year average followed by 2 to 6 months of enforcement if you want to go for nominal. And so if you're modeling an exit case, if the case doesn't settle rapidly, then you've got obviously a considerably longer duration.

So it doesn't really work to say, I don't think it's that helpful to say, yes, portfolio-wide here is the number because of the degree of idiosyncratic variability.

Okay. Understood. Just changing tack here. You mentioned in the presentation both the ability to aggressively manage operating expenses and also to harvest cash. Could you talk about the different levers that you have in line?

Yes. Look, ultimately, with respect to managing the operating expenses, it's something that we've been doing continuously as we monitor the cash that goes out the door, whether that's with respect to day-to-day operating expenses and our long-term growth aspirations. I think that overall, though, our focus, obviously, given that those numbers are not as large when you think about the potential of revenue and realizations, the focus really is on continuing to see the portfolio perform.

And then how we harvest cash from the existing portfolio, we don't necessarily control the cases, but that doesn't mean that we are extremely active partners to our clients, whether that's corporates or law firms, in thinking through opportunities in which to manage resolution. Case management is something that we have done historically and we'll continue to do as we go forward.

And I think we've talked in the past about, but even in cases where we obviously don't control settlement, the counterparties or lawyers will come to us to model the potential outcomes, whether it's granularity on particular matters, and they confirm that quite helpful and useful in figuring out what's an acceptable strategy towards settlement and to get to yes sooner.

Got it. And then just one more if I could slip it in. Sounds like cutting the dividend is at least on the table here. I think when it was raised in the last earnings call, you kind of mentioned that you've got a class of investors that kind of need some yield to hold your shares. Have you looked into how meaningful of your shareholder base that is and what pressure you would have on the stock if you did cut the dividend?

Yes, the consultations that we've had, including with our advisers, suggest that that's not a particularly dramatic portion of our shareholder base at this point. We've seen quite a lot of rotation in the last 5 years since we added the New York Stock Exchange listing. And so if you look now at liquidity and trading volume in the shares, it's very heavily U.S.-weighted today. And the consistent feedback we've had from U.S. investors is a relatively low level of focus on the dividend.

Your next question comes from the line of James Allen of Berenberg.

Just in terms of a couple of questions from me. So first one, I think earlier on the call, you mentioned -- forgive me if this is wrong -- around your 86% of cases against Argentina saw them pay out historically. Does that include international arbitration? And if it does, what would that be? And then secondly, just with regards to the debt-to-equity ratio, it sounds like you're quite comfortable on that, but you obviously will have to pay it down over time through kind of aggressively managing your OpEx, et cetera. But would you also consider a sale of a bundle of cases if there was a buyer out there?

So sure. So taking them in order, the 86% number in fact is international arbitrations. So that represents -- and you can get decent public data on this -- there have been, if memory serves, the numbers on the slide, there have been 51 international arbitrations brought against Argentina.

And just so that we're clear about what we're talking about, because a lot of people think about arbitration as being simply an alternative to litigation. So you might have an arbitration clause in your employment arrangements, or you might have an arbitration clause when you sit down in an Uber, you can't see it but you've agreed to go to arbitration. Those are commercial arbitrations. Those are simply an alternative to litigation where you've got a dispute between two private parties and you're choosing an alternative resolution mechanism. That's not what we're talking about here.

What we're talking about here are arbitrations that are brought under what are called bilateral investment treaties. So these are treaties between two sovereigns. In our case, one between Argentina and Spain, because Petersen is a Spanish entity, and one between Argentina and the United States because of Eton Park. And those treaties permit claims under what is called a public international law regime administered by the World Bank or by the UN, and so on.

So we're talking about a special kind of arbitration that yields an award against a country that, as you heard me say, is generally satisfied. So that's the denominator, the 51 bilateral investment treaty arbitrations brought against Argentina, and 86% of those, as reported, have had resolutions in favor of the investor.

On the debt-to-equity question and sale of cases, we're fans -- and I've talked about this for years -- we're fans of creating, building and being able to make use of a vibrant secondary market in litigation risk. And that's how you saw us take profit off the table in YPF. That still remains, I think, one of the largest secondary transactions that was done in the space. So we're totally open to it.

The challenge is whether the market is there and pricing, because we haven't seen the secondary market move to the kind of efficiency that you see in, let's say, private equity secondaries, where investors are still, in my view, regularly trying to overprice secondary capital for those transactions. So we're certainly open to it, but it's not as fluid as one might wish, and it's an area that we continue to devote time and effort to.

Your next question comes from the line of Hal Potter of Bank of America.

Just two for me. So on your managing of operating expenses, you called out potentially some early retirements. My question really is about to what extent are you concerned about key person risk and the potential knock-on impact on the rest of the business going forward? And then my other question is just about the shape in terms of doubling of the portfolio aspiration and then specifics on timing. If we're thinking that there's no more leverage to fund it, at least in the short term, is there a kind of kink upwards that you're expecting on that multiyear view?

Sure. So on the people point, no, and quite contrary actually. We've talked for a while about the bench that we've been able to build at Burford. We're really, really, really thrilled with the quality of the team and with the next generation of people coming along.

And so while it's always sad to say goodbye to people that you've worked with for a long time, Craig Arnott had been at Burford for a decade. But he and I actually started working together all the way back at Latham when we practiced law together. So it's sad when that happens, but at the same time, it opens the door to our next generation really coming along and moving up. And so I'm actually quite excited by that.

And in terms of doubling the portfolio, I think if you look at the new business numbers that we highlighted today, it's -- to be honest, while it sounds like a lofty goal to double the portfolio, to double the size of the business, it's actually not that difficult to do over the course of 5 or 6 years. And we have been running CAGRs that are well in excess of what we would need to produce to just be able to meet that goal. So I think that is frankly largely a business-as-usual undertaking, while obviously continuing to pay attention to the market dynamics.

Your next question comes from the line of Brian Shelley of Bank of America.

My first question is around kind of the cadence of commitments. Are you able to provide any color on how you can time those commitments when you need to fund them? And just as we think about operating expense going forward here, given where the covenants sit today?

Yes. So I think let's break that into two pieces. My suspicion is that you're probably talking about the definitive commitments that we've identified. So those are commitments to existing cases that we expect to finance over time. And those have been pretty consistent.

Again, back to the conveyor belt, you have a pretty good sense when you start the case of the rhythm that it's going to follow and when the spend is going to go out. Litigation spend comes in peaks and valleys depending on what's going on in the case, but there is certainly a relatively large component of the spend that comes towards the end as you prepare for and go to trial.

And if you look across history, and we published those numbers for years, you don't see a massive percentage of that number going out in any given year. I want to say numbers in the 20s %, give or take, so that's sort of what it looks like. Now the other piece of commitments is, of course, new business that we do. And that new business, as Jon pointed out earlier, is entirely within our control. So we can do lots of it, we can do none of it, depending on what we think at any point, our risk tolerance and our cash position and liquidity.

I would only add to that, we have relationships with some firms where the pace at which the dollars go out is actually built into it. Firms instead of billing by the hour will bill us by the month or by stage of case, and if the stage gets delayed, then they'll postpone the monthly billing. Or for those who are billing by the hour, there will still be caps on stages to make sure that you don't use up the budget too quickly.

And conversely, we will -- when it comes to our returns -- have a component built into those returns that is IRR-based or multiple-based, so that to the extent you're putting out money, your potential returns go up as well.

Got it. Very helpful. And one more quick, if I could. In the presentation, you mentioned the possibility around repurchasing some of the bonds in the open market. Can you talk about what you would need to be able to do that? Is that something you'd be considering today? Or are there any hurdles before you consider doing that?

Sure. Look, we've always been active in managing our maturities and purchasing bonds in the open market. If you look at the last two U.K. issuances, we spent some of our cash in advance of redeeming these bonds when we saw attractive pricing. I think that it's something that we are constantly looking at relative to the pricing that we see, the cash on balance sheet, the forward look of our cash and expenditures, and then how the maturities are playing out.

So I guess it's a dynamic view that we continually have compared to our growth, et cetera. So I don't think there's a hard and fast rule, but it's a tool that we've used over the last several years that I've been here.

This is Josh. I'm going to jump in really quick. I think we have just a few minutes to take a few questions from the webcast. The first one is: given the current YPF outcome, what would you do differently in terms of valuing such a large potential outcome? Is there a case for a more conservative valuation or a cap on potential value to reduce the impact on share price volatility from unfavorable outcomes?

Well, what I would do is look at the cash and not the accounting, but given that people want to look at the accounting, there's not much you can do. We fair value our assets. We engaged in a market transaction with the YPF assets that set a clear market valuation mark, but it was very high. And so the accounting rules leave you no choice but to take the asset on your books at that point at a value that's implied by the market transaction.

And then the other valuation rules, including writing assets up over time based on the passage of time and so on, come in and do their own work. So no, I don't think there's anything you can do differently about that. And I do think that if you examine the value of the YPF asset at various points in time, I think it did accurately reflect what the fair value, what the market value of the asset was. The simple fact is that if you were going to do a probabilistic analysis walking into the Second Circuit, you would have said that your odds of reversal were in the single digits. Preska's reversal rate was 4%, the whole Southern District reversal rate was 6%. So the market wasn't irrational in how it was valuing the asset -- it was just a low-probability, high-impact outcome.

Okay. Second webcast question. Your Slide 19 shows accelerating legal costs, which you say drives companies towards litigation finance, but we're paying these increased costs, so unless we're increasing pricing, does this reduce margins?

Yes, yes, yes, I'm happy to take that. I sort of alluded to it in answering your prior question, and maybe Jon sort of started to answer this, which is we virtually always have a component in our pricing that is a multiple on or an IRR on the money we put out.

There will be a component as well where it's a percentage of the net beyond that. But we're very mindful of it. And in particular, with high-priced, big-ticket litigation where we are concerned about the spend, we not only work very hard with the lawyers and clients to come up with budgets that we can predict and that we can hold the lawyers to, but we also build it in so that the more the lawyers spend, the larger our profit, which means that we and the clients have a strong incentive to monitor the cost and make sure that the lawyers aren't overstating.

So I'd say that basically, the litigation does get more expensive as billing rates go up, and that is the reason why there is greater demand for our capital. But we are able to deal with that additional cost by making our capital more expensive, as the question says, it does become inherently more expensive. Every dollar of spend is going to need a profit to us as well as the lawyers' built-in profit.

Okay. And we'll do one last webcast question. Will deleveraging activities hurt your long-term growth? If YPF had not been written down, could you have taken on more cases than you now will?

So I think and hope the answer to that is no. And as I said earlier, we had decided some months ago that we were not going to continue to close new business funding gaps with leverage. We made that decision long before the YPF decision, and we put that in a release a while ago, in fact.

And so the reason for that is basically that we thought that the portfolio is large enough and the cash generation ability of the portfolio was substantial enough that we didn't need to give people the out anymore of just saying, "Oh, well, let's just go and take out more debt because we've got this BA1."

So we believe that we're at the size and stage where we don't need to do that, where we should be able organically to fund the growth that we want to do. Now, as I noted, there's always the risk of some timing mismatch there because the incoming cash is not the most predictable thing in the world. And so that's really the only area of risk that we hit there, I think. But otherwise, I think that the plan should work itself out.

I might add to that just an observation. In the same way that we said before that the high price of litigation is what creates demand structurally for our capital from the clients who would otherwise pay those costs and who end up not only having to pay them, but pay our returns on them in the end, but out of recoveries.

But also, the structure that the question implies, that basically in Chris' response, there is a lag time between putting the money out and getting it in, although a relatively predictable lag time across the whole book, meaning our weighted average life hasn't changed dramatically even if COVID slowed things down. That sort of explains the moat that we've historically described around our business.

It is very hard to start up a business like the one we've built because to start it up, you have to raise capital, you have to deploy capital, and have the relationships and the underwriting team to be able to do it. And generally, to keep the machine going, you have to raise more capital before the money comes back. And that's why over the years, we've seen entrants raise initial capital, and when they go to raise the second fund, they've had a hard time keeping up because they don't yet have the performance or the cash back for investors to reinvest.

And as Chris said, we've gotten to a size and scale where we can use the money coming in from prior cases to fund the new commitments. And that's really a pretty privileged position to be in. That has nothing to do with YPF, and so in fact, it highlights the competitive advantage we have.

Thank you so much. I'd now like to hand the call back to Christopher Bogart for closing remarks.

Thanks very much. We really appreciate your time. We ran well over time, I know. To the extent that we did not get to your question, we have a call coming up for retail shareholders where we're happy to take a whole lot more of your questions, and details about that will be forthcoming.

And there are also lots of opportunities to engage with us, both at investor conferences that are coming up and in one-on-one format.

So we know this has been a shocking and disappointing time for the last few months, but it's time for us to turn the corner and to really now not have my investor meetings start with YPF and instead for us to be able to show you just how potent the core business is and how much cash we think that is capable of generating from the portfolio that we have been building a little bit out of sight, out of mind of the market for the last half dozen years. So we're very excited about what that has to offer, and we're excited to be sharing it with you as we go forward down the road here. Thanks to you all.

Thank you for attending today's session. You may now disconnect. Goodbye.

Thank you for standing by. My name is Bailey, and I will be your conference operator today. At this time, I would like to welcome everyone to the Burford Capital Fiscal Year 2025 and Fourth Quarter 2025 Financial Results Conference Call and Audio Webcast. [Operator Instructions]

I would now like to turn the call over to Josh Wood, Head of Investor Relations. You may begin.

Thank you, Bailey. Good morning, everyone, and thank you for joining us to discuss Burford's fourth quarter and full year 2025 results. On the call, we have our Chief Executive Officer, Chris Bogart; our Chief Investment Officer, Jon Molot; and our Chief Financial Officer, Jordan Licht. Earlier this morning, we posted a detailed earnings presentation, which we'll refer to during the call, as well as our annual shareholder letter, and we also filed our Form 10-K for 2025. If you haven't already, you can find all of these materials on our Investor Relations website.

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 and 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.

With that, I'll turn the call over to Chris.

Thanks, Josh, and thanks, everybody, for joining us today. I'm going to take you through some key messages, and I'm going to start on Slide 9 of the presentation deck. And what I'd really emphasize about what happened in 2025 is that we had a standout year when it came to new business, which is the thing that we really have the largest amount of control over in this business. So we saw -- as you can see here, we saw very significant numbers, taking us well on our way to meeting our longer-term goals of doubling the base portfolio by 2030. If we were to keep on, on this clip, we would significantly exceed that goal.

So that was just a terrific performance across the board: new definitive commitments, deployments, we added a net of $700 million of additional modeled realizations to the overall portfolio, taking that number to north of $5 billion now. So we're very pleased with how the year went from that perspective.

As all of you will be aware, our realization activity, while still robust, was not as strong as it was last year. And that, of course, was a disappointment to us. That's, of course, also something that we have less control over, and it's something that as longtime observers of this business know, it's something that can ebb and flow with the level of activity going on in the courts. And we've been describing to you over the past several years, a world where we have a significant volume of older cases in the portfolio, which are simply not moving through the court system, the court process, at quite the pace that we would wish.

We think that's probably still a hangover from the portfolio. In our shareholder letter this year, which I'd encourage you all to go and have a look at, we refer to -- we try to refer to it as 4 lanes of highway traffic trying to merge into 2. But the good news there is that the portfolio still had a significant level of activity, a good level of cash generation, and a good level of realizations. And most importantly, we're not seeing degradation in portfolio quality.

The loss rates are stable. Our returns are stable. So the issue from our perspective is much more an issue of throughput and timing than it is anything else. And we'll take you through some more detail about that. However, that obviously impacted our income, which was down somewhat, and we'll take you through -- and Jordan will take you through in more detail just exactly how all of the numbers looked.

So I'm going to turn to Slide 10. And this really highlights what happened on the new business front. It really was just a terrific year. You saw there a 39% increase in new definitive commitments. And that was coming off a year that was already relatively robust. That enabled us to significantly increase our portfolio base. That's the metric that we're using to look at our goal of doubling the business by 2030. And you see there, we've not only had a multiyear significant level of growth, but just this past year, we were able to put up a 20% growth rate in that number. So that's really very exciting for us, and it positions the business very, very well for the years ahead.

Slide 11 takes you through realizations. And what you see in realization activity here is on the right side of this slide, you see that the world is continuing to go pretty well. We hit a new high of rolling 3-year average realizations. And so we're pleased with the level of portfolio activity that we're seeing. And you can also see there that we saw a number of portfolio events, basically right on top of the number of portfolio events that we saw in the prior year.

But what really did happen there that caused the numbers not to be as robust as they were in the prior year is we simply didn't have as many big chunky wins. And you see that if you look at the graphic on the very left side of the slide, you see there that even though we had a roughly similar number of large-ish outcomes, we didn't have those big, big outcomes that drove the 2024 performance. And so when that doesn't happen, when we're missing one of those big, big -- or 1 or 2 of those big, big outcomes, you just inevitably see a decline in the overall realizations that the portfolio is driving. So if you look across here, we saw lots of activity, 69 assets add realization activity in fiscal '25 compared to 71 in fiscal '24. So that's an insignificant difference.

But the dollars per realization event were just lower. That doesn't reflect portfolio quality. It just reflects the fact that we didn't have one of those big cases that we've been waiting for to show up and conclude and generate cash. It doesn't affect our enthusiasm for the portfolio, as Jon is going to go through in some detail. And again, our loss rates have been stable, our returns have been stable, but it just reflects the fact that we didn't have the kind of throughput that we had. The good news is all that stuff is still out there waiting. So it's not as though these things are gone. It's simply that when you look at our larger cases, we didn't -- we simply didn't have as much activity in them as one might have wished on a single year basis.

And if you turn to Slide 12, you really see this illustrated in a more graphical format. Interestingly, we even saw -- if you look at gains year-by-year, we even saw an overall higher level of gains in fiscal '25 against fiscal '24. That's those 2 green bars on the left, $508 million to $579 million. But at the same time as we saw those higher gains, we also saw a somewhat higher level of losses.

Now what does that mean? That doesn't mean case losses. Case losses, when you look at realized losses, those numbers are still pretty low, and you see those numbers there over on the right-hand side. Those numbers are low, our loss rates are acceptably low, and consistent with historical practice.

So what's going on there? What's going on there is we have some unrealized losses. And I'm going to take you through a few examples of what creates an unrealized loss in our book because the reality is that while bad case events can also cause unrealized losses, so too can a number of things that don't speak to the underlying merits of the cases, things like changes in duration, changes in cost, and other extrinsic factors. And so it's important when you look at these numbers and you go into the accounting numbers as opposed to the cash numbers, it's important to bear in mind that there's quite a lot going on in the accounting, which is why we've always said we like to look at the cash performance of the business instead of the accounting performance. But since we have these accounting numbers, we're going to unpack them a little bit for you so that you can really see some of the dynamics in play.

And before I delve into this, I'd also just encourage everybody to go and read our Shareholder Letter. I'm not going to go through every theme orally that we hit in that letter, but we talk there in some detail about topics like AI and our technology initiatives. We talk about our continuing market expansion, including our launches in Madrid and in Seoul, South Korea. And we talk at the end about Burford's overall role in the justice system and how we've become a very significant part of that overall process.

But turning now to some actual examples so that you can see what's actually going on there. Slide 13 talks about a collection of cases that we call the proteins cases. And these are U.S. antitrust cases involving allegations of price-fixing in the proteins foods cases. So the reality of these cases is that they're going pretty well. You can see 4 different proteins there, all seeing positive outcomes and forward momentum. And in fact, we just had a significant win in one of these cases in the Seventh Circuit Court of Appeals, where one of the major proteins players had been trying very hard to cling to a settlement that was, in their mind, done before we became actively involved in the cases. And the Seventh Circuit rejected that effort, basically signaling that the cases were worth more than the settlement had been done for at the time.

But the reality of these cases is that this is complex litigation, and it's taking somewhat longer than one would have wished. And the way that our accounting works, and Jordan is happy to answer questions about this later or offline. The way that our accounting works is that if duration extends past our original expectations, that's going to cause a reduction in our fair value. And so we, in fact, took a $22 million charge to earnings from nothing more than the fact that these cases are taking longer and costing more, even though they are proceeding well, and we're quite optimistic about their ultimate outcomes.

So there's that sort of interim action in the numbers there that the complexity of our accounting now is causing that. And it's important that when you look at these numbers, you separate the things that are these interim time-based, non-merits-based dynamics from what's actually going on in the underlying merits portfolio.

Turning the page to Slide 14, which is still a little bit in the proteins world. This is another example of where our earnings can be depressed from things that don't actually go to the underlying merits of the cases. One of the counterparties that we financed here, a very large wholesale distributor, has gone into Chapter 11, into the operating bankruptcy regime of the U.S. And that means that we and other creditors of this business are jockeying for a position.

Now it's obviously not great when your counterparties go into bankruptcy. But here, the underlying claims that are our collateral are proceeding well and actually are continuing to be settled and to pay cash. So even though we, for accounting purposes, have taken a significant charge to earnings because of the pendency of this Chapter 11 proceeding, the reality is that the underlying collateral is continuing to perform, and we have reason for optimism that we're going to not suffer the kind of loss that you would normally associate with being -- particularly a potentially unsecured creditor in bankruptcy.

So again, this is divorced from the underlying merits of the case, and it's an issue where -- it's a place where we actually expect cash to flow to the business over time. And a third example on Slide 15 is a mining arbitration where we see the benefits of having cross-collateralized portfolios. And here, we have 2 cases in play. One of those cases has had an initial unfavorable outcome. But the other case has yet to be decided, and the first one is on appeal. And either one of those cases, if successful, is sufficient to make up our whole entitlement out of these cases. However, the accounting reality is -- and the market reality, we're not trying to walk away from the market reality, is that when you have 2 chances to win as opposed to 1 chance to win, the asset is probably somewhat more valuable. And so having had a negative impact on 1 of the 2 chances to win, that causes appropriately a decline in the accounting carrying value of that asset. But it doesn't mean that we don't necessarily have every opportunity to both win the second case and get our full entitlement out of that 2-case cross-collateralized portfolio.

So the purpose in going through all of these is really just to show you that there's a fair bit going on under the covers. It's not as simple as us just saying, okay, well, here's the case, we either win it or we lose it, and money comes in. That's how we look at the business on a cash basis. And on that basis, the business is doing very nicely. I would have liked some more cash in 2025 than we generated. But overall, when you think about the strength of the new business that we were able to create, the progress that we're making towards achieving our long-term goals, and the fact that both our returns and our loss rates have remained steady, that all tells me that this cash basis is a waiting game. And what's important to me is not to have the accounting get too much in the way of understanding that basic cash principle about the business.

So we're happy to take your questions on that. But before I turn you over to Jordan, I don't think any Burford presentation these days would be complete without talking briefly about YPF. So turning to Slide 16. This is a slide that you've all seen before. I'm not going to go through it in any great detail. I think just about every Burford shareholder is pretty familiar by now with YPF and what's going on with it. And that slide is really there just to remind you of the basics. We did, however, add a new slide, Slide 17. And on that slide, we tried to pull together the threads of everything that is going on right now because there is quite a lot happening.

So the main -- the big issue is that we're awaiting a decision from the Second Circuit Court of Appeals on what we call the main appeal, so Argentina's appeal of the underlying $16-plus billion judgment that has been growing now with prejudgment interest and post-judgment interest added to it. That appeal was argued on the 29th of October, and we're waiting for a decision. That decision, if past practice is any guide, you would expect that decision during the course of this year, although there's no requirement for that to occur. And like everything else about litigation, nothing about that is certain, and some litigation risk always remains in these cases.

But in addition to playing a waiting game for that decision, there's actually a fair bit going on elsewhere. The District Court, the trial court that gave us the judgment in the first place, has been actively enforcing the judgment, has had many hearings over the past months, has been actively engaged in the process, has now scheduled a further evidentiary hearing on a whole variety of topics, including contempts and sanctions and Argentina's gold reserves for late April. So that's upcoming.

There are some other collateral appeals floating around in the system. One of them is around the order that Argentina turn over its YPF shares as partial satisfaction of the judgment. There are some discovery issues around the senior Argentine administration officials' use of off-channel communications like WhatsApp and Gmail, and there are some procedural appeals. Those are not entirely calendared yet.

The way the process works is that the Second Circuit tries to respect lawyers' schedules, and so it sends out a preliminary idea of when it might like to try to hear the appeals, and it's done that, suggesting the week of April 13th. It's had feedback from the lawyers about their availability, and now we're all waiting to see if they will pick a date during that week, or if they will push it off to some other sitting of the court. And then we have enforcement proceedings going on in 8 different foreign jurisdictions in which there's probably -- in which there's likely, in fact, to be a reasonable amount of activity in 2026.

So with that, let me bring my introduction to a close and hand you off to Jordan, just with the overarching theme, though, that while I know people will have been looking for some more cash and some more realizations, and, of course, we would have liked that, too, the simple reality is that there's not much we can do about the pace of the conveyor belt, but we're very happy with the state of the business and the amount of new business we were able to generate, which sets us up very nicely for the future. And we're happy with what's left in the portfolio, as you'll hear from Jon.

Thanks, Chris. Good morning, everyone. I'm going to take us through our 2 segments. That's the total segment. That's what we also call Burford-only. It's what the shareholders own. I'm going to jump straight into the Principal Finance and focus on the portfolio to start. If you look at the snapshot of where we are on Page 22, and you can see the portfolio is now $3.9 billion. YPF represents slightly below $1.7 billion. And then we've got deployed cost of slightly over $1.7 billion, and then unrealized fair value above that of around just under $500 million, which is around 27%, 28% of the total deployed cost.

It sets us up, obviously, very well when you think about what the potential future of gains can be relative to how much cost in portfolio is out there. If you think about that number relative to our historic 82%, 83% ROIC, or we'll talk more about our modeled realizations in a couple of slides. The portfolio is also very diverse. You've seen these 2 charts before, and it remains -- the diversity still remains very similar in terms of geography with just over 50% in North America and continuing to expand, as Chris highlighted briefly, and we talk more about in the shareholder letter, as we explore other opportunities internationally. Asset type is also extremely diverse with a number of different, what I'll call, 20% type slices.

In terms of moving forward, though, on how this segment, this is our Principal Finance segment, how did the revenue capital provision income play forward. First and foremost, I think Chris spent a lot of time with that on Slide 12, historically looking at breaking down the capital provision income between its gains and losses and then also the net realized gains and losses for the period.

I want to remind folks that when you look at the movement out of fair value, you also have what's the transfer from unrealized to realized, which makes sense. When you have an asset that's been positively marked and has some fair value associated with it, when that asset concludes positively, you're going to see a reduction in fair value, and that flips itself into net realized gains, which makes sense. That happens every period.

I think the other place to focus is on how the balance sheet actually moved itself forward. Hopefully, by now, folks are familiar with the charts on the bottom of Page 23, but I'll walk through it quickly, which is we have our asset value as of the end of the year, continued deployments as we invest in the portfolio, where it's healthy this year at $457 million. You have a duration impact. This is just the passage of time.

As we move forward with respect to getting closer to the ultimate resolution or expected resolution of these assets, you have a change in discount rate. Works the same as bond math. Rates go up, the asset value comes down, and vice versa. In this period, for the year for our portfolio, the discount rate had an approximate 80-ish basis points of improvement, and that's then represented in that change in discount rate, which brought value of $75 million.

And then you have the milestones and other impacts. And that is going to coincide neatly with the case studies that Chris just described, both positive and negative, as well as some of the other changes in models when we change a duration or there's an expected value change that plays itself in, and you can see the impact on fair value there. And then, of course, obviously, the realizations when the assets themselves turn into a settlement -- excuse me, turn into a receivable or cash, I'm finally finishing up with a little bit of foreign exchange impact. So overall, that's the march forward from just under $3.6 billion to $3.9 billion.

Before I hand to Jon, a little bit more on the new business. If you look at -- I mentioned the deployments on Page 24, and you can see the relationship of '25 to fiscal year '24 on the bottom of the page, but also the new business. We wrote a lot of new business in the year, 39% growth of our definitive commitments. This is where we not just have entered into a relationship with a counterparty, whether it's a law firm or a corporate client, but have identified the cases and have committed to spend over the duration of those cases our capital. You can see the growth in 2025.

I want to highlight also, though, that the absolute growth didn't come from necessarily reaching for more risk. The absolute values of the -- we've started to show you the bands in which we look at analyzing our cases from the onset. And you can see that the absolute amount of higher-level risk was pretty much the same as 2024, and most of the growth came then obviously from other areas in the portfolio, the lower risk kind of middle tier and lower tier buckets. So we're happy -- extremely happy with the type of new business that we put on as we continue to grow the portfolio.

And with that, I'm going to turn to Jon.

Thanks very much, Jordan, and thanks to you all for joining. So as Jordan and Chris have both said, it was a very strong year when it came to new business and increasing the potential of the portfolio. And I'm going to turn to that, but I do want to first turn to Slide 25 and have a word about the past.

When you look at Slide 25, as Chris and Jordan both said, the realizations were not in '25 what they were in '24, a record year. But as Chris also pointed out, it wasn't a lack of activity in the portfolio that we had 69 assets contributing to realizations in '25 compared to 71 in '24, pretty comparable, just not as many big, chunky realizations. There was one matter that was a large deployment that was fairly short term. And in fact, when you look at the ROIC numbers, part of the reason that the ROIC number for '25 was lower is that matter happened quickly enough that we had a 40% IRR, but only a 25% ROIC. I'd do that deal any day when it comes along, but it's going to affect the numbers.

Nonetheless, you see that our track record across the 2 years produced an ROIC of 81%, which is almost spot on with the historical track record over a longer period. And that's not really surprising. If you turn to Slide 26, you've seen this slide before. Basically, the nature of our business is there's 3 possible outcomes for any time we put money out. We can have an adjudication gain. We go to trial and win. We can have an adjudication loss, so we can have a settlement. The vast majority of our matters settle. They settle at an attractive IRRs and ROICs, but below our historical performance. The reason for that is the wins far outweigh the losses, and that makes for a very attractive model. As long as we're rigorous in our underwriting and rigorous in our case management, and we continue to invest in this asset class the way we have, I'm pretty bullish on putting new matters into the portfolio given that track record.

And if you turn to Slide 27, you've seen this, too, instead of dividing it into 3 buckets, we actually break it down over every investment we've made, show graphically. Those red bars, those are triples, better than a triple, meaning you've got an ROIC in excess of 200%. That stuff far exceeds the black bars where we have losses, many of which are only partial losses, and then you have the singles and doubles in between. And that's really what -- that asymmetric profile, that asymmetric distribution of returns is what makes it attractive and why I continue to want to just put money out in good deals as we've been doing.

If you turn to Slide 28, you've seen this, too. This is broken down by vintage, and you see the IRRs and ROICs may bounce around, but they blend to something quite attractive. And basically, the last 2 slides are a comparison of the black bars to the red bars by vintage, right? The black bars is the money that went out, the red bars is the money that's come in. It's a bigger number. That's great. That's what's produced the IRRs and the ROICs. But day to day, what I'm focused on is the gray bars, right? That's the investments we've put out and continue to put out in a big way in '25, and I'll turn to that in a moment, that we have put out that are there to deliver value in the future.

And if the gray bars, if we just perform the way we've been performing, it's an attractive -- and we actually think there's great potential there. And if you turn to Slide 29, this kind of tells the story about what a successful year it was in terms of new commitments. The modeled realizations for the entire portfolio as of December 31, 2024, the prior year, was $4.5 billion. As of December 31, 2025, it's $5.2 billion, a big increase. Why was that increase? Where does it come from? Well, we have $1.4 billion worth of modeled realizations from those new 2025 definitive commitments. That's what's been, I think, the success story of this year.

You reduce it by $0.5 billion for the actual realizations. Of course, when the cash comes in, you have to -- the modeled realizations for the future go down. And not surprisingly, the net change in the portfolio, given what Chris described in terms of as an accounting matter, as a GAAP matter, that there are things that reduced fair value on an unrealized basis, it's not surprising that the models would also show some reduction. But overall, we more than made up for that with the modeled realizations from the new definitive commitments. And I'm really pleased with what we've done this year in setting ourselves up for the future, and I'm really happy with the portfolio.

And with that, I'll turn it back over to Jordan.

Thank you, Jon. I'm going to switch to Page 30 and talk a little bit about how do you tie that $5.2 billion then and think about that with respect to the Principal Finance balance sheet. So this is obviously on the ex-YPF basis. And the first piece to understand is, well, what if all the cases won, went all the way to the very end and adjudicated win. That estimate, that's what we sometimes call the win node, and it's where all of our initial work starts from. When you start to think about a settlement, when you think about the different probabilities of what could happen in the case, it derives from, well, what could happen if you actually won, even though the overall majority of our cases, 70%, 80% of them ultimately settle, well, that win node would be $12.8 billion.

What we then do is we establish a model in which there's a litigation risk premium and, of course, duration, the discounting back. And when you bring that down, that window then settles at $2.2 billion, and that can be broken into the fair value that I -- that's the fair value that we have on the balance sheet, and that's broken into the net unrealized gains as well as the deployed cost. That's the $2.2 billion and the $1.7 billion.

Where will that book of business ultimately land? The modeled realizations, as Jon just described, is $5.2 billion. And then ultimately, we believe in a modeled ROIC of 110%. That, of course, is based on a future estimate of deployed cost. The cases still have some money to spend to get to their ultimate conclusion. And so that's estimated on this slide to be at $2.5 billion. So that gives you a little bit of framework to think about how our modeled realizations tie to the balance sheet.

Since many, if not all, of these cases exist in some form on our balance sheet and then in partnership with our asset management business, as they produce for the balance sheet Principal Finance, there's an expectation that they would produce asset management cash receipts. And so the correlation there would be approximately $350 million of future asset management cash receipts based off of the models.

That's a perfect segue to take us into the Asset Management segment, which is the next page. I'm jumping straight to Page 33, in which, first, let's start on the right-hand side, cash. Cash has stayed fairly steady. We had $32 million in '23, dipped a bit in '24, back to $32 million in '25 in terms of the cash receipts from asset management. Income of $36 million overall for the year. That's going to track somewhat consistently with some of the movements in fair value.

Again, since the assets very much mimic what's also in our Principal Finance segment, movements in those assets are also going to play out in the recognition of potential future income from our profit-sharing agreement with respect to the BOF-C fund. The other piece, though, to highlight in 2025 is the Advantage Fund and starting to receive income off of the Advantage Fund, as that portfolio continues to perform.

Overall, you'll see the fund sizes in the bottom right-hand corner. If you look at the funds, they're predominantly in runoff, and you can see that in the black bar. BOF-C continues the sovereign wealth fund partnership, continues to be a partner to us. While the investment period ended, they're continuing to invest in assets as they move forward, amendments to those assets. We enjoy a good relationship and are exploring opportunities to continue that.

Page 34 gives you some more detail on some of the other funds, but I'm going to jump into the next segment and focus on liquidity and cash first. Our liquidity and cash started off the year around $500 million. We discussed the robust year of having $530 million, obviously down from 2024, but the fourth quarter saw us back up over the $100 million level with respect to the fourth quarter in terms of bringing in cash. In the bridge, you also see the debt that was raised in the summer, and I'm going to talk about debt twice here.

First, this was to pay off the existing bonds that were coming -- that came due in the summer of 2025. And that's why you see a net number that results. We did a $500 million issuance at 7.5%, but that number obviously is much smaller in terms of proceeds to the balance sheet to be deployed because we used the proceeds of that to pay off a bond. And then you can see that the cash that come in clearly covers our operating expenses. Finished the year at $621 million of cash.

Before I do more on the capital structure, though, we'll hit expenses real briefly on Page 37. Overall, operating expenses slightly up from 2024, and there's a couple of reasons I'll go into for that. First, total comp and benefits, almost flat, a little bit higher than last year. You see some growth in salaries and benefits as you see some inflation, but as well as our expansion and building of the team. The movement between annual incentive comp and long-term incentive comp, that's what we effectively call carry or our carry program. There's some movement in between those 2 items in relation to 2024. It's important, I always remind folks that while we accrue carry, we only pay it out when we actually receive the cash.

On the share-based and deferral compensation, a reminder, I did talk about this a couple of quarters ago. There is an element of this, which is the mechanical vesting or acceleration of the expense for some tenure-based awards, but the vesting of that, the actual delivery of those shares will still occur on the original schedule.

In G&A, we were up from last year, mainly due to professional fees. Some of that -- proud to announce the completion of our transition to KPMG fully from E&Y, also the resolution of our material weakness with publishing of this 10-K, and there's some other policy-related items in the professional fees associated with the second and third quarter. But to take a step back, looking at all these numbers -- oh, I should mention one more thing. On case-related expenses, really hard to compare to 2024. We have a revenue item in 2024, where we won an insurance settlement on our behalf, and so you're going to see a negative number there in 2024. But the trend of that has come down, so $1.1 million in the fourth quarter, and it's come down significantly from the $15 million that we had seen in case-related expenditures in 2023.

But when I look at all these numbers, I look at the right-hand side and try and understand, okay, how do these operating expenses look across the portfolio. The 2.3% looks very favorable in terms of our expected expense ratio across the portfolio and fits favorably into the unit economics that we discussed at length during Investor Day and how this expense base allows us to continue to achieve the ROE long-term target of around 20%.

One more slide, and then I promise we'll get to Q&A, is just to hit the debt outstanding. I mentioned what happened this past summer. Well, we did the same thing, rinse and repeat, in the first quarter of this year. And so we've pro forma'd the schedule for that. We took out the remaining bonds in the U.K. We thank our investors who participated in those over the years, but the 144A market has become much more practical and available to us in terms of raising capital and efficiently for our balance sheet. We went out and raised and then went and paid off the last of those bonds. That also changed the slide. You no longer see 2 different types of covenant levels because we no longer have the incurrence covenants associated with those U.K. bonds, and now we just have the maintenance covenants that you can see we have plenty of room within those levels.

The final comment that I would make is when I look at the pro forma life of our debt relative to the assets. The weighted average life associated with assets that concludes is under 3 years, and the active capital on our balance sheet is just over 3 years. But the weighted average life of our debt is 5.7 years. And so that shows that we have a laddered maturity schedule that matches neatly with the duration of these assets.

And with that, I'll give it to Chris for some closing remarks.

Thanks very much, Jordan. And I'm on Slide 39. And just to really come and sum up here. We have what we believe is a pretty fantastic core operating business, and Jon took you in some detail through why we believe that. We have showed a consistent ability to grow that business over time, growing to what is now a very substantial player in the legal industry.

We deliver cash regularly. We don't always deliver as much cash as we would like as 2025 is a testament to. But that doesn't mean the cash isn't coming. It just means the cash is somewhat delayed. I've used for years with many of you the analogy of the litigation process being a conveyor belt, and that's exactly what it is. It moves forward. It moves forward inexorably, but it twists and turns and moves at unpredictable speeds. We can't control that. But in some ways, we're the beneficiary of it because that is what gives us our completely uncorrelated returns. So we have growth, we have cash, and we continue to believe that this business can produce a long-term ROE in the 20% range, as we've said before.

On top of that, we've got the YPF assets, which we think continue to have very substantial value and option value for the business. And we are continuing to grow this business, not only in the core business, but as we continue to drive throughout the legal ecosystem.

So we thank you all for your support. And with that, we're happy to take your questions.

[Operator Instructions] Your first question will come from the line of Mark DeVries with Deutsche Bank.

I appreciate this is not going to be an easy question. But just looking across all the different matters in your portfolio, where they are in the development, can you give us any sense for how the outlook for realizations looks for '26 relative to 2025?

So the short answer to that is no for 2 reasons. One is because as a matter of policy, we don't guide that way, just because we simply feel like we're unable to do so. And number two is I used my 2 lanes -- my 4 lanes merging into 2. And the problem with that is that we don't really know the pace of that merging. Like if you go back to Slide 28 that Jon talked about, that shows you a lot of stuff that is, to use a technical expression, jammed up in the 2015 and onward. And there's stuff there that just shouldn't have taken that long. Some stuff in litigation always takes a long time.

And I always get people asking me when they look all the way back on this chart, they say, oh, look, you've still got active deployments from 2010. Are you kidding yourself? Are those ever going to come in? And the answer is yes to that. We write them off if they're not going to come in. But we actually got some money out of that 2010 band this year, and we're expecting to get more in this coming year. So no is the answer to that question.

But the simple reality is those cases are going to move over time, and we just don't know exactly what that timing looks like. It would be lovely if we could take this on a quarter-by-quarter basis and give you a pretty reliable projection, but we just can't do that. And candidly, if we were able to do that, I think that more people would do this business and the returns would be lower. So the fact that it is unpredictable, while I realize is painful to many of our current shareholders, it, in fact, is also, to some extent, a moat in this business.

Okay. Any other color you can give us on what's driving this dynamic of the 4 lanes merging into 2? Are we still dealing with like backlogs related to court closures from the pandemic or other factors worth calling out?

No, I think you really are. Like when you think about what happened there, you had court closures at a time when there was no lessening of new disputes. And so you had the same volume of new disputes. If you look at the filing levels, it's not like they collapsed during the pandemic. So you had a world where all of a sudden, courts don't have any physical ability to expand their operations. We already have vastly fewer judges in courtrooms than we do for the number of cases filed. And the reason for that is that the system expects, just as our portfolio shows, most cases to resolve by settlement. But to get a case settled needs a catalyst, right?

If you're a defendant, you're not going to settle a case if you can simply sit on your hands and not spend the money to settle the case. So you need to feel some pressure. And the pressure usually is the case is moving through the process along the conveyor belt that I described, and it's putting you at trial risk. So if the court congestion is kicking the trial risk out, then you're realistically also kicking that settlement pressure out. And look, I think it's getting better, but it's a lot for the system to absorb, given that every single year, something like 12 million new civil cases are filed in the United States.

And then I've got an accounting question for Jordan. Jordan, do you have room to get more conservative on the duration assumptions on your fair values such that you reduce the risk that you have these negative fair value marks when you don't have a negative development, it's just a change in assumption related to the duration of the case?

Absolutely. And I think that we're constantly looking at our models with respect to how to initially establish duration and then how it impacts over time. So yes, to the extent that we see it up at the onset, that we should set a duration that's longer, we can, and we have that ability.

Your next question comes from the line of Timothy D'Agostino with B. Riley Securities.

Regarding new definitive commitments, I was wondering if you could provide some color on the composition of those, understanding that '25 lacked some of those big case resolutions. So as we look at new commitments for this year, I guess, any color on the composition of maybe how many dollar amount or case-wise are these larger scale cases, that would be great.

Sure. So for those of you who are newer to Burford, let me just remind you that in addition to all of the gory detail that we provide in the slides and the 10-K and so on, we also publish on our website a detailed table that goes literally case by case and shows you for each new -- well, for each existing and for each new case that we put on, it shows you a bunch of demographic information. So it shows you the type of case, so whether it's, for example, a business court or an intellectual property case, or an antitrust case. It shows you the industry that's involved. It shows you the geography where the case is pending. And it shows you the size of the commitment that we've made, the amount of deployment against that case. And once we start to get returns, it shows you, again, on a granular line-by-line basis, what the returns are.

And so you can pull that up, and you'll see that there are several dozen new cases in 2025 or new investments in 2025, and you can scan through them. And you'll see that there's quite a lot of diversification there. We typically span a significant number of industries, a number of case types, a number of geographies, and 2025 was no exception to that. And they also range in size from quite large commitments to significant matters to relatively small things that are single cases that nevertheless, we think have the potential to generate attractive future returns. So that's a useful source if you want to get granular about what's going on in the portfolio.

And your next question comes from the line of Mike Piccolo with Wedbush.

I had 2 questions related to the negative fair value marks on the cases highlighted in the presentation. The first one with the Sysco proteins case, what are the potential gains for that?

The potential gains for the case? So we don't release individual case modeling expectation data for pretty obvious reasons that, that would feed very nicely into the litigation strategy of the other side. And so that's something that is not only something that we don't release, but something that we would regard as being protected by legal privilege. That being said, I think if you look at those cases, and there's quite a lot of public information about them, I think it's clear that the size of the claims in those cases is substantial.

And the next one with the bankruptcy case. Is the collateral separate from other claims?

Well, so we are entitled -- when we provide litigation finance to people, we're entitled to proceeds only from the claims that the companies have. So we're not a general creditor like a bank is where we're looking for repayment from any assets. Our claims are just for proceeds from the underlying claim outcomes.

So the way that's going to play out is that as those claims pay, there's lots of things going on in that case. That was a multibillion-dollar distributor. So it's not as though the only cash flow sources are these litigation claims. So within the Chapter 11, there's cash flowing to the senior secured creditors and so on from the business operations and the business continues to function. But we have our handout for proceeds from the litigation claims, which continue to be strong and which continue to be resolving positively. So there is positive cash flow coming from those claims as well.

And just one last question. I don't think you guys give guidance, but in terms of your long-term ROE target, the 20%, when you say long-term, how do you bridge that gap from where ROE is sitting currently?

Well, we do it on a...

Like it's a matter of...

Yes, we do it on a rolling basis. We've certainly had individual years where our ROE was well in excess of that long-term target, and we've had years where it's well below it. Right now, as you can see from one of the early slides in the deck, our multiyear ROE is in the teens, but it's not up to our 20% target. And that's something that we believe, and Jordan walked through the unit economics associated with ROE at our Investor Day. And that's something that we still believe is achievable over a longer period of time.

Okay. Bailey, I think we'll jump in here with a quick question that's coming in through the webcast. We have a question. You mentioned before reluctance to buy back shares due to unpredictability of capital needs. If so, there seems to be no real justification to pay a dividend, especially with current share price. Why not turn off dividends and opportunistically buy shares instead?

Yes. So this is certainly a theme that we have heard from a number of investors, and it's something that we considered very carefully over the last few months, including with the Board and with our outside advisers. And the dynamic for us -- because I certainly understand the logic behind the concept.

The logic for us works as follows. The dividend, we've had a constant level dividend for some years that pays at $0.125 a year. So in round numbers, think about that as being $25 million. So it's a pretty small amount. If we were to stop paying that dividend altogether, then we would turn a number of particularly U.K. income-focused fund investors into forced sellers whose funds would no longer permit them by their mandate to continue to hold Burford stock if we didn't pay a dividend at all.

And so we basically weighed the value of a $25 million buyback, which we think is pretty low against the negative impact of turning a portion of our shareholder base, including some very long-term and loyal shareholders, turning those shareholders into forced sellers. And when we considered that balance, we ultimately came down on the side that the $25 million buyback wasn't enough to move the needle compared to the negative impact of the -- of losing those investors in the U.K. And so that's where we are.

It's not -- it's a relatively fine call, I would say. And if the dividend had been dramatically larger, I'm not sure that I would have -- or the Board would have come out in the same place. But that -- just to give you transparency into our thinking, that was the underlying thinking behind it. And we also debated, well, do you do something in the middle. Do you reduce the dividend and take some of that and put it towards a buyback. And then we got into the point of saying, well, gee, at some point, we're dealing with such small numbers that it really doesn't make any difference for anybody. So that was the underlying logic.

Okay. One more from the webcast here. How is your underwriting changing to reflect potentially longer court times on new pieces of litigation?

Jon, do you want to...

Yes. I'm happy to take that. So we're constantly updating our modeling and underwriting based on our historical experience. And one way I think we've talked in the past that we've dealt with duration is to structure deals so the terms reward us for delay so that our returns go up as matters go longer. There's no doubt that we have paid increasing attention to that dynamic to make sure that we're compensated for the longer run times.

So that's a little bit why also when Chris says that not having the realizations this year, of course, we would rather, but we feel good about the portfolio. The same case that resolved at this moment, if it resolves in another year, it may well be it resolves with a higher return for us, given the way we've structured things. And that's on top of the dynamic that often the question of whether it resolves now or later is going to be a product of the recovery level, both that whether it's going to be a settlement or an adjudication win, but also that settlements later on can end up being higher settlements. So we definitely take into account duration as part of our underwriting, and I like to think that we try to get better at it as time goes on and learn from experience.

All right. We'll do one more question from the webcast around debt structure. Why not obtain a revolver, delayed draw facility or securitization facility instead of discrete notes to better match capital unpredictability and allow for share buybacks?

Sure. Yes. I was about to say Chris talked a lot about our thought process around share buybacks. How it relates to the capital structure, we're constantly looking for other ideas and exploring ways in which we can build the balance sheet. I do -- the asset itself is not as similar to some consumer or even commercial assets in terms of its predictability to fit neatly into a securitization facility or to obtain that in size relative to the balance sheet that we currently maintain. I understand the logic of that, and we're constantly in conversations. We haven't found the perfect match. And ultimately, the unsecured and covenant levels that we have, the cost of the capital, and the amount that we can put on has favored -- has become very favorable relative to some of the things that we've seen, especially the scale that we would need with respect to that.

Well, we have made it to the top of the hour. And with thanks, as usual, to all of you for your interest in Burford, quite frankly, for your patience as we wait for some cash and as we wait for some YPF news. We're looking forward to an exciting 2026, and we'll continue to keep you updated about where things are going. So thank you all very much.

Thank you. This concludes today's conference call. You may now disconnect.

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" Deutsche Bank AG, Research Division

Hello, and thank you for standing by. My name is Bella, and I will be your conference operator today.

At this time, I would like to welcome everyone to Burford Capital's Third Quarter 2025 Financial Results Conference Call. [Operator Instructions].

I would now like to turn the conference over to Josh Wood, Head of Investor Relations. You may begin.

Thank you, Bella, and good morning, everyone. We appreciate you 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 this morning, we posted a detailed earnings presentation, which we'll refer to during the call and also filed our Form 10-Q, both of which you can find on our Investor Relations website.

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 more information regarding these risk factors, please refer to our earnings materials relating to this call posted on our website and our filings with the SEC.

We'll 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.

With that, I will turn the call over to Chris.

Thanks very much, Josh, and hello, everybody. Thank you again for joining us today. We're going to do this call today a little differently than usual. Before we turn to Jordan and the usual financial review, I would like to cover a few different topics with you.

Let's start with YPF, given the market reaction to last week's oral argument. The YPF case was adjudicated in the Southern District of New York. That's the Federal Trial Court in Manhattan. It is one of the highest quality courts in the United States. Court-wide its reversal rate on appeal is 6.28% over the last 10 years.

The YPF case was decided by Judge Preska, the former Chief Judge of the Southern District. Her individual reversal rate is 4.63% over the same period. So, the statistical reality is that a judgment from this court and especially from Judge Preska is likely to be affirmed on appeal. Because of some of the questions and comments from the panel at oral argument, the market seems to have freaked out a little bit about the risk of the case being dismissed on the legal doctrine known as Forum non conveniens, literally an inconvenient forum.

Forum non, as it's called, is a discretionary doctrine. It allows the court only once it has determined that it has jurisdiction, which is settled law already here. It allows the court to send the case to another more convenient court for trial. This occurs most often when there is some logistical issue going on, for example, that witnesses can't travel to the U.S. courts for trial.

A sort of hooky example of Forum non is for Jordan and me to go to a conference in Arizona and get into a fight and for Jordan to punch me in the nose and for me to sue him for damages. That case could be brought in Arizona because that's where the punch happened. But given that Jordan and I both live in New York and never otherwise go to Arizona, Jordan could try to argue that it would be more convenient for the case to be heard in New York and not in Arizona.

That's really the essence of what Forum non is all about. And although anything can happen in litigation, it would be extraordinary for the appellate court to dismiss the YPF case on this ground on Forum non grounds now for several reasons.

First of all, the trial judge has discretion to decide Forum non motions. And Judge Preska twice exercised her discretion to deny 2 separate Forum non motions over time. To reverse her decision, the appellate court would not only have to disagree with her rulings but also conclude that she abused her discretion in deciding the matter. That is a very high standard, and it is very hard to satisfy.

Second, there is a substantial body of law out there that says that further along a case goes, the less viable a forum non dismissal is. It's one thing to send the Jordan-Chris case to New York as soon as it's filed. It is quite another to do so after 10 years of litigation, a trial and a judgment.

Indeed, it would be extraordinary to dismiss a case after trial judgment. As the plaintiff's lawyer, Paul Clement, who is the former solicitor General of the United States, said during the oral argument, the only case example Argentina could find was 38 years old and from another circuit.

And its facts are nothing like the fact here with a New York Stock Exchange issuer being sued in New York by U.S. shareholders. In fact, the old case was about a Peruvian sailor who died on a Peruvian ship that just happens to have been docked in Texas at the time. Every single other element of the case was Peruvian, and that's the best-case Argentina could find 38 years old.

Third, Argentina would also have to show substantial prejudice from having to litigate in New York, for example, by not being able to have witnesses show up to testify, which was a problem in the Peruvian case. That is simply not an issue here. Every witness showed up for trial. And Argentina suffered no prejudice at all from litigating New York, which it has been doing for decades in numerous litigation matters.

In short, although we don't litigate cases in the press and while there is always litigation risk and Forum non was not the only issue on appeal, it would be exceptional for this case to be dismissed out of the U.S. courts at this juncture and sent to Argentina on Forum non grounds.

And even then, by the way, wouldn't be the end of this case. The market seems to us to have completely overreacted to the appellate argument. As we said in our release before the argument, trying to read the tea leaves in an oral argument is a perilous course. Of course, it would be lovely if all the judges came in and said loudly and in unison, of course, you win. But that is just not how the process works. Judges ask probing questions of both sides as part of the Socratic process. So now we wait for the court's decision. That will take months, but we remain bullish on this case. The YPF case is only part of our business, and it's not the largest part.

And we are excited about the broader business and its growth and performance potential. We're continuing to grow organically and inorganically, and we're confident in our 2030 plans as laid out in our April Investor Day.

Looking at Slide 9, we are having a great year for the business. Definitive commitments up more than 50%. The overall portfolio is up 15% already year-to-date, that's 20% annualized. That is well above the level to achieve our goal of doubling the business by 2030. I don't care much for quarterly results, but looking just at the third quarter, deployments were up 61%.

And this slide that we're looking at just underlines the new business point. We have done a lot more business this year in dollars and in number of cases than last year. And as we have discussed before, the thing that makes the difference quarter-by-quarter is the presence of big cases, and we have already had more than our fair share of those this year.

As Jordan will show you later, a lot of that new business is also in the nicely high returning zone on a modeled basis. In other words, we have seeded the ground for substantial realizations in the years to come. And don't forget the overall potential of the portfolio. We showed you modeling at Investor Day, estimating $4.5 billion of potential realizations from the portfolio as it was then, and we keep on growing it.

Let's shift from new business to actual realizations and move to Slide 10. We are running ahead of last year in the volume of realizations. And we're making new realization records on a rolling average basis. That's consistent with how we are feeling about the portfolio that things are moving. They never move as fast as we would like, and Jon is going to address this a little bit more in a few minutes, but they are moving, and you can't look at this on a short-term basis. This is always a long game.

Results. In fact, the weighted average life of both the concluded book and the ongoing portfolio are pretty stable, around 2.5 years for the former and a bit over 3 years for the latter. Does every location drive us nuts? Sure. And especially because delays can cause accounting noise has occurred this period when some duration extensions negatively affected the unrealized line.

No court ever calls and says, "Hey, good news. We've moved your trial date up by 6 months. So while delay and a lack of predictability is something that is a constant frustration to anyone involved in litigation, it is simply how the system operates. And frankly, we are good at managing through that process and structuring deals around the inevitability of delay.

Our focus really has to be in running this business on whether bad things are happening like a spike in losses, which simply isn't happening and not whether the system is working as it has for the entire 35 years I've been involved in what are always delayed litigation matters where, frankly, no deadline ever actually holds.

And notwithstanding delays, notwithstanding uncertainty, our IRRs are also remaining steady at 26%, and that's now on $3.6 billion of realizations. So with that and loss rates steady, we're feeling very good about the portfolio.

Let me add just a bit of color to those bare numbers as a cross check. As we showed you at our Investor Day, the business relies on big cases for a material portion of its growth and performance. Whether we do a new big deal in any period will affect our new business numbers and whether a big case concludes or has forward progress will affect our realized and unrealized gains.

As we have said since the beginning of time, this doesn't happen smoothly. And as you can see, our realized gain numbers are down, suggesting that we haven't had a big case realization yet this year, although we have actually had more case realizations in total this year than last year, just not as many big chunky ones. However, we have lots of good forward progress.

As just one example, we have had 4 large case wins so far this year, each of which, if held at their current levels, would generate more than $100 million in proceeds for us. Those cases aren't over. And as a result, their value is nowhere close to being reflected in our accounting numbers, but they offer a window into the potential performance power of the portfolio.

And at the same time, we have not had any case losses of anything approaching that size because of the continuing positive asymmetry in the business.

Another important point about the business reflected in Slide 11 is the very significant spread between our book value and our expected value. That disconnect exists because of the nature of our asset class. Value occurs at the end of the case because that is when the binary nature of litigation has ended in either a trial conclusion or a settlement. Our history demonstrates that we know how to identify that value and to do so much earlier in the process than the accounting will actually drive.

That being said, we can't just create income or GAAP value in a case by merely investing. We need the case to run its course. And that leaves is a disconnect between the likely ultimate value of our assets versus the accounting value, as you can see with this graphical illustration of the point. If our track record holds true, there is a significant amount of embedded value in our assets yet to come.

So in short, Jon and I are passionate about the business and the portfolio. Investors can take confidence in our strong alignment of interest as large shareholders and committed executives. Our personal financial performance is directly tied to the success of the portfolio and to the performance of the stock.

We recognize that needing to take the long view and put up with volatility like the volatility you've seen in these quarterly numbers isn't the perfect fit for quarterly earnings obsessed public markets. But that is just the way this business works, and that is the price of high uncorrelated returns.

Turning more directly to the market. Shareholders have, I think, every right to be unhappy with our share price performance, just as we are. As we all know, markets can become obsessed with elements of the company, and they can attract an undue level of attention, often masking more fundamental valuation presets. That seems to be what has happened with respect to the YPF case.

When a company's share price goes down, especially when it declines in what seems to be a fashion unrelated to its fundamental value, shareholders tend to respond by wanting management to buy stock or for the company to do a share buyback.

Here, management has indeed been buying the stock because we think there's a good value. In fact, Jon and I bought more than 1.3 million shares of Burford stock in just the last year. But we don't think it's prudent at this moment, much as we think Burford shares are cheap to use corporate funds to buy back stock. This is something we've talked a lot about with the Board, with shareholders and with our advisers. And here's our reasoning and Slide 12 tries to help make this point.

We are continuing to grow this business. In fact, we are sticking to our prediction of being able to double it by the end of 2030 as we laid out at Investor Day. And given that we don't reliably have incoming cash flow from realizations at any particular point in time to meet our growth capital needs, we fund the gap with debt. Because the asset cash flow isn't predictable, we don't want to take on too much leverage. But we think the current level of long-dated maturities is fine, and we have confidence in the portfolio performing over time to meet our debt service needs.

However, diverting cash to a buyback changes that equation because we're now essentially funding the buyback with debt; but we're removing the cash and its earning power permanently from the business. This isn't just about accretion. So for example, given our returns and the average life of our assets, we would expect $200 million today, as this slide shows you, to generate about $800 million of cash by the time we need to repay the underlying 33 debt.

That's a comfortable position. But if we divert the $200 million to a buyback, we will have to find all that repayment capacity elsewhere. And at some point, that becomes less comfortable.

I'm not saying that we couldn't do that. Our leverage is low enough, we probably could, but it doesn't seem very prudent, and it would certainly add risk to the business. And when investors sit back and think about that dynamic, they tend to agree in our conversations with them.

To be clear, we're not a closed book on this point, coming back to our shared frustration with the stock price. And we will keep on discussing it ourselves and continue to welcome shareholder feedback. I think it's clear to the market what we believe about the business and the share price. And so I don't think a signaling release where we do a little buyback does a whole lot for us. And a big buyback just seems imprudent when we talk through the issues. But as I said, it's something that we will continue to talk to people about and continue to listen to shareholder feedback on.

And then just before I turn you over to Jordan, I'd just highlight Slide 13. First of all, to highlight the appointment today of Bank of America as a corporate broker for us, representing yet another step forward in both the U.S. and the U.K. markets, and just more evidence of our maturity and market leadership. I'm not going to spend time on this, the rest of this slide orally, but it's worth a look for those of you based in London, where the LC, frankly, never ceases to lose its capacity to amaze me.

And with that, I'll turn you over to Jordan and Jon and look forward to taking your questions later on.

Thank you, Chris, and good morning, everyone. I'm going to take us through the 2 segments, Principal Finance, Asset Management. Jon will spend some time in the middle on the portfolio. Three things that I want to make sure to hit upon a little bit deeper and coincides directly with some of Chris' comments, which is to talk about capital provision income, discuss realizations and new business.

When you look in overall at the financial results and you see that year-to-date, we're down in capital provision income revenue. A lot of that was driven by extension of fair model durations. And I'll unpack that even further when we get into the Principal Finance segment and the bridge.

But before we get to that, I'd like to spend a little bit of time just commenting on the portfolio. Right now, ex YPF, I'm on Page 19. ex YPF, we're deployed cost of just under $1.7 billion. Chris already highlighted and it reflects in some earlier slides, the amount of fair value unrealized gains associated with that, which is around 32%. So as mentioned, there's significant upside to come in terms of future gains to the extent we hit our historical ROICs.

I really do love the right side of the page, and it correlates with not just the historical portfolio, but the way in which the business is continuing to grow. You look at all the different colors and you can see the diversity. On the top, it's the diversity in geography and on the bottom, the diversity in the actual portfolio, whether it's arbitration, antitrust, contract cases or patents. We really have a diversified portfolio and a diversified team around the globe.

Moving to Page 20, we can go through the capital provision income and the fair value bridge. I'm going to focus specifically on the bottom left-hand side to illustrate some of the numbers. And this shows how we moved from $3.8 billion to $3.9 billion in total fair value.

First 2 pieces to discuss that somewhat offset each other when you look at the quarter or the year is deployments and realizations. Deployments putting the money out, and we'll discuss that more on a future slide and then realizations with the cash coming in.

The middle is how we earn the income in terms of fair value as well as the realized gains, and we break it apart into 3 components.

First is the Duration Impact. Now this Duration Impact that's what we're outlining here as passage of time is truly just the passage of time. So, this is if you take all of the fair value models and you move forward a quarter towards the ultimate completion date. You then have change in discount rate. We've discussed that before. When rates go up, the value comes down slightly and vice versa, it works the same way as bond math when you're discounting an NPV.

And then you have the collection of milestones and other model impacts. And so, this is the recognition of an objective event with a milestone or in the case of this quarter, if we've identified some cases in which we've extended the fair value model estimated duration. And when you push that out, it will then correspondingly have a reduction when you think of an NPV, we will have a reduction in value.

It's important to take a pause there and say, by moving duration, that doesn't necessarily at all change our view of the case or the outcome. It also doesn't necessarily impact what we're going to receive. In some cases, or in many instances and in most of our assets, we have back-end adjustments in which multiples can rise the longer the capital is outstanding. We have back-end fee arrangements. Duration can also be extended because the case has progressed through the lower courts and has made it through objective milestones. And so, while the movement of duration was a significant impact on this quarter, it doesn't necessarily change our view on the portfolio at all.

So that gives you a little bit of more color around what happened in this quarter. Flipping back to new business, though, and how that portfolio expands, the first piece on Page 21 is to think about new definitive commitments. Chris highlighted the diversity of the risk bands associated with this year, not to mention the growth that we've seen in 2025 compared to where we were at the same point in 2024.

That also corresponds with a growth in deployments. Ultimately, the commitments are great, but you still put the money out and the cases are progressing and it's the money that earns the returns. And so you can see our deployments here have increased over 2025. And it's important to harken back, I'm not going to make a switch back to all the slides, but just the different diversity in the numbers of different new commitments, and we highlight that on some of the earlier slides that Chris mentioned.

I move to 22 and talk about realizations. And it's important to note that we look at this business on a multi-period basis, not just on a single quarter. We highlighted that on some earlier slides, $310 million of realizations this year. The other thing that's important is we do not look at ROIC on a quarter-by-quarter basis or even on an annual basis, but rather on a blended basis across the entire portfolio.

And I want to remind folks that 43% ROIC that we see that occurred in 2025, we did have a very large event that ended quickly in Q1. That was a great IRR, but given the short duration resulted in a low ROIC. And so given where we stand, we would expect to see that number obviously be lower.

I'll pause there to hand it over to Jon to talk more about the portfolio.

Thanks, Jordan. Thanks to you all for joining. And I'm going to turn to Slide 23, which you've seen before, but I want to talk to it in a way that emphasizes and fleshes out something Jordan said earlier, which is as a shareholder and running this business, I don't pay as much attention, as Chris said, to how we do in a particular period, except maybe to make sure that we are continuing to put out money. And why is that so important? Why is the growth in commitments and deployments are important.

You kind of understand from Slide 23, it is a reminder that we have a really good asset class that when we are the ones managing that asset class and deploying capital into it. When you put out new money in a new deal, there's only 3 things that are going to happen. It's going to go to trial and win, it's going to go to trial and lose or it's going to settle. And over the course of our life, these numbers have stayed pretty steady. In any particular period, they could bump around because you could have one really large adjudication gain. Large adjudication losses are kind of harder, as Chris said, because I mean they don't happen in the same way because we've got these asymmetric returns, which I'll turn to on the next slide. So they're not as possible.

But when you look at this is what we're putting the money into, that we know the majority of our matters are going to settle as long as we continue to pick good cases and our track record shows that we have been able to do that. And the adjudication gains outnumber the adjudication losses, both in number and size. And so you just look if you can produce, which we've stayed constant, 83% ROIC, 26% IRRs, you want to be sure that pipeline is continuing to move, you continue to bring in new matters, and that is what we've been experiencing, which is experiencing, which is really wonderful. It is the thing we can control.

As Chris said, we can't control court dates. We can do everything we can to make sure that parties and lawyers know the urgency and the importance of moving things forward and not agreeing to extensions, but courts are going to make those decisions. What we can control is being out there in the market, solving people's litigation problems by providing capital to those who need it to litigate effectively.

If you turn to Slide 24, you see the same theme, but in a different representation, which is basically, again, I described how the nature of the asset class as invested in by us and why that produces attractive returns. Here, you actually see what we've achieved. You see the asymmetry of outcomes where we can have truly outsized returns. And for the smaller number of losses, it's much smaller numbers. And so you take these 2 slides together and you say, how did Burford do? Well, it continued to put out money into this very attractive asset class that has been generating these returns over time. And that to me is what, as Chris said, makes me so bullish about this business. And with that, I will turn it back over to Jordan.

Thanks, Jon. So, coming back to the asset management part of our business, and I'm going to focus on Slide 27. To take a step back and remind folks where we are with asset management, we're continuing to deploy capital for the balance sheet. And we've been clear on the importance of doing that and enjoy the partnership that we do have with the sovereign wealth funds, which we also call the BOF-C portfolio. The rest of the other funds are in runoff. And so we wouldn't see management, continued management fees from those funds, and we'll see episodic performance fees from the fund. Overall, you'll see cash receipts from asset management was approximately flat year-to-date at $17 million between '25 and '24.

If you isolate just to the quarter and you look at the negative in the asset management, the reason for that is simply put that when fair values move and we then book a corresponding adjustment to the future potential profit sharing income that we would receive. And so if you have a negative there in fair value movement, you'll have a negative with that. It doesn't impact our view necessarily of the future of the cases. So that gives you a little bit more color with respect to the quarter there.

Switching to Page 29 now to go through some of the capital structure and expenses. We sit in a great cash position at $740 million. Obviously, that number has been impacted by 2 things. One, which is the recent issuance of the $500 million notes in July of 2025. And as a reminder, we do have a maturity coming due in December of 2026. And so part of that cash is sitting there to address that maturity. The bottom of the page shows the cash receipts, again, being consistent and coming back over $100 million in the third quarter.

On our operating expenses on Page 30, while we look at this also more frequently on an annual basis, and it's important to look at that, a couple of items I want to make sure to pull out.

The first is when you look at the share-based and deferred compensation. And I've discussed this before, but that also includes the movements in our share prices that impacted both up and down given the DCP program. But also what's included is a onetime item related to a mechanical acceleration of tenure-based awards that vested in this period but haven't been paid out, and that's a onetime impact.

With respect to the G&A overall for the year, you also see that, that's slightly up, and that's due to increased costs associated with policy and planning.

On Page 31, some highlights. And in a couple of quarters, this page will actually change. And I mentioned before the USD 235 million that's in U.S. dollars on this page that's outstanding for the '26 maturity. As we look to address that, and we're addressing that similarly to how we addressed this year's '25, looking to potentially purchase in the open market as well as then addressing it at its final maturity. But that's the last of the bond that has a covenant that's outlined on the left-hand side of the page.

We'll then move to the covenants associated with, on the right-hand side of the page, that's with the 144A U.S. transaction. And as you can see, at 0.9x, we're well within our debt to tangible equity covenant levels, approximately 5 years average on the debt outstanding and a 7.4% weighted average cost.

So with that, I will turn it over to Chris to take us through Q&A.

Great. Thanks, Jordan. And rather than doing yet more closing remarks, why don't we just go straight to questions, operator?

[Operator Instructions] Your first question comes from the line of Mark DeVries with Deutsche Bank.

I appreciate all that new perspective on the YPF case. Just had a related follow-up on that. Could you just give us a sense of potential timing of the appeal of the Second Circuit on the order for Argentina to turn over its YPF shares?

Sure. Although like everything in, as you've heard from us today, the timing of litigation is inscrutable to some extent. But that appeal is going to be fully briefed, if I'm not mistaken, Jon, correct me if I'm wrong with this, by sometime in December. And then after it's fully briefed, the court will schedule it for argument. There's no argument date for it at the moment. As you know, from the main appeal, that can take a long time. It doesn't always take a long time, but it can take a long time. And then after the oral argument of the appeal, there will be court will go out and write a decision about that again, that doesn't have any particularly fixed timing associated with it. So it's certainly not a 2025 event. It's likely, but not certainly a 2026 event.

Got it. And then just a question on realizations. How are you guys thinking about the trajectory of that over the coming years, particularly as we think about the impact from the pandemic on courts and the backlogs that created? Are you still getting, are you seeing elevated realizations as courts play catch-up? And what might the implications be for the next couple of years?

Well, you sort of, we tried to show the data on a few different metrics when we did some of these slides. So some of the slides that we put together had some new information because we know people are focused on this theme. And I think that looking at the rolling 3-year realization is kind of an interesting way to do it as opposed to having sort of quarter-by-quarter up and down shocks.

And I don't know, Rob, if you want to put that back up again, that was Slide 10. And so what that slide is telling us is there's quite a lot of activity going on. You've seen 61 assets so far this year have realizations. And if you look forward to next year, and again, like I don't want to use these kinds of numbers as predictors because courts change their minds about schedules all the time.

But if you look at where we stand today, we have more events, more trials, more hearings and so on scheduled for the next 12 months than we had for the 12-month period a year ago. So what that says is there's this continuing velocity in the portfolio. And the thing, of course, that drives settlement activity, cases really don't settle without a catalyst for them settle. And so when Jon was showing you the slide that we've used before that show really a very high level of settlement activity in the portfolio in the upper 70s percent. I think it might even be 79% now.

So how do you get that settlement done? And the answer is you need some pressure on the defense usually to get there, and that pressure is a looming trial date. So, when cases get set for trial and when trial approaches, that's the most likely time for them to resolve by settlement. So I just think you're seeing, you're continuing to see forward momentum, at the same time, you have frustrating moments, like we had this quarter where we also saw courts, not do things as quickly as we would have otherwise expected. And when that happens, because of the relatively new valuation approach that we use, that can have a negative impact on our unrealized gain and loss line.

So, it looks like Julian Roberts is joining us by webcast today. So, his question is, thanks for the presentation. Are you able to give us any more detail on the change of expected or modeled timing of the case whose duration has been extended. Jordan, do you want to try your hand off?

Sure. And thanks for the question. I'm going to answer that in a second and first, just to make sure everyone understands how we think about modeling.

First and foremost, we look at all of our assets every quarter and the assets are constantly changing with a variety of different inputs, whether that's an observable milestone event, whether it's expected proceeds or duration discount rate that I've mentioned. With respect to this, Julien, I'm not going to answer the part of saying, hey, which case or cases it was, I think that would be inappropriate. But overall, if you looked at the impact of the duration change, it's somewhere in the $40 million to $50 million of impact when you look at that compared to the overall deployed cost fair value associated with the non-YPF book.

So, we've got another webcast question. This is from Jonathan Alexander at Evergreen, who says, on the buyback, the logic that you have laid out makes sense. But if we anticipate a positive YPF return, isn't it merely a short-term levering of the business when the stock is cheap that will then be paid off when the YPF result comes through and the overall risk to the business hasn't increased.

So again, as I said, like we're not dogmatic and dug in on this point. It's something that we talk about a lot. I think, frankly, my partner, Jon Molot, would probably agree with you on that question.

I think it all comes down to a question around the prudential management of the business. as we were just talking about in other contexts, we lack the ability to be able to accurately predict when cases are going to turn into cash. We have shown that we're pretty darn good at predicting whether they'll turn into cash. We've got a really long and successful track record of being able to do that. But that doesn't answer the “when” question.

And of course, that sits somewhat uncomfortably beside a world where public debt does come with a “when”. And so, the interest on the debt has to be paid and the principal has to be repaid on agreed timing, obviously. And it doesn't work. The debt holders don't say, "Oh, well, the court delayed, so that's fine. We'll delay too.” Like that's just not how it works. And so that's really the dilemma that we have always had, not even just in the context of a buyback, but in the context of how much leverage to use in the business in general because you are not wanting to put the equity holders in the business at risk of the debt becoming an obstacle to be able to manage the business properly.

So those are sort of the things that we weigh. And where we've come out thus far, and this has been talking to lots of investors and talking to advisers and talking to the Board and so on is to be on the prudential side of that equation. But as I said, it's something that people are frustrated with the share price. Jon and I are frustrated with the share price. Our team is frustrated with the share price. So, it's something that we welcome continued dialogue and debate about. Let's see.

There's another question. This is from Steve Thompson about buying and selling of shares. So let me explain how Jon and I largely buy shares in the business. So, we make use as this is a very common U.S. corporate practice, which is considerably less common in the United Kingdom. So, what we do is we take cash income and we put that cash income into a deferred vehicle. And we could, in that deferred vehicle, buy something other than Burford stock. We could buy S&P 500 indexes.

But Jon, I don't do that largely. We principally have been taking that cash in substantial quantity now and using it to put against Burford stock. And when we do that, it's disclosed publicly in security filings. But the stock itself lives within the plan in the hands of a custodian as opposed to living in my own individual brokerage account. So that's how the significant purchases are going. But they are realized purchases and Burford typically goes into the market and makes those purchases to hedge the position as well.

Another webcast question from Igor Arkhipov, sorry if I messed up that name. Has there been any impact from the U.S. government shutdown?

No is the short answer. In fact, and this is I think why the shutdown progresses, like living in the United States, you don't really notice that there's a shutdown going on except maybe when you go to the airport sometimes. And, but it hasn't had any impact at all on our litigation portfolio. The courts are continuing to operate. The place in litigation it has impacted things is with respect to the U.S. government, but that doesn't really affect us. So, if the U.S. government is a party, they have been asking for delays and accommodations and so on, but that's not a factor in our book.

So, waiting for another question that is being typed from Thomas Fickel. With several peers facing refinancing and balance sheet pressures, do you see opportunities for Burford to accelerate growth through portfolio or corporate acquisitions as part of broader industry consolidation?

I think the short answer is we don't know. It's, we've certainly talked about the competitive landscape before. And you've seen a migration in what has been going on in the competitive landscape a little bit. If you went back some years, you would have found litigation finance mostly being done by smaller pure-play litigation finance specialists. And those firms have, many of them have struggled to grow and the financial, sorry, the COVID really, the pandemic really caused them some distress because that really did slow down durations.

And many of them are organized as 220-style funds and that really through the ability to earn performance fees into some degree of chaos. And so, you've seen, as the question suggests, you've seen some level of distress among both of the other public peers that we have out there, the other public much smaller players. Where that all shakes out at the end is a little bit unclear. We're always happy to look at things, but Jon has a pretty sharp pencil when it comes to things and forms, our team forms its own view about value, which sometimes is lower than the valuation expectations of others. So, we'll just have to see how it all plays out. And with thanks for another investor who says, not even as a question, just well done to management, I agree completely on the view of not doing a buyback, investing in the business.

And now I think there is a question on the phone.

Your next question comes from the line of Mark DeVries with Deutsche Bank.

Just a follow-up question on kind of the recent commitments deployments, whether there's any kind of noticeable trend worth calling out on kind of the distribution of those among some of the shorter duration, lower ROIC versus some of the longer duration, higher ROIC.

Jon, do you want to comment on that?

Sure. I guess what I'd say is our approach is to be all things to all people. So, it depends what comes in the door, and we end up achieving diversification, not just of the sort that Jordan described geographically and by subject matter, but also in terms of duration and risk. I don't know, like I haven't, I don't have the numbers at hand as to the portion of new deployments that are on the shorter or longer, although I did would note, Jordan noted that a sizable chunk of the new business that was done is in deals that are, that have the capacity to generate higher returns and higher ROICs.

Jordan, if you have the statistics more in hand than I do, I would just be talking anecdotally. We've put out, we've done some big deals that are that have very high profit potential. Of course, we do know is things can settle earlier and you can end up with lower returns earlier, but with attractive IRRs. But if they go as we would project, they are meatier investments with higher upside potential.

Okay. That's helpful. Just a follow-up then for Jordan, I guess, on Slide 9. Does the lack of kind of the larger north of $25 million commitment speak to the point that Jon just made. Are you less likely to put a lot of money out the door if you're not expecting a more immediate return? Or is that kind of unrelated?

I wouldn't necessarily correlate the 2. We do see opportunities that are smaller but can also be more towards the monetization in which we're putting more money out the door earlier. So I don't want to necessarily equate the two.

So we've had some more sort of capital allocation buyback-related questions and comments. And so if I sort of sum them up, like one perspective was will, over time, this dynamic change?

If we're successful in meeting our objective of doubling the base portfolio by 2030, that obviously means we'll be doing a significantly larger number of cases. And one hopes at some point, the law of large numbers kicks in and you get more predictable, steadier returns. And I think that there's some truth in that. We have sort of not succeeded in achieving that thus far because of the way that the asset class has grown and the way we've been able to grow the asset class. And so we are doing much larger transactions than we were a decade ago.

If we had stayed at our average ticket size a decade ago and had the business of the size it is today, then I think you would have that kind of greater predictability. But at the same time, you'd have such a volume of business that I think the OpEx and the business model would be slightly challenged. And so because we have more than quadrupled the average ticket size, that has led to us having this, still this dependence on pretty large cases for a significant portion of the returns, and we haven't yet reached or even frankly, come close to the sort of the law of large numbers point.

Will that change in the future? And will that result in us having a greater sense of predictability of cash flow such that we would expand our capital return options. I think that's entirely possible. And of course, we also have the dynamic of YPF sitting out there because assuming a positive return from YPF, that is a very large cash event for us as well that as we've said repeatedly to shareholders, would require a discussion with shareholders about what to do in terms of capital utilization and capital return.

So that's sort of where we are on the buyback front. I know that there are also people who are going to say, but it's accretive, right, who are just going to do the corporate finance math and say, look at the book value, look at the share price, do the math, you should, instead of putting a new dollar into a new case, you should put that dollar into the existing portfolio.

And I understand that corporate finance math, which is why we keep on having this discussion. But I think if you go back to the slide that we showed earlier, I think that it is not as simple in a levered business that isn't always reliably producing positive cash flow. I don't think it's as simple as just doing the corporate finance math. But as I said, it's something that we don't claim a monopoly of brilliance on. And so it's certainly something that we're happy to hear from shareholders about as we continue to walk down the road.

And with that, I am told we are done. So thank you all very much for your time and attention. We enjoy being able to give you these updates. And hopefully, we shed a little more clarity on our views about what's going on both with YPF and with the business as a whole. We remain bullish and fans and sorry for my raspy voice. So thank you all for joining us today, and we look forward to talking to you soon.

Ladies and gentlemen, that does conclude our conference call for today. Thank you all for joining, and you may now disconnect. Everyone, have a great day.