Stock Watch - Stock Picks — Investec and Burford Capital
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Nick Kunze from Sanlam Private Wealth chose Investec as his stock pick of the day and Drikus Combrinck from Capicraft chose Burford Capital.
Kunze said: "We think the valuations are far closer to around R120 per share and it's currently sitting under R100. We think it has been far too discounted relative to its peer group and with their asset management spin off coming pretty soon it should unlock even more value. They have also been unfairly knocked with the hole Brexit thing which is hopefully coming to an end soon."
Combrinck said: "I chose Burford, it is the largest litigation finance company on the planet. It is still fairly small in a fairly young very fragmented industry. I think there's about 20 public listed companies scattered around the globe - most of them in the UK the does litigation finest. You will mostly find them were there is Roman common law. Smaller law firms would offer their client's financing needs to Burford which takes a lot of pressure away from the litigation team and from the law firm itself. This started with individual cases at the beginning so Burford at this stage the have raised capital and are now managing some of these finance pools basically as collective investments or as a fund and you can invest in that fund if you are a private equity holder or you can just buy the share on the London Stock Exchange. It is trading a 16 price earnings ratio. Projections are is that the industry will be five times the size it is now in the next 10 years and Burford is currently the industry leader."
Kunze said: "We think the valuations are far closer to around R120 per share and it's currently sitting under R100. We think it has been far too discounted relative to its peer group and with their asset management spin off coming pretty soon it should unlock even more value. They have also been unfairly knocked with the hole Brexit thing which is hopefully coming to an end soon."
Combrinck said: "I chose Burford, it is the largest litigation finance company on the planet. It is still fairly small in a fairly young very fragmented industry. I think there's about 20 public listed companies scattered around the globe - most of them in the UK the does litigation finest. You will mostly find them were there is Roman common law. Smaller law firms would offer their client's financing needs to Burford which takes a lot of pressure away from the litigation team and from the law firm itself. This started with individual cases at the beginning so Burford at this stage the have raised capital and are now managing some of these finance pools basically as collective investments or as a fund and you can invest in that fund if you are a private equity holder or you can just buy the share on the London Stock Exchange. It is trading a 16 price earnings ratio. Projections are is that the industry will be five times the size it is now in the next 10 years and Burford is currently the industry leader."