Burford Capital Limited (BUR) Q2 2018 Earnings Report, Transcript and Summary

Welcome, everybody. Good morning to those in the U.S, and good afternoon to those in the UK and Europe. Thank you all for taking a few minutes today to listen to Burford talk about its interim results. We're going to follow our usual format. I will lead off. Jon Molot, our Chief Investment Officer and Burford's co-founder, will talk about the investment portfolio and our progress. Elizabeth O'Connell, our CFO, will round out the slides. And then we'll open the line for questions. We're obviously pleased to be putting up another set of record-breaking results. I'm going to use the slides that are up on the website. And we'll tell you where we are as we go through them. So on Slide 2, the highlights page. What you say there on a single page is a number of key financial metrics for us. And I think, before we touch on them individually, I think the key point overall here is when you look at the business and you compare its 2016 to its 2017 performance, you obviously saw explosive growth from 2016 to 2017. And I think the question, perhaps, that was on some people's minds was whether 2017 was an anomaly or whether, as we have suggested, both the business and the market really have turned the corner. And we have seen litigation finance and the provision of capital to the legal sector move considerably more into the mainstream. And what I think that the first half 2018 results show, across the board, is that 2017 was not an anomaly. That the use of capital in the legal industry has become more prevalent. And the Burford has been able, based on its market-leading position, has been able to ride that wave. You see that, obviously, in the new business that we're writing. For the first time, we wrote more than $0.5 billion of new business in the first half, which historically, has been our slower half of the year, simply because the law world tends to tip later in the year, as clients and as lawyers both consider the financial ramifications of their litigation as the year goes on. And not only did we write that level of new investment commitments, but we deployed around $400 million in investment activity just in the first half, which is obviously, a significant amount of activity. As you know, income and profit for us are really historical measures because they reflect the performance of investment decisions that we made some time ago. Our income rose to a new record $205 million. I'd point out that 65% of that in this particular period took the form of realized gains. I point that out because we're asked about that issue from time to time, and Jon's going to talk about it a little bit later, but it's also worth noting that we don't manage to that number. That number will fluctuate based on underlying litigation activity that, as you know, is difficult for us to predict. And so we neither manage to that number nor, frankly, pay particular attention to it. But it's something that I know investors have asked of us from time to time. And so we're certainly supplying some more information about it. Along with that growth in income came a corresponding growth in profits. I draw particular attention to the fact that we generated an awful lot of free cash in the period, $299 million of cash received. That's a 61% increase. And we have, consistent with our practice, suggested that we'll pay an interim dividend at the rate of one third of last year's final dividend. So that represents a 20% increase year-over-year in the interim dividend. And finally, on this page, you notice not only all of these nice income and profit numbers, but a real increase in our total assets. And the reason that, that's significant for us is that those assets, which are fundamentally investments, that sort of prime the pump for future generation of income and profits. Turning the Slide 3. This really is more for new investors, when we're talking to people who aren't currently Burford investors. And I'm not going to dwell on that page. But I am going to note that Burford isn't alone in this industry. Burford came into existence at about the same time as a number of our competitors. And what has happened, over the last 8 or 9 years, is that we have simply grown well past those competitors. We are clearly the market leader. There are some statistics in the interim report that quote a recent analyst report that not only is quite bullish on market growth generally, but suggest our share of that market is somewhere in the 55% to 60% range. So what we have been able to do over Burford's life is not merely on a standalone basis produced some desirable financial results, but we've also managed to effectively outgrow and outcompete the competitive universe, including a number of competitors who came into being right around the same time that we did. Slide 4 really is an effort to capture some data points for you around what's going on in the broader market. We introduced the idea of looking at the volume of coverage in the legal trade press of the concept of litigation finance. And we did that because 2017 seemed to us to represent a sea change. We had as much media coverage of litigation finance in 2017 as we did in a number of prior years combined. And what has been most striking is that, that trend has really continued in 2018. Just in the first half of 2018, we've seen about as much coverage in the trade press as we did in all of 2017. So that's a really steep trajectory. And it's suggestive of what this graph shows at the bottom of the page, which is also some data from our market research surveys, which showed that a very significant majority of lawyers and the survey responders agree that litigation finance is growing and increasingly important. And it's not only the people who have used litigation finance who were saying that, close to 90% of them believe that, but the people who have not. So more than 3 quarters of the legal industry surveyed suggest that litigation finance is going to continue to grow. Slide 5 is a new data point. And the reason that we've put this in here is it shows the significance of our single-case offering. When you think about Burford's growth, a significant amount of our business today comes from large transactions, especially portfolio transactions. And you'd be tempted to wonder whether, given that now our average investment size is really quite large, it was $24 million per average investment at year end, whether it makes sense for Burford, still, to do the $2 million and $3 million investments that we do. And this slide really answers that question, because it shows that, that single-case entry point is how we get clients in the door the first place. That lawyers are coming to us because their business is being disrupted by their clients. And we're providing the solution for that disruption. But what we then find is that a significant number of those lawyers, after working with us once, wants to keep on making use of the incremental flexibility that access to capital gives them in their practices. And so 75% of the law firms that we've done one single case with have actually come back with more investment opportunities for us, 40% of which turn into portfolio deals. So it's important from our perspective to be a broad player, a scaled player in this industry as opposed to simply being, simply operating just at the very large dollar high end of it. With that, I'll turn to slide 6, which is the historical. We've done this now 3 times, this bucketizing or categorizing of our commitments, and it lets us talk in more granular detail about what's going on in the business. And I'm about to hand this over to Jon to do that. On my way to doing that, I'd just note that the real core of the business, what we think of as sort of traditional litigation finance, is represented by the first 2 categories there: single-case finance and portfolio finance. Whereas, the other things are newer and more capable of ebbing and flowing. And in those first 2 categories, you'll note that we basically doubled our new business volume period-over-period. And with that, Jon Molot.

Thanks, Chris. Thanks to all of you for joining us and to our investors for having invested your capital with us and put your faith in us. And thanks, especially to the members of the Burford team who are on the call. As Chris points out, the growth in the business, boast a more than $500 million out in the first half of 2018 in commitments. But the robust growth in our core business, the single-case finance and portfolio finance, it's, I really have to attribute that to the team we have built. We've got a team of people who were excellent lawyers before they ever came to Burford. They came from top law schools and then top law firms, often top in-house legal positions. But there are also investors, people who can look at a legal risk and see how to view it as a financial asset and how we can make money off it. And on top of that, they just have a sense of law practice of what makes lawyers and law firms tick. And not only is it a good working team, where I wake up every morning so happy to work with this team, but I think all of our clients and counter-parties feel the same way. And that helps explain the statistic. Chris talked about that the people who do business with us once come back for more. And I think that our team makes law firms want to work with us. And so I'd say, a big chunk of our success this half year period and since inception is just that we've built an incredible team that is able to see opportunities, capitalize on them and make people want to come back for more. The other piece, I would say, is just as Chris pointed out, the market demand is there. That we're not, despite Chris saying, it's true, there were some other competitors at the time and we've just outstripped them. It's not just that we're trying to do something people have done for years and try to do it a little bit better. The capital market have, by and large, ignored the market for legal services until our inception. And there has been a thirst for outside capital to make law firms more competitive and meet the needs of their clients. And so when you combine the market demand with a team of lawyer and investors who are able to capitalize on that market demand, that really is the key to our success. And when I look at this portfolio, the deals we have done, we had great opportunities, we've been able to negotiate great deals. It's just a -- it's a wonderful portfolio we've built here. And I'm very optimistic, both about how the portfolio will perform and about our continued trajectory. As Chris said, the last 3 categories: recourse finance, legal risk management and asset recovery, could have been slow. I'll say a little more about asset recovery because there are some interesting things to note there. But we have always, as we have expanded into new adjacent areas, refused to take our eye off the ball. And the team has been very focused on continuing to seek out, take and evaluate and make investments in these core single- and portfolio-finance opportunities. Turning to Slide 7. That really is the result of that hard work. When you look at our portfolio, the bullets on the left side just emphasize how diverse the portfolio is. It's a very large number of clients across a large number of investments, in multiple jurisdictions, multiple subject matters, multiple law firms. And that is always been our approach to litigation: build a great team inhouse and build a diverse portfolio. That wasn't how some of those competitors that we started out against worked. But that has been our mantra from the beginning, and it is produced a portfolio that I'm very proud of and very pleased with. The bullets on the right side are a little more of that detail that Chris explained I would touch upon. It's not something we attach very much importance to, as Chris said. Whether gain ends up being taken at the moment of a realization event, when the investment is terminated, we get paid our cash or some gain gets taken along the way because of the accountancy. There's been a material event in the litigation that makes our investment more valuable that -- we don't manage to that. We don't attach that much importance to it. But we know some investors do. And so it is worth pointing out that 65% of our investment income, historically, has not been recognized until the investments concluded. And we have a further metric, the chart on the right at the bottom is not something we have put together and released before. But it's to show you, of the 35% that we take in unrealized gains prior to the termination of the investment, bulk of that comes very late in the investment cycle. So this is a cumulative chart, meaning, that if you looked at things that are 4 years to conclusion, only 4% of any gains would have been taken back that far. If it was 3 years, 7%, so an additional 3% because it's cumulative. If it were 2 years before conclusion, you'd be up to 12%. And then it's only in the last year that the remaining 23% would be taken, you'd be up to 35%. And then it's only on conclusion that the 65% would be taken above that. Again, those numbers could vary. This is the average across the whole -- this is across the whole portfolio. And we don't attach much importance, but I think it's helpful to investors who need more transparency to understand the underlying value of our portfolio and the sources of our income. So turning to Slides 8 and 9. I'll say a word about the Petersen matter. I don't want to dwell too much on it because it's just one investment among many. But given that investors have paid attention to it, given it's public and sizable, it's worth noting. The event that has occurred in Peterson occurred after our June 30books closed. There was a decision on July 10. So those are not reflected in our numbers. But we have a positive decision from the U.S. Court of Appeals, from the Second Circuit. You may recall that Petersen sued Argentina and YPF in U.S. federal court for the Southern District of New York at the trial court level for contract breach. Basically, when Argentina and YPF had decided to do an initial public offering of YPF shares for public market investors on the New York Stock Exchange and various global market, they had included in the bylaws a contractual promise to shareholders that if Argentina ever reacquired control of the company, it would make a tender offer and buy out the minority shareholders at a formulated price. That was a contractual promise in order to induce people to invest in a company, which was supposed to be a private concern, and didn't want to be minority investors if there was a state-run oil company. That contract then was breached. Argentina did reacquire control and did not affect the tender offer. And so Peterson sued for contract breach. You will recall that Argentina and YPF had moved to dismiss under the Foreign Sovereign Immunities Act, basically arguing that this was a sovereign act of Argentina, not a commercial one, and therefore, it couldn't be litigated in the U.S. federal courts. The trial judge, the Chief Judge, of the Southern District ruled that was not the case, that this was a basic commercial obligation and a suit for contract breach. And YPS and Argentina appealed to the U.S. Court of Appeals in the Second Circuit. That court affirmed the trial judge's decision that this was commercial activity and it's a suit for contract breach, not for any sovereign activity. And that means the case goes back to the trial court to proceed so that Petersen can litigate its contract claims. There is the possibility that the defendants will seek further review. There's an en banc review, by the entire Second Circuit appellate court or the U.S. Supreme Court, but those are discretionary appeals, they're rarely granted and don't give us much concern. So that's a positive development post-June 30. The other thing I'll mention, on Slide 9, which we're reporting is that the next largest shareholder of YPF at that time was Eton Park, the large New York-based investment fund. We had provided litigation finance to Eton Park, in connection with its claim against YPF and Argentina, which is analogous to Peterson's claim. Eton Park is now in the process of unwinding. It's not investing outside capital anymore. And so we agreed, in June, to take on a broader role. Basically, they'll still be Eton Park Management, or at some point, if everything else is sold off, they'll be a trustee for Eton Park that will still be overseeing the matter for Eton Park to make sure Eton Park investors end up with their due. But Burford has provided additional financing in exchange for further percentage of proceeds, because of course, when you're dissolving an investment fund, it's important to get cash to your investors sooner rather than later. As a prudent risk and cash management matter, we decided that in order to finance the -- in order to make this additional investment in an analogous claim, Eton Park's claim against YPS, it was prudent to sell a very small portion of our Peterson entitlement. There's now a robust market in the Peterson claim. And so we sold a small portion in order to cover the cost of the additional investment at Eton Park. And that additional sale of Peterson came at a fair evaluation, implied evaluation at $800 million for the Peterson entitlement. I think that pretty much is enough to say about Peterson and Eton Park. I don't want to dwell too much on it. If you turn to slide 10. I would just point out, I mentioned before that the thing we're really pleased with is, as Chris said, people wondered after 2017, would you really be able to continue to grow the business? And the core business has grown beyond the 2017 performance in the first half. And we've been very pleased with the single-case finance and portfolio finance. The 2 other areas I wanted to mention, asset recovery and insurance. So asset recovery, we have really shifted from a business model of providing fee for services to providing capital at risk as well as services at risk. So it's not surprising that people that have won large judgments against solvent defendants and think they've been through the battle, they have spent millions of dollars to achieve those judgments, they are entitled to still more millions in cash, and then they confront a recalcitrant defendant who refuses to pay. It's not surprising. There will be frustration there. And the willingness to invest additional millions to enforce the judgment, track down assets around the world and freeze them, often the claimants do not have that willingness. And so they have come to us, both to provide because of our know-how and expertise in the team we have developed that's able to track down assets and freeze assets in various jurisdictions around the globe, but also because we're willing to put investment capital behind that. So we can provide them services at risk on a contingent-type fee, and on top of that, we can provide monetization of judgments. So that has, that business has grown in the last period. And we, because we're not only identifying answers but also freezing them, there's an internal legal function that's needed there. And we've established a wholly owned law firm, Burford Law, which provides support to the asset recovery business. Finally on insurance, there's not much to say. Our historical ATE, After-the-Event insurance, is in line down, just as we've always said. And it's performing as we had hoped. But we have created a new Burford insurer to facilitate our litigation finance business. We found there were circumstances where there were good cases in need of litigation finance and the only way they could go forward is not just if the affirmative claim was financed, but also if there was insurance available to cover adverse costs. And so we set up an insurer to cover that and a reinsurance facility to pass along some of the risks. So we think this is something that helps facilitate the growth of our litigation finance business. And with that, I will turn it over to Burford's CFO, Elizabeth O'Connell to take it from here.

Thanks, Jon. Turning to slide 11. As to Burford's investment funds, we've provided a few data points to show that the existing funds continue to generate performance. This is including a significant trial win in Partners III and some further concluded investments in the strategic value fund. However, the larger fund management news is that the overall pace of growth in the business has been such that Partners III is fully committed. And while there is some room for incremental investing by recycling in the fund, we expect to be in the fundraising market again this year. Turning now to Slide 12. We recently started to include this cash waterfall chart in our presentations to try to make it easier for you to see the levers on our cash. And just so it's clear, this chart only includes cash moves on Burford's own balance sheet. It does not include any cash moves from third-party interests in our consolidated funds. As Chris already said, cash generation across the business has been robust. And what you see from this chart is that in this period, that cash generated from the business, the $299 million, more than covered our deployments, operating expenses and our financing costs. However, while the business was still financing in the first half, we certainly cannot count on that happening reliably, especially given the growth we've been experiencing. And that's why we raised $180 million of debt in late January. This capital raising followed a robust period of new business writing leading up to the end of last year. And it ensured we had cash on hand to not only meet current commitments, but also to fund continued new business. As followers of Burford, you know that we are unable to forecast either the timing or quantum of cash receipts. And so the debt capital raised was prudent from a cash management perspective. And this leads into the points on Slide 13. Over the last 4 years, to fund our growth, we've been supplementing our internal cash generation and our development of a secondary market with some long-term, low-cost debt. Our average life on that debt is 6.9 years compared to Burford's investments that have a duration in and around 2 years. Our debt has a weighted average interest rate below 6%. There's no question that low-cost, long-term debt is a cost-effective way of financing growth for equity holders. We continue to have capacity on our balance sheet to take on further debt, given our net debt to equity ratio of 0.39x and our significant coverage of interest expense. But I said at year end, we're also not interested in running a highly leveraged strategy. And thus, we continue to look broadly at other sources of capital, including our thirdparty investment funds as a way of meeting continued strong growth and demand for capital that we're seeing in the legal markets. And that concludes our formal presentation. And I'll hand the baton back to Chris who will open it up for questions.

Thanks very much. And Tyler, we are ready for questions if there are any.

Thank you, Chris. [Operator Instructions] Your first question today comes from Julian Roberts of Jefferies.

Thanks very much. I think this is one for Elizabeth, and it's just one from sort of the back of the report. We see that fund investments are up 8% in -- it rose on the back in late '14. But the adjustments and eliminations to that are only up a small amount. Can you tell me why that is?

Julian, I'll have to look and see what you're talking about. I'm not sure I'm following your question.

Okay. Sorry, I'll send it by e-mail.

Okay.

Thanks, Julian.

And the next question comes from Trevor Griffiths from Nplus1 Singer. Trevor, please go ahead.

Two quick questions. The trade press has recently been full of articles about a pay war at the associates' level and big law firms. And as I understand, this is typically the talent pool in which you hunt for recruits in growing the team. So I wondered if this has implications for your ability to hire, or indeed, to existing operating cost space. And the second question is in relation to the Eton Park claim against Argentina, is it possible that this claim can somehow, and if it is effectively the same as Petersen, somehow be combined or heard at the same time by the same judge to streamline things?

Thanks, Trevor. So on the associates' salary point, the trade press, I have to say -- so just taking a step back, the way that law firms to attend to deal with associate salaries is almost in a sheep-like way. There are a few firms that tends to stake out a public position early. And then a whole lot of other firms feel pressured to match those salaries. And the result of that has -- there's no question that the result of that has been to cause continuing compensation increases for, especially, for young associates coming right out of law school. We're not recruiting from that population. And I think the reason you see so much trade press coverage of it is because clients are up in arms about whether a first-year associate, in other words, somebody who is a brand-new graduate from law school, can possibly add enough value to a matter to support compensation, which, in New York, is now peeking around $200,000 for that person. Unfortunately, for law firm associates, that doesn't last. And so you don't actually see a linear approach to legal services compensation. And by the time we're hiring people out of law firms they are in, they would have done a number of years of work, and compensations start to reflect ability instead of merely longevity from law school. So we haven't seen any impact on our own hiring. What I will say about Burford is that we appear to be a very popular place to work among lawyers. And I think the reason for that is you get, as Jon was saying earlier, you get many of the intellectual benefits of being a practicing litigator. And you don't have some of the particularly pernicious lifestyle disadvantages. So we continue to have a robust pool of people seeking to come and work at Burford. As to your previous question, I'm going to pump that to Jon.

Sure, I'm happy to take that. The only thing I'd add on the litigation associate salary rate is, I think, more significant than its impact on how much we pay to recruit people, which I would echo Chris' observations, is that it just highlights the cost pressures on law firms and the dissatisfaction of clients with how much they charge, and therefore, re-enforces the demand for our capital. That there has to be another way to provide legal services with different arrangement from the [indiscernible]. On the Eton Park matter, your question is a good one. In fact, the cases are before the same judge, Judge Preska, who issued the original decision in Petersen. And Judge Preska had stayed the Eton Park case while the Second Circuit was considering the appeal from her decision in Petersen. She said we might as well wait and get the resolution of both. So I would be optimistic that the 2 cases would move along at similar paces on similar tracks, given that they involve the same issues.

[Operator Instructions].

We may have exhausted the curiosity of the audience. Why don't we just give 1 more minute to see if anyone else has a question that they'd like to pose. I think I'd I make a final point about Burford, which we've made over the years, and I'd just echo it again here, which is we're obviously thrilled with how the business has grown and performed. And we're especially pleased to deliver these kinds of results. But at the same time, we do just continue to remind investors, that from our perspective, this is a long-term play based on a widely diversified portfolio. And as both Elizabeth and Jon have already mentioned, it's extremely difficult for us to predict, on a quarter-by-quarter, period-by-period basis, when a court is going to rule and exactly how it's going to rule. And so despite the fact that we had mini periods of desirable earnings here, there remains always the risk in this business of period-to-period volatility. And I say this without having a message attached to it. It's not as though I'm speaking in code here. We've said this over the years. But I do think it's important for investors to understand the nature of the litigation process. Trevor's questions to Jon really reflects that. That's, Jon's answer is our best supposition of what's going to happen. But ultimately, we are, by standards, in a complicated process that has defied predictability over time. Tyler, didn't anyone, while I was riffing, come up with one final question or shall we call it a day?

We do have additional questions. Your first one comes from Emmanuel Figueiredo from LBV Asset Management. Please go ahead.

Just to use really the opportunity, if you can just give us a little bit of color or any KPIs you would like to share on the development of your asset management business with third-party funds. And any plans you could share?

Sure. So we think about the asset management business possibly in a somewhat different way than lots of third-party fund managers or third-party asset managers. And the reason for that is twofold. One is, we look at the asset management business simply as another leg in our capital stool. And so if you think back about Burford's origins, Burford was a purely public player originally. And so the first thing that we did is raised equity capital, and we invested that equity capital and we reinvested its proceeds. So that's all we did as a capital structure matter for pretty much the first 5 years of our existence. So it wasn't until 2014 that we first went to the debt markets. And we started issuing debt because we were seeing growth that exceeded our ability to self-finance, just from that initial pool of equity. And so we started raising, pretty much annually, we started raising debt. But by the time we get to 2016, it was clear to us that the market was growing and Burford's presence in the market was growing faster than our ability simply to finance all of the opportunities that we saw on our own balance sheet, just with the combination of equity, debt, recycled capital and our burgeoning efforts to create a secondary market. And so at that point, we decided that we would also tap the third-party funds market. And so we did that by acquisition originally. And now we've been doing that organically. We've been adding new funds to the fund manager that we acquired. When we think about that capital, what we're doing, as I said, is really making sure that we have broad access to sources of capital. And the economics for us around the fund management business really flow from performance fees as opposed to fund management fees. So lots of asset managers are just asset managers, as you know. And really what they're in the business of doing is trying to build up an enormous pool of assets under management so that they can clip management fee coupons. And that's the primary driver of their business, with performance fees either not coming at all or really coming as an afterthought. With litigation finance, the return profile of the underlying assets is such that even if the funds, collectively, do significantly less well than Burford's balance sheet, the value of the performance fee potential in those funds considerably outstrips the value of management fees. And so while the performance fees are more unpredictable, consistent with my comments a moment ago about predictability, that's really what we're looking to unlock here. And so we view the funds today, as I said, as a source of capital and as a future source of performance fees. Tyler, anything else for us today?

We do. The next question comes from Daniel Lasry from Engadine.

Could you talk a bit more about the asset recovery business? Just looking at it this half, and I think you just changed your fee structure. You had more commitments this half in asset recovery than single-case finance, so what kind of potential do you see for this business, rolling this forward 2 or 3 years down the line? And do you expect to have a similar return profile in the asset recovery business and duration profile as you have in the post-settlement funds? Thank you.

So as Jon said when he was talking about the 5-bucket chart that we had, the first 2 buckets are really the core litigation finance business: single-case and portfolio finance. And the latter 3 buckets are newer. And we are -- we have a greater expectation that those will wax and wane on a period-by-period basis. So, what we've done in asset recovery, as you said in your question, Daniel, we've shifted the business model. So when we started into asset recovery a couple of years ago, 3 years ago now, I guess, we were largely a fee-for-service business. So you would be a law firm or a corporate client who had already secured a judgment. You are having difficulty collecting on that judgment because the defendant, the debtor, had moved the assets around or they had been in a jurisdiction that was difficult to enforce against. And so our professional team would come along and both do the investigative work, the research, to locate assets in a place that we believe we could get to them, and then would assist in developing the, often, the multi-jurisdictional strategy to go and do that. And we really operated that almost as a law firm, almost as an adjunct to what the law firms were doing. And we tended to charge for our time to do that. There were 2 things that weren't terrific about that model. One is the clients had already spent a lot of money and were not all that enthusiastic about paying yet more to try and recover on this case that they had won. And the other is that we could see that we were contributing a lot of value to the process and not necessarily getting paid commensurate with the value that we were contributing. And so we started to test the idea of doing this on risk instead, effectively putting the fee portion of the business at risk in exchange for a payment out of the recovery. And also, sometimes, to put capital at risk, either to pay other service providers or even to take a small interest in the underlying judgment. And that was, as you can see from the deployment -- from the commitment numbers in the first half, we really have made that business shift now. In terms of predicting the future, I think we're not at the stage in that business to be able to do that, either as to volume of incremental capital or in terms of what we think the duration profile looks like. Although, you compared it to the post-settlement fund and I think it probably is inevitable that the duration profile would be longer in the asset recovery process than in the traditional American post-settlement fund.

Perfect. Thanks. And just another question on another subject, I think you've hired around 10 people this half or somewhere around there over the last few months. Can you just talk about if this is to reinforce a specific area or to have more of a geographical coverage?

So our hiring in the business is really across the field. So we've obviously seen very significant growth in the investment portfolio in the last couple of years. And so we are hiring people who will both assist in the management of those investments and also in the underwriting and diligence of new investments, just given the volumes that we're seeing. We are also continuing to ramp up our marketing and origination activities. We -- some of you may have noticed a pair of significant new hires in that area just recently. We hired David Perla, who most recently was the President of Bloomberg Law; and Greg McPolin, a longtime colleague of his; to come in and take what was already a market-leading marketing and origination platform and take it to the next level as the business continues to grow. And that's not only a domestic U.S. effort, but it's really a global effort. We now have a significant London presence. And from London -- and now from our office in Singapore, we are branching out to many different jurisdictions.

Okay, Chris. We have one more question on the phone, and that's from Russell Wynn of Canaccord. Russell, please go ahead.

Congratulations on a good set of figures. I really wanted to ask something you touched on just now, about the unpredictability of your figures going forward. When you put out your statement regarding Peterson a few weeks ago, there was sort of an addition there saying how, if your estimates differed from, you weren't guaranteeing these estimates. And if your thoughts on it varied significantly from them, you wouldn't sort of tell the market. How do you sort of square that with the obligation with the stock exchange to prevent a false market in your shares if your expectations of figures do differ widely from the market's expectations?

So I guess we put ourselves in what I think is pretty good company with Warren Buffett and Jamie Dimon, who wrote a piece not really long ago in the Wall Street Journal calling on companies not to give earnings guidance to the market. We don't do it as a matter of philosophy. We do it as a matter of practicality. So the reality of our business, and you referred to the Peterson release, but the language in that release is not new. We've said that throughout our history to the market. And we've said that very language in the Peterson release, has appeared in our annual reports and another press releases. But what we've said to market is that our job is to, as Jon to said earlier, to do the best we can to compile a terrific portfolio of investments. We are effectively a buy-and-hold investor in those investments. Litigation is its own process, and we have no ability to control its timing or its duration, or frankly, predict them. And just to put a fine point in that, the appellate court in Peterson released decision on the 10th of July. That was in a case that was argued before it on the 15th of June, 2017. So about 13 months earlier. That decision could have come out at any time after the oral argument. It could come out the very next day, and it could, we could still be waiting another year for it. So we have no visibility into when that decision would be released. And we found out about the release of the decision by it arriving by e-mail to our lawyers. There was no advanced warning of it, and there is no predictability of when it's going to occur. And so based on that, we're not in a position to be able to give guidance or predict what our earnings or what our cash flows are going to be. And we've made that very clear to the market. And that, in our view, is the best that we can do. If investors and analysts find it helpful to try to make their own predictions, that's obviously, fine for them to do. But they're doing that without our guidance and without our endorsement. And so that's the, that's, I think, the best that we can offer for this particular industry.

I appreciate the unpredictability in courts will actually announce results. But presumably, if one month you get a result that is a major sort of win or whatever, you would announce that then, not wait for your results several months later, perhaps if it was a substantial effect on your annual profits. or you're saying you'll wait until your standard reporting time scale?

So we have historically, consistent with our obligations, we've historically put our RNF announcements when there has been a material development in the business. The -- and we obviously have continued to do that. You saw us do that for example, with Peterson within 12 hours of the result coming out. So absolutely.

Okay. Thank you very much. I appreciate that Chris.

And that sounds like it is the end of our question period. So with that, I very much appreciate everyone's time today on this call. We obviously are available for any further questions or follow-up. And as Jon said at the outset, we're very grateful to all of you for your continuing support of the business and for providing us with for your capital. We do our very best to be worthy of that. And we look forward to demonstrating the future potential of what this transforming legal market is capable of providing. Thank you all very much.

Ladies and gentlemen, that does conclude today's call. Thank you for joining and enjoy the rest of your day.