Foris AG - 20ys too early (Burford Capital & Co)

Part of the Portfolio since 2020... Here is a rarity for the museum: an exhibit that was destroyed not because the idea was bad, but because it was too good, too early, and listed in the wrong place. Foris AG of Bonn deserves a moment of genuine respect before the usual mockery resumes.

In 1998, Foris pioneered commercial litigation funding in Germany: it would pay the costs of pursuing a lawsuit – lawyers, court fees, the lot – in exchange for a share of the winnings if the case succeeded. For the claimant, risk transferred; for Foris, an uncorrelated return stream with nothing to do with the stock market. It was, genuinely, a clever and modern idea, and Foris even ran a joint venture with Allianz (ProzessFinanz) to do it at scale.

Then it made the one fatal decision available to a clever idea in 1999: it floated on the Neuer Markt, Germany’s Nasdaq-cosplay growth exchange, in the white heat of the dot-com mania. For a moment this was wonderful. The Neuer Markt did not ask awkward questions about profits; it asked only for a story, and ‘we fund lawsuits for a cut’ was a fine story. The shares behaved like every other Neuer Markt rocket – straight up.

The 1999 accounts, in hindsight, carry the warning in plain figures: a per-share loss inflated by the costs of the flotation itself, an operating loss underneath, the unmistakable profile of a company valued for its narrative rather than its earnings. Which was fine, right up until narratives stopped being legal tender.

When the Neuer Markt collapsed between 2001 and 2003 – the whole index eventually wound up in disgrace, a byword in Germany for retail-investor carnage – Foris’s shares went down with the ship, shedding well over 90 per cent. The company itself did not vanish; it survives today, quietly, as a small and real business. But the share, as a Neuer Markt artefact, belongs here.

And the cosmic punchline, which the museum cannot resist: litigation funding turned out to be a superb business. An entire global asset class now does exactly what Foris pitched in 1998 – Burford Capital and its peers manage billions doing it. Foris was right about everything except the two things that actually mattered to its share price: the decade, and the stock exchange.