THE £120M BURFORD SHARE SALE
They cashed in last year at £13.50 . . . now they’re buying the stock back on the cheap
THE under-fire bosses of Burford Capital scooped almost £120m selling shares last year – 15 times the amount they have since spent buying stock back as they attempt to shore up investor confidence.
Chief executive Chris Bogart sold 4.4m shares for £59.4m in March 2018, while chief investment officer Jonathan Molot raked in £57.8m, offloading 4.3m shares.
The American pair were still left with stakes worth £117m and £115m respectively, underlining the fortunes they have made since founding the litigation funding firm a decade ago.
Having listed at 100p each in 2009, the shares peaked at 2045p in August last year, just months after Bogart and Molet sold a third of their stakes at 1350p a share.
But the shares tumbled 56pc in just two days last week following an attack from US hedge fund Muddy Waters.
Bogart, who is married to Burford’s finance director Elizabeth O’Connell, and Molot have taken advantage of the rout to buy up stock, paying between 663p and 856p a share.
Molot, a professor of law at Washington DC’s Georgetown University, stumped up another £1.9m to buy 690,606 shares on Monday, bringing the total he has paid since Muddy Waters began its attack to £7.2m.
Bogart bought 123,747 shares worth £821,395 last week. Meanwhile the hedge fund attacking Burford has now accused its bosses of structuring the firm to line their own pockets.
Carson Block, who runs Muddy Waters, alleged that Bogart and Molot engineered a deal which saw them bag millions of Burford shares.
That same deal also incentivised the two bosses to make Burford’s accounting practices more opaque and misleading to investors, Block claimed.
He said that without one of Burford’s major cases being ‘bailed out’ by Invesco, the fund manager where Neil Woodford made his name, its performance would look much less impressive.
Block added that if Burford had played by the book, ‘we speculate that Molot and Bogart would live in smaller houses than they do today’.
Burford, which helps companies and individuals fund their legal cases in return for a cut of any winnings, first came under attack from Muddy Waters last week.
The hedge fund, which is shortselling Burford’s shares and profits when the stock tumbles, blasted Burford for booking future profits on its balance sheet which may not actually materialise.
It went into more detail yesterday, claiming Bogart and Molot restructured Burford in 2012 to make more money for themselves. From when it was founded in 2009 up until 2012, Burford Capital operated as an investment fund which guarded its clients’ money while entrusting the investment decisions to another company.
That company was run by Bogart and Molot, who charged Burford around £5m per year for them to find legal cases to invest in.
But in 2012, the two Americans sold their fund management company to Burford in return for 24.5m shares. This had the obvious outcome of handing Bogart and Molot a valuable stake, then worth £33.4m, in the enlarged company.
But it also turned Burford from an investment fund into a fullyfledged operating company, meaning the market would be likely to value the shares more highly.
Muddy Waters alleged: ‘All Bogart and Molot seemingly needed to make this move really pay off is some more earnings. Well, Burford’s change in accounting policy delivered.’ He alleges that the firm then modified the way it booked its profits to make it seem more successful. Over this time, Bogart and Molot have refused to disclose their pay.
But the total pay to all staff since 2010, much of which is thought to have gone into the pockets of Molot and Bogart, is £139.4m.