Hospital firm in sick bay after Muddy Waters rap
MUDDY Waters, the hedge fund which attacked AIM darling Burford Capital this year, has turned its attention to the FTSE 100.
In a damning report, the fund accused private hospital provider
NMC Health of ‘materially misleading’ investors at best and committing fraud or theft of company assets at worst.
Led by American entrepreneur Carson Block, Muddy Waters said: ‘We have serious doubts about the company’s financial statements, including its asset values, cash balance, reported profits, and reported debt levels.’
The hedge fund, which is shorting NMC’s shares – meaning it profits when they fall – accused the Gulf-focused firm of fraudulently valuing some of its assets.
Block thinks it is understating its debt by manipulating its balance sheet, and has poor governance due to a lack of truly independent board directors.
Block concluded: ‘We are unsure how deep the rot at NMC goes, but we do not believe that its insiders or financials can be trusted.’
The report caused NMC’s shares to slump 32.4pc, or 837.5p, to 1747.5p. Muddy Waters is already facing a legal challenge from litigation funding firm Burford, which denied the allegations Block levelled at it this year, for causing its shares to slump by more than 50pc.
NMC chairman, Bavaguthu Raghuram Shetty, said: ‘We hold ourselves to the highest standards across our entire portfolio.’ But shares in Finablr, a payments firm he founded, fell 10.9pc, or 22.7p, to 187.3p. The FTSE 250 went into reverse, following two days of strong gains since the General Election. The mid-cap index slipped 1.05pc, or 230.49 points, to 21,690.20 as a number of stockspecific issues proved a drag.
Boeing’s decision to temporarily suspend production of its grounded 737 Max sent shock waves through British suppliers across the Atlantic. Shares in Hertfordshire engineer
Senior, which counts Boeing among its biggest clients, tumbled 11.1pc, or 20.6p, to 165.7p.
Other UK suppliers also fell, including Meggitt (down 1.5pc, or 10p, to 659.8p), which makes the fire detector system for the Max engine, and Melrose (down 1.1pc, or 2.7p, to 237.3p), which supplies the windows.
Boeing confirmed on Monday that it would halt production of the jet which was grounded after two crashes within five months killed 346 people. There are fears this will trigger job losses at suppliers in Britain.
The FTSE 100 just managed to hold on to its winning streak, edging up 0.08pc, or 6.23 points, to 7525.28. Drugs giant Glaxosmithkline edged up 0.8pc, or 14p, to 1778.2p after applying for US approval for a new drug to treat cancer of the blood plasma cells, which has had a meaningful effect on nearly a third of patients.
If approved, it would be the first of its type available in the US and would pit GSK against its US rival Johnson & Johnson in the treatment of multiple myeloma.
At the smaller end of the pharma sector, Silence Therapeutics revealed its chief executive, David Horn Solomon, was the subject of court action in Denmark. Silence said a bankruptcy motion had been filed against him and he has left the company. Shares slipped 4.1pc, or 20p, to 470p.
Roadside recovery firm the AA appointed a chief financial officer to replace Martin Clarke, who stepped down in April to devote more time to anti-Brexit party Change UK. He was replaced by Mark Strickland, who makes way for Kevin Dangerfield, from chemicals business Wilmcote Holdings. Stock fell 2.2pc, or 1.2p, to 52.55p.