Burford’s shares rebound after hitting back at Muddy Waters
THE war of words between Burford Capital and short seller Muddy Waters escalated yesterday with the litigation funder branding a report issued by the US firm earlier this week “false and misleading”.
Muddy Waters published its blistering 25-page research note about Burford on Wednesday, prompting Burford to issue an 11-page riposte of its own. It responded to both the substance of Muddy Waters’s criticism of the company and the manner of its “bear attack” on the share price, which halved in value.
Burford shares rebounded 25pc to 760p as it hit out at the report’s “many factual inaccuracies, simple analytical errors and selective use of information and expose its fallacious insinuations”.
Christopher Bogart, chief executive of Burford, said the report “only serves one purpose and we all know what that purpose was”. Muddy Waters was contacted for comment.
Burford also rubbished Muddy Waters’s claim that it was “arguably insolvent”. Bosses said the company remained “solvent, generates strong cash flow and has good access to expansion capital”.
It also defended its financial reporting, saying Burford was “transparent, appropriate and has been consistent for many years”, reiterating that auditors at EY had signed off on its accounts since 2010. EY said it was not its policy to comment on the companies it audits.
As a litigation funder, Burford puts up the cash to help costly legal cases proceed, while investors benefit from payouts in cases that are won or settled.
Muddy Waters accused Burford’s largest shareholders, including troubled fund manager Neil Woodford and his successor at Invesco, Mark Barnett, of “unethical behaviour” and of being “complicit” in Burford’s aggressive accounting techniques.
Burford called the claim “simply false”. Invesco said: “We categorically refute any accusation of improper or unethical behaviour.”
Burford was a top 10 holding in Mr Woodford’s now-suspended equity income fund. Woodford Investment Management declined to comment.