Burford Capital has strongly retaliated against the accusations made by Muddy Waters, accusing the shortseller of “fallacious insinuations” and “inflammatory rhetoric”.
In a strongly-worded statement issued to investors, Burford denounced Muddy Waters’ report into the company as “baseless”, saying it contained “many factual inaccuracies, simple analytical errors and selective use of information”.
The company also said it is considering a share buyback in an attempt to bolster Burford’s shares, which have crashed in the wake of Muddy Waters’ short attack.
A report published yesterday by Muddy Waters described the litigation funder as “a poor business masquerading as a great one” and criticised some of Burford’s accounting practices.
Burford’s shares went into freefall in response to the report’s publication, and almost £1.8bn has been wiped off the value of the Aim-listed company since Tuesday.
Shares have begun to rebound following the release of Burford’s statement, and were up almost 40 per cent to 846.5p at lunch time.
In today’s statement to investors, Burford countered each of the seven claims made by Muddy Waters, raising what it called “the major inaccuracies”.
“Burford’s accounting and financial reporting is transparent, appropriate and has been consistent for many years,” it said.
The statement also denounced short attacks as “fundamental menace to an orderly market and to the value inherent in long-term investing”.
Burford is “well equipped to investigate and pursue market manipulators”, it added, and is “exploring doing so here.”
This morning the head of Muddy Waters hit back at those who had questioned the firm’s motives.
Asked about his financial motivation in shorting the stock in an interview with Radio 4’s Today Programme, Carson Block said: “Of course we have a financial motive and they [Burford] have a financial motive. Everybody who’s doing this has a financial motive.”
“It’s kind of funny that everybody always thinks ‘well we need to impugn the integrity of the critics just because he’s financially motivated but these other people over here they must be angels’. They are not,” he said.