Burford Capital

Just to add to my portfolio woes this week, Burford Capital has tanked. https://www.marketwatch.com/story/litigation-finance-firm-burford-capital-drops-as-muddy-waters-says-its-shorting-it-2019-08-07

Perhaps a news-driven buying opportunity in a volatile AIM stock?

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Out of interest. What drew you to invest in Burford Capital originally?

‘Bear raid’ accusation here: http://www.stockmarketwire.com/article/6536417/Burford-Capital-says-share-price-decline-not-linked-to-any-operational-corporate-reason.html

I hold BUR, would buiy more if I had the spare cash.

This guy is a very famous short-seller. Just announced a “short position on an accounting fiasco that’s potentially insolvent and possibly facing a liquidity crunch.” as well as the company has “egregiously misrepresented its ROIC and IRRs, as well as the state of its overall business.”

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I can see what they mean, but I can also see why they would say it’s a ‘bear raid’. Still, all very interesting.

It’s cool that your original reasons for investing still stand, and you are still holding, but what made you want to invest originally?

Burford Capital is Woodfords 2nd largest holding - I’ll post some data in the Woodford thread about this.

They’re in some serious trouble if that accounting fiasco turns out to be true. I actually bailed on this investment about a year ago because I didn’t like the non-standard metrics they disclosed & they continually dodged requests for lots of data. I read that report this morning & it is compelling. If its true then Burford will likely breach its debt covenants very soon - $350m in capital is a lot to come up with very quickly

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Was looking to have different shares in my Freetrade ‘fun’ portfolio (ie not in my ISA). BUR were certainly different, I liked and understood (or thought I did!) their business model, good business in the pipeline, increasing dividends paid over past few years, decent dividend cover.

Note it’s only a small holding, so the tanking is nothing to shed any tears over!

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He’s very prominent in the documentary The China Hustle I posted last weekend in the community. Highly recommend

Growth stock with big future and track record, undervalued in several metrics and actually profitable. Of course that’s nothing if they haven’t been playing fairly which will be a hard lesson for me.

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Yeah I am invested also, it’s been a horrible day. It’s a claim at this point and it’s freaked out everyone. We will await to see what Burford’s response is.

They responded almost immediately by attacking the short sellers and essentially denying it all:

It did little to bring the price back up

Yes I know but they didn’t go into detail, which I think they will do, Im talking about an actual response,

They say they will look into the claims and respond appropriately.

https://otp.investis.com/Utilities/PDFDownload.aspx?Newsid=1320719

Response

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That response is doing it’s job

Phew, good job I scooped up a few yesterday! :chart_with_upwards_trend:

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https://shorttracker.co.uk/company/GG00B4L84979/

Still a buying opportunity even though it’s up 30%. IMO.

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Very strange that Muddy Waters reduced their short position days before issuing such a damaging report

Because their analysis was fundamentally flawed. It was underpinned by a criticism of a perfectly legitimate accounting method.

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What about the concerns raised around corporate governance? Burford isn’t exactly a role model in this regard

(Disclaimer - I hold a long position)