LONDON (Reuters) - Short-seller Muddy Waters has sparked a 2 billion pound slump in shares of Burford Capital (BURF.L), a London-listed fund that finances lawsuits in return for a cut of any payouts, after criticising its accounts and saying it had bet on its shares falling.
Muddy Waters, known in financial markets for regularly declaring short equity positions on the basis of its in-house research, also criticised Burford’s top shareholder Invesco Asset Management and under-fire British money manager Neil Woodford for what it termed improper behaviour.
Burford had “egregiously” misrepresented its return on invested capital and internal rate of returns, the short-seller said.
In response, Burford said its litigation finance returns rose to their highest level as of June 30 and it had more than $400 million of cash and cash equivalents on hand as of Aug. 5.
The company, which last month reported a 36% rise in first-half profit after tax to $225 million, said it would issue a detailed response to the report as soon as practicable.
Burford also said its chief executive and chief investment officer had told the company’s board they would buy the company’s shares once the response had been published.
Invesco, which owns about 14% of Burford, rejected any accusation of improper or unethical behaviour. “Invesco’s legal advisers are reviewing the accusations and we expect we will be able to make a broader statement in due course,” it said
Woodford was not immediately available for comment.
Burford shares were down 584 pence or 52 percent at 536p by 1505 GMT.
Reporting by Thyagaraju Adinarayan; Editing by Marc Jones and David Holmes