Popular retail investor stock Burford Capital (BUR:AIM) saw its market value collapse after the company was targeted by a bear raid attack.
Overnight US research firm Muddy Waters launched a document making damaging accusations about Burford’s financial strength and operational reputation, describing the company as a ‘poor business masquerading as a great one’.
Burford, which provides funding for legal disputes, today issued a response refuting the key claims.
That was followed up later in the day with a short statement that said the company believed that ‘the report's criticisms are without merit,’ and gave a promise that directors of the company plan to put more of their own cash on the line by buying more shares in the company.
Not that it did much good. Shares in Burford did manage to bounce off intra-day 450p lows to 588.5p yet that is still a 48% crash from Tuesday’s £13.81 close.
At their peak last year the stock traded in excess of £20.00 levels.
Numis Securities, one of Burford’s financial advisors, today attempted to prop-up investor confidence, pointing to the firm’s results which have been audited by accountancy firm Ernst & Young and adhere to strict IFRS accounting standards.
‘Burford provides cash-based investment reporting in detail, providing line-by-line investment detail about every litigation finance investment they have ever made,’ Numis’ analysts said on Wednesday.
Burford has promised to give a more detailed rebuttal to the Muddy Waters claims as rapidly as possible.
