(Alliance News) - Muddy Waters Capital LLC claimed Friday that the response of its short-selling target Burford Capital PLC to the critical report of the US research house "strongly indicates" the AIM-listed firm was being "deceptive".
Shares in Burford were 4.8% lower at 838.28 pence in London on Friday. The stock is down almost 40% in the past two weeks.
Last Wednesday, litigation finance firm Burford was targeted by short-seller Muddy Waters for being "a poor business masquerading as a great one" and describing the firm as "arguably insolvent" and delivering "heavily manipulated" figures. The report had sent the shares sharply lower.
Subsequently, Muddy Waters hired a third-party behavioural analysis firm - QVerity - to probe the response to the report delivered by Burford on Thursday last week.
On Friday, Muddy Waters announced the investigation by QVerity "strongly indicates" that the Burford management was "deceptive in their written and verbal responses to our initial report".
In particular, the QVerity report repeatedly indicates Burford exhibited "aggression, evasion and persuasion" in its response to six key issues raised by the Muddy Waters report, it said. These include the supposed manipulation of key performance metrics, its purported heavy reliance on just four cases for financial performance and assertion that Burford is "arguably insolvent" amid "risky" liquidity.
Muddy Waters statement on Friday morning comes after Burford announced plans on Thursday to seek a secondary US listing for its shares, as well as the demotion of its finance head amid criticism that she is the wife of the Burford chief executive.
Burford Capital (BUR)