Short-seller Carson Block attacked Burford Capital on Wednesday, spurring investors to halve the British litigation financier's stock price, wiping $1.5 b...
Block, who also runs the hedge fund Muddy Waters Capital, flagged five key concerns about Burford in its report.
2) Burford"actively misleads investors about how its accounting for realized gains works," Muddy Waters said. Burford earns investment income from a mix of net realized gains and fair-value movements, but the vast majority of investors aren't aware net realized gains include previously recognized fair-value movements, the shortseller said.
4) Burford is at"high risk of financial stress" and"arguably insolvent," Muddy Waters said. The shortseller estimates its"real" invested capital to be around $880 million and its funded debt balance to be about $638 million, giving it a cushion of roughly $242 million. However, it pegs Burford's off-balance sheet commitments at $602 million, putting it about $360 million in the red, the firm said.
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