Muddy Waters: Shortsellers are targeting Neil Woodford investments after Burford Capital
The head of Muddy Waters has warned that shortsellers are attacking Neil Woodford investments a day after he shorted Burford Capital, burning almost £1.8bn off the value of the company.
“Shortsellers do definitely look for where Neil Woodford is invested, especially when he’s invested outside of large cap value,” said Carson Block.
Read more: Burford Capital left reeling as shortseller takes aim at business
“He’s not had a great track record in life science and some of these smaller cap stocks so there’s always the temptation to go looking where he’s been invested,” Block told Radio 4’s Today Programme.
Muddy Waters published a scathing report on Burford Capital yesterday morning, which described the litigation funder as “a poor business masquerading as a great one”.
The report criticised the accounting practices used by Burford to value its litigation cases, which it says it is “aggressively marking”.
Burford has said it “believes that the report’s criticisms are without merit” and that it would issue a more detailed response to what it called the “short attack report” as “soon as practicable”.
Woodford is a significant investor in Burford Capital – his funds collectively own just under seven per cent of the company.
In this morning’s interview, Block also hit back at those who had questioned Muddy Waters’ motivations for launching the short attack.
Asked about his financial motivation in shorting the stock, Carson Block said “Of course we have a financial motive and they [Burford] have a financial motive. Everybody who’s doing this has a financial motive.”
“It’s kind of funny that everybody always thinks ‘well we need to impugn the integrity of the critics just because he’s financially motivated but these other people over here they must be angels’. They are not,” he said.
Burford’s shares were down 46 per cent at yesterday’s close, having already fallen 20 per cent on Tuesday following a tweet from Muddy Waters that said it would be announcing its new short position.
Read more: Shortseller Muddy Waters savages Burford Capital shares
Collectively, these drops have wiped almost £1.8bn off the value of the Aim-listed litigation finance company.
Shares in Burford were down just over five per cent to 574p by lunchtime.
Main image credit: Getty