LONDON (ShareCast) - (Sharecast News) - Burford Capital said it was considering buying back shares after a damning report by US research firm Muddy Waters sent its stock price tumbling this week.
Burford shares tanked after Muddy Waters, which was founded by notorious short-seller Carson Block, accused the company of "egregiously misrepresenting" its returns and the "state of its overall business". In a note on Wednesday, the research firm said Burford was "a perfect storm for an accounting fiasco", with "laughter-inducing" governance strictures.

But Burford hit back again on Thursday, labelling the report "false and misleading" and insisting that its financial reporting is "transparent" and "appropriate" and has been consistent for many years.

The company had already said on Wednesday that it its chief executive and chief investment officers were planning to snap up some shares once its response to the research had been published. It went a step further in its latest statement, saying the board is also considering buying back its own shares, "given the potential investment return the shares represent at their current price".

In the statement, Burford set out a detailed rebuttal of the Muddy Waters report as it insisted it was solvent, generates strong cash flow and has good access to expansion capital.

"The suggestion that Burford is 'arguably insolvent' is baseless. Presumably, the reason 'arguably' is inserted is because Muddy Waters knows they would lose a lawsuit if they accused Burford of insolvency, and they know they can't support such a claim," it said.

The company also went on to say that it has a low debt level, a strong cash position and robust governance.

"Short attacks such as this are a fundamental menace to an orderly market and to the value inherent in long-term investing in companies such as Burford that are revolutionising industries," it said. "Burford is well equipped to investigate and pursue market manipulators, and as stewards of investor capital, we are exploring doing so here, cognisant of the substantial losses our investors have suffered. Our early investigation already shows the hallmarks of market manipulation."

At 1350 BST, the shares were up 40% at 846p.

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