Burford Capital Share Discussion Threads

[edmondj] 11/8/2019 20:17

Blah blah,

"Any regulated entity that provides research cannot trade ahead of that research being published, ie front run it."

I'm not convinced that exists already given the small prints that refer to 'may hold positions in the above securities' and e.g. in some cases a few days' required delay between dealing and publication.

More vitally it would not be in the interests of market efficiency given it's impossible to assert what exactly constitutes 'research'. Some fund managers publish monthly newsletters explaining their rationale for dealings esp in principal holdings; and a tough-minded compliance officer/adviser could say that given rule changes it would be better henceforth to say nothing at all.

[edmondj] 11/8/2019 20:10

sk2,

If my short case was principally - quite as Gotham are suggesting today - financial investment company shares should and cannot in the long run, sustain market values at multiples of NAV, then yes it would be fair to close a BUR short in a market price range say 400p to 600p, this being below 'fair value' opinion.

But MW has cast the 'insolvent' aspersion, implying the accounts are a house of cards waiting to collapse. In which case equity value is zero.

It quite reminds me of shorting Eidos a good many years ago now, when hedge funds used to ring up hacks claiming the stock value was zero - knowing this was likely to get coverage - although Eidos ended up acquired in 2009 for 32p a share with shrewd hedge funds long closed-out .

[blah blah] 11/8/2019 20:07

Edmond, you are wrong in my view in the order of which events should be allowed to happen. Any regulated entity that provides research cannot trade ahead of that research being published, ie front run it. Short sellers and others tell their friends and clients to get on board then publish - they therefore have an incentive to throw as much mud at the company as they can find to create fear, uncertainty and doubt. There is very little the target can do other than shut the stable door after the horse has bolted.

I have no problem with shorting, I do have a problem with shorters if they use scare tactics to manipulate markets for their own financial advantage. Spare me the cobblers about helping society - no-one is accusing BUR of being frauds, the argument now seems to be how it should be valued, which is exactly the same argument buyers and sellers have every day on every stock.

[mad foetus] 11/8/2019 20:01

Sorry, link to BP case https://www.dentons.com/en/~/media/0b104b0d28354ca184a69c5fe5c97acf.ashx

[mad foetus] 11/8/2019 20:01

Key point now is that it is in BURs handsThe issue is not about shorting but whether MW believed their statements at the time they made them and actions speak louder than words. Situs wise I'm on the phone but as BUR is listed in London the case should be within U.K. jurisdiction regardless of where MW are based. If anyone is interested the Ontario court were quite happy to hear misrep claims against BP iro Ontario residents who bought shares on TSXI'm actually quite excited, this could turn out to be massive

[sweet karolina2] 11/8/2019 19:59

EdJ

You believe a share is undervalued. You buy it. You tell everyone you can about it. The shareprice goes through what you thought it was worth, but not what it could ultimately be worth. You sell most of it to take profit while keeping a bit in for the future. Have you done anything wrong?

Has MW done anything wrong doing the same thing in reverse with its short?

I expect MW increased its short position again on Fri ready for a Mon release of round 2.

[edmondj] 11/8/2019 19:55

There's little fundamentally wrong with taking a stock position and publishing arguments why, or indeed accusing a company of insolvency if an investigation can marshal evidence. The ethical/regulatory issue is promptly doing the opposite of what you've argued publicly - i.e. here, MW not following through by reasonably sustaining its position, instead it's very swiftly closed the majority of its short and by doing so has at least trashed its 'arguably insolvent' claim.

Quite the same as The Mirror City Slickers scandal, on the bull tack; but anyway, where are those tipsters now? Once sussed, they had no credibility to continue, and MW risks same for its future bear raids.

[luckymouse] 11/8/2019 19:46

They prob have fantastic litigation insurance! Would be great if they got nailed & the insurer found a loophole lol

[luckymouse] 11/8/2019 19:41

SK - tks - agree little can be done under the current regime. Just saying that when the papers got real nasty & carried away the law changed to reign them in - & quite rightly. Same prob needs to happen here - just an observation.

[mad foetus] 11/8/2019 19:39

Cross examination:"On Wednesday morning you published a paper which described BUR as arguably insolvent. You repeated those allegations on Bloomberg on Wednesday afternoon""Yes""And did you buy or sell any shares in BUR on the Tuesday or Wednesday""Yes, I bought around £30m of shares""You bought shares? At the same time as making and repeating allegations that the company was insolvent""Arguably insolvent""Indeed. But at the time you bought shares did you believe that it was insolvent""I was managing my risk""I see. So either you were buying shares in a company that you thought was insolvent or you were publishing information which you knew to be false. Or are you in the habit of investing tens of millions of pounds in a company that you think is insolvent?"I wasn't a tort lawyer but I think MW look bang to rights for both negligent misstatement and deceit. Definitions here: https://www.inbrief.co.uk/offences/fraud/On Wednesday morning they should have said that they had intended to issue a report on a company but due to a change in circumstances had changed their mind. Instead they doubled down and, if the media reports that they largely closed their shorts on Wednesday are correct, issued statements where they were reckless as to the truth of them and intended for those statements to be relied on by others. Often the difficulty is proving that you intend for others to act on the statement. Putting them on Twitter and making them freely available however weakens that defence. It will be interesting to see what insurance MW has, but there is a chance that this case could be as big as Petersen. That would be amusing

[sweet karolina2] 11/8/2019 19:24

sapper,

The business of the main stream media is to sell "news" to the masses. Does anyone care about accounting issues, no of course not. What sells papers / internet subscriptions is scandal and people who put themselves on pedestals getting knocked off them. How do you think potential clients of BUR will view reading the stories about how corrupt BUR, regardless of how accurate it is, week after week?

LM,

BUR are not looking at trying a libel line, because under Obama's speech law it would have to be tried in US under US law, which is strongly on the side of the defendant (MW)

[blah blah] 11/8/2019 19:19

These shorters don't even talk to management, they look at sets of accounts or whatever documents they can, interpret them as they see fit and then make all sorts of accusations in an attempt to smear the company. If they are wrong, it is too late, they have already tainted the company - in the BUR case I think MW confused two different cases and completely got the wrong end of the stick. Where is their apology for that?

The shorters say there is no point talking to the company because they will just lie. Well if the shorters are so clever then surely they will be able to see through those lies? Or is it the case that they just want to create an impression, and make an impact, and letting the truth get in the way won't help their cause? I hope BUR is the start of a more level playing field here because shorters who publish one-sided, unsubstantiated reports are hurting market confidence generally.

[sogoesit] 11/8/2019 18:58

"The way to end a nightmare is to wake up from it not perpetuate it."

Apparently the stock market frightens some folks.
The answer is to leave it to the adults.
Dont try to touch risk you cannot handle.

[sapper2476] 11/8/2019 18:52

SK. The general public won’t give a toss and anyway it is a judges decision. The average person is more interested in paying the mortgage and who is on love island. This will run with BUR for quite a while I believe. It’s what they do.

[urbanvoltage] 11/8/2019 18:52

Turning to the Petersen case (Argentine Republic v Petersen Energia Inversora) whose permission appeal was denied by the United States Supreme Court last month, and in which Burford initially made a “very small” USD 20 million commitment that may eventually return USD 1 billion, Bogart quips he would be “quite happy to do five Petersens this year and nothing else”, which theoretically would take its commitments to less than USD 100 million.

Principally, Burford’s decision to sell off 10% of its entitlement in Petersen for USD 100 million shortly after the Supreme Court announcement was simply a matter of prudent portfolio management, he notes. “As the value of Petersen continues to rise, it becomes a larger portion of our overall portfolio, and just like a fund manager would start to trim a position, we too don’t want to be overshadowed by Petersen, if you will.”

[stoxx67] 11/8/2019 18:34

No, MW should not be allowed to walk away full stop, never mind with dignity. they need to be nailed to the rafters to show anyone that attempts to mess in future how they will be dealt with and what the end result will be.

doesn't matter how long it takes, Burford are the aggrieved party, as are its shareholders, therefore MW need to be held accountable and made to pay for the damage they have caused, hopefully ending in the deconstruction of Muddy Waters Capital and a massive amount in damages paid to Burford (well its shareholders)

[sapper2476] 11/8/2019 18:32

I think you are very blinkered SK. I think over the coming weeks you will see a market manipulation case against MW incoming.