Shares in Burford Capital fell some 20% yesterday following rumours that short sellers will target the company.
The company, involved in litigation finance and risk management, said it “believes that yesterday’s share price movement relates to a rumour of a potential ‘short attack’ or ‘bear raid’, a tactic where short sellers take on a short position in a company’s stock and then engage in claims about the company in an effort to alarm investors, depress a company’s stock and profit from the decline.”
“Burford also believes that some of its prior recent share price volatility is related to such activity.
“There is a clear line between appropriate commentary and market manipulation, and Burford is investigating, with the assistance of market experts and experienced outside litigation counsel, the market activities here and will take appropriate legal action should we discover actionable misconduct.
“We are strongly suspicious that yesterday’s significant fall in the share price was based on such actionable misconduct.
“Short sellers of this ilk are not long-term investors. Rather, their goal is to panic investors into selling their holdings and thereby to drive down the share price. If investors oblige them, then the attack succeeds, long-term investors are harmed and the short sellers pocket a quick payday.”