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Short Seller Gotham Says Burford Is ‘Inappropriately’ Financed

  • Litigation assets shouldn’t be financed with debt, Gotham says
  • Gotham shorted Burford last year, has no position currently
Updated on

Short seller Gotham City Research LLC said Burford Capital Ltd. isn’t being financed appropriately because of the risks associated with litigation assets, in the wake of a recent report by Muddy Waters.

“We think Burford is inappropriately financed,” Gotham founder Daniel Yu said in an emailed statement. “Litigation assets -- whose associated cash flows’ size and timing are notoriously unpredictable -- should not be financed with debt. This poses a real risk of an eventual asset/liability mismatch nightmare.”