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.”