Morning folks,

Burford news keeps rumbling on.

At the same time, there are a lot of interesting macro stories at present. And there's also some small-cap news to look at (which is supposed to be my topic, after all!). 

Stories covered today:




Burford Capital (LON:BUR)

  • Share price: 748.5p (-12%)
  • No. of shares: 219 million
  • Market cap: £1,635 million

Evidence of market manipulation in Burford shares

There are softer stock market targets than a group of litigators, but that is exactly who Muddy Waters decided to pick a fight with. So far, Muddy Waters is winning.

In today's RNS, Burford claims that there is evidence of illegal market manipulation of its stock.

I don't know if that is true or not, but I do know a little bit about market mechanics. Burford explains to us today what "spoofing" and "layering" are, and says:

Spoofing and layering are both illegal and have resulted in criminal convictions in the past.  As an example, layering led to the 2010 "flash crash" when the Dow Jones Industrial Average fell 600 points in five minutes; the perpetrator was found guilty of fraud.

There are a few things I might say about that.

Firstly, the "Flash Crash" was indeed a disorderly event but I can't agree that it was all bad: it was a terrific buying opportunity for fundamental investors, for example. I remember reading about a fund manager who literally sprinted across his building to place his buy orders in the market as quickly as possible. For every seller, there was a buyer. Those who were focused on value did very well out of it, as they should!

Therefore, at the risk of repeating what I have already said about the short attack at Burford, let me highlight that Muddy Waters did not force anybody to sell their Burford shares.

Indeed, those who believe that Burford shares are worth £20 should be pleased that MW has created an opportunity to buy them for £7.50.

But lots of people don't think this way: they…

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