Corporate raider speaks out on targeting UK firms

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A US investor who sparked a collapse in the share price of a London-listed firm has defended his role to the BBC, admitting he is financially motivated.

Carson Block has criticised the accounting methods of Burford Capital, a litigation funder, which insists his comments are “without merit”.

It is a blow to high-profile stockpicker Neil Woodford, whose suspended fund owns 7% of Burford.

Mr Block said he had targeted companies in which Mr Woodford has a stake.

Mr Block’s Muddy Waters is known as a short-seller – in other words, taking bets on companies in the expectation that the shares will go down.

Muddy Waters’ critique of Burford Capital led to a 66% fall of its share price at one point on Wednesday. That followed an earlier slide on Tuesday, prompted by rumours that a “bear raid” or attack by a short-seller was coming.

Mr Block told BBC Radio 4’s Today programme: “For your listeners who might not know, I’ll let them in on the secret.

“Short-sellers do definitely look for where Neil Woodford is invested, especially when he’s invested outside of large cap value. He’s got a great track record in large cap value, he’s not had a great track record in life science and some of these smaller cap stocks, so there’s always the temptation to go looking where he’s been invested.”

But that was not the main motivation in targeting Burford, he said.

“I can’t remember the first time we heard of Burford,” he added. “It’s stock that has attracted the attention of smart money investors for a while, saying, it seems too good to be true, there’s a lot of red flags.”

He admitted that he was financially motivated – and that everyone else was too.

“Of course we have a financial motive and they have a financial motive. Everybody who’s doing this has a financial motive,” he said.

“Every investor who makes a ‘buy’, ‘sell’, ‘hold’ decision has a financial motive. It’s kind of funny that everybody always thinks, ‘Well, we need to impugn the integrity of the critic, just because he’s financially motivated, but these other people over here, they must be angels.’ They are not.”

He added: “I’ve been doing this nine years and I’ve certainly made my share of enemies. I’ve had a number of controversial calls and look, I’m still here doing this.

“It’s not an easy job, because you know the people on the other side have far more resources than you do and they are going to use everything they can to discredit you.”