A warning from litigation funding firm Burford Capital (BUR:AIM) that profit for 2019 would be lower than the previous year didn’t trouble investors who bid up the shares 2.9% to 672.5p on the news. The profit setback was caused by the timing of realised and unrealised gains.

The market instead focused on positive factors such as a 24% year-on-year increase in new commitments to $1.6bn. Commitments to its core litigation finance business rose 30% to $854m while the asset recovery business attracted $89m, an increase of 43% on the previous year. The post-settlement financing business saw even stronger inflows with $299m of commitments, up 78% on 2018.

Investments in cases came to $1.1bn, with cash proceeds up 23% to $997m which led to cash on the balance sheet of $192m compared with $171m in June of last year. Meanwhile investment losses were the lowest on record at less than $6m.

Burford’s shares have fallen almost two thirds in value over the last year as the company became a target for US short-seller Muddy Waters, which accused it of misrepresenting its returns, as well as criticisms over the state of its overall business.

Muddy Waters also claimed the AIM-quoted funder was ‘arguably insolvent’ with a ‘high risk of having a liquidity crunch’. Despite a series of detailed rebuttals as well as an overhaul of its management team, the shares are back to the lows of August when Muddy Waters launched its attack.

Disclaimer: The author Ian Conway owns shares in Burford Capital

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