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Small cap movers: Burford Capital sinks into the Muddy Waters after short attack

A look back at some of the more interesting stories from the junior market this week

Burford Capital Limited - Small cap movers: Burford Capital sinks into the Muddy Waters after short attack
Burford's shares have been sucked into a quagmire, losing around 40% of their value

As bad weeks on AIM go, you’d struggle to find a worse story than Burford Capital Limited (LON:BUR), which saw its shares crash after a scathing attack from US short-seller Muddy Waters.

The hedge fund had on Wednesday confirmed a “new short position” against the AIM 100 litigation funding outfit, while simultaneously accusing the firm of “Enron-esque” accounting and “egregiously misrepresenting” its returns.

Not wanting to take the comments lying down, Burford responded on Thursday by branding Muddy’s report “false and misleading” in a rebuttal which it said exposed the hedge fund’s factual inaccuracies, analytical errors and “fallacious insinuations”.

While the fightback did help the shares recover somewhat, it wasn’t enough to hold back the tide as the stock plummeted 43% in the week to 804.5p.

The incident will also be humbling for Burford, which until recently was AIM’s biggest company.

Over the week the AIM All-Share was down 3.8% at 886, while the FTSE 100 fell 2% to 7,261.5.

Meanwhile, Zimbabwe-focused investment group Cambria Africa PLC (LON:CMB) was having its own argument, albeit of a legal nature, with the country’s banks as it confirmed it had served summons to the Bankers Association of Zimbabwe to seek $100 million in damages relating to “anti-competitive practices” against its PayNet banking platform.

The company said that if its actions were unsuccessful it would need to “significantly downsize” its presence in the country, a fact that seemed to send a chill through investors as the shares fell 24% to 0.5p.

Oiler Petro Matad Limited (LON:MATD) found itself on the slide, dropping 13% to 6.9p after it ran into trouble with a provincial government in Mongolia over its Heron-1 prospect in the country.

Another hefty faller in the junior market was pilot training systems provider Pennant International Group PLC (LON:PEN), which tumbled 32% to 55.5p after contract delays led to issue a profit warning for its current year.

Financials were causing a headache for Frontier Smart Technologies Group Ltd (LON:FST) after $450,000 in advisory fees relating to several takeover approaches put a dent in its bottom line. The shares sank 13% to 27.5p.

Brexit was looming over the small caps as recruiter RTC Group PLC (LON:RTC), which fell 10% in the week to 51.5p after unveiling that its subsidiary had been hit by uncertainties surrounding the UK’s future relationship with the EU.

Volga Gas PLC (LON:VGAS) shares were also deflated, down 26% at 36p, after a three- day maintenance shutdown and lower output from its Vostochno-Makarovskoye gas field cut its average daily production in July by 21%.

Among the risers, there was positive news for easyHotel PLC (LON:EZH), which soared 33% to 94p after it accepted a 95p per share takeover offer from a consortium including ICAMAP Investments, one of its major shareholders.

Over in the miners, Goldplat PLC (LON:GDP) was brighter after the firm managed to break even in its second-half following a cost-cutting programme and the mothballing of its Kilimapesa gold mine in Kenya. The shares surged 31% in the week to 3.8p.

Fellow gold player Anglo Asian Mining PLC (LON:AAZ) was up 7% at 137.5p as exploration activity at its projects in Azerbaijan delivered what it said were “very positive results”.

Resource investor Armadale Capital PLC (LON:ACP) also managed to advance 6% to 1.4p after “exceptionally high purity” results from test-work at its Mahenge Liandu graphite project in Tanzania.

Rounding off the sector’s gainers was Griffin Mining Limited (LON:GFM), which bounced 15% to 91p as it secured approval from the Chinese government for its Caijiaying mine after six years of waiting.

Elsewhere, brownfield developer Inland Homes PLC (LON:INL) was lifted 4.2% to 69p as it received planning consent for its development site at Cheshunt Lakeside in Hertfordshire.

Restructuring plans brought some freshness to shares in Modern Water PLC (LON:MWG) during the week, which floated 23% higher to 2p.

Finally, screening services group ClearStar Inc (LON:CLSU) managed to close out July on a record footing after monthly sales of its Medical Information Services topped $1 million for the first time, sending the shares 17% higher to 61.5p.

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