Quite frankly it’s been difficult just to keep up, let alone work out who to believe, even with a running commentary on Twitter and across the media from all and sundry. Both parties have, it seems, reported each other to the Financial Conduct Authority. Looking at Burford’s share price, investors remain as spooked this week as they were last week – as are bondholders; market manipulation does not explain why Burford’s listed retail bonds fell and continue to trade well below par (although Bearbull’s analysis might).
And that points us back towards a far more simple truth – which is that had investors been able to get satisfactory answers to the concerns that had been mounting over Burford’s figures and its governance (which have still not been addressed), the short attack would have failed. Add in a whole load of accounting and market jargon we have since faced and the story remains an utterly impenetrable swamp of grey areas, and best avoided.
Burford aside, I’d go as far as saying the whole financial services industry (and it is not unique in this respect) is built – to varying degrees – on the kind of complexity and jargon that has led to this situation. That’s not because it is necessary, but because the smoke and mirrors it creates help keep outsiders in check, making it seem like a mystical world that can only be navigated by its high priests. I am often left scratching my head trying to understand why so many investors continue to accept high charges, or directors’ and fund managers’ egregious salaries, often for abject failure. I am increasingly sure jargon is at least partly responsible.
That said, there is no getting around the fact that to successfully invest in individual companies you need a good working knowledge of accounts. That’s why we’re starting a series this week to get to grips with key accounting concepts investors should know about (page 33). Or why Phil Oakley examines how even what seem like the most straightforward companies might not be as good as their published figures suggest. Both written in plain English of course.
