Anders Melin Jan 30, 2021 – 6.07am https://www.afr.com/markets/equity-...s-short-selling-for-long-bets-20210130-p56y0a The bounty hunter of Wall Street has finally met his match. Andrew Left, who’s taken on everything from drug companies to Chinese real estate firms, said his Citron Research will no longer publish short selling research, ending the firm’s two-decade run as one of Wall Street’s best-known contrarians. Citron will instead focus on what may seem like the only logical move in a world of ever-rising equity markets and low interest rates: long bets. “Twenty years ago I started Citron with the intention of protecting the individual against Wall Street -- against the frauds and the stock promotions,” Left said in a video posted on YouTube. Since then, he added, the research shop lost its focus: “We’ve actually become the establishment.“ Citron’s long bets more than doubled on average last year, Left said. And so starting with a report this Monday, the firm plans to roll out ideas for companies that “can use the support of a whole new generation of shareholders that have an appetite to buy stocks,” Left said. “It’s a sign of how brutal and difficult it is,” said Marc Cohodes, who says he’s known the Citron founder for 20 years. “People who are bad would love nothing more than for the short community not to exist. You could go through fraud after fraud after fraud because there’s nobody there to put you out of business.“ Industry veterans expect others to follow Left’s lead and stop publishing reports on their targets. Those who remain may have to tweak their approach. “I hope he continues to use his gift to root out market abuse,” said Fahmi Quadir, founder of New York hedge fund Safkhet Capital, which doesn’t publicly publish its research reports. “I wish him the best in his new plans.“ Left, 50, didn’t respond to requests for comment. The Friday video didn’t specify whether he would stop shorting stock altogether. Boiler rooms Born in Detroit and raised by a mother who worked as an office manager and door-to-door salesman, Left studied political science at Northeastern University in Boston. He entered the world of finance in the early 1990s, as it was teeming with boiler rooms peddling obscure stocks over the phone to anyone who’d buy them. Left eventually started betting against stocks being pumped by brokerage firms, and published his research in easily distilled blog posts. He started Citron Resarch -- initially called StockLemons.com -- around 2001. The firm has published reports on dozens of companies, but its most prominent win was Valeant Pharmaceuticals, which Left called the “pharmaceutical Enron”. The Justice Department, which subsequently indicted two executives, gave Left an implicit nod in a release, saying “investor websites” helped reveal suspect aspects of the business. Citron, based in Los Angeles, also published reports on companies that haven’t panned out as well, like airplane parts manufacturer TransDigm and payments-card company FleetCor Technologies. “He has been a plus any way you slice it,” Cohodes said. “I like him and he’s very good at what he does. It’s just impossible to short stocks right now.“ Detached prices Left made the same point in his 2020 letter to investors. In the prior year, Citron steered clear of Tesla and other stocks whose prices had become “detached from any underlying financial metrics”, he wrote, as the market had become “increasingly dependent on psychology and less about business“. On January 19., Citron tweeted that GameStop, whose shares were nearing $US40 apiece after doubling in a few days’ time, would quickly half in price, triggering an avalanche of criticism from day traders set on proving the short sellers wrong. Citron later had to suspend a scheduled live stream to explain the call, saying there were “too many people hacking” its Twitter account. “I’ve never seen such an exchange of ideas of people so angry about someone joining the other side of a trade,” Left said in a video he later posted. On Wednesday, he said the research firm covered the majority of the GameStop short in “the $US90′s at a loss of 100 per cent”. Shares of GameStop surged 50.3 per cent to $US291.01 at 2.04pm in New York on Friday local time. The stock rebounded after several brokers including Robinhood Markets and Charles Schwab imposed trading restrictions on the stock earlier this week. This year’s surge has helped inflict damage at some of the world’s most prominent hedge funds, most notably Gabe Plotkin’s Melvin Capital, which required a cash infusion from billionaires Steve Cohen and Ken Griffin. Left on Friday still offered a word of caution to traders piling into GameStop: “If you choose to buy GameStop here, it’s caveat emptor.“ Bloomberg
Boomers no longer control the market,’ says 16yo Reddit trader Aleks VickovichWealth editor Jan 29, 2021 – 6.30pm https://www.afr.com/wealth/investin...et-gen-z-aussie-reddit-trader-20210129-p56xsz A Melbourne high school student and active member of the notorious WallStreetBets social media forum has lashed Robinhood’s decision to restrict trading activity by its customers, but experts say Australia’s market integrity rules would prevent it ever coming to that. Dan Tadmore, 16, joined the Reddit forum WallStreetBets in April last year, shortly after Victorian Premier Daniel Andrews brought forward school holidays amid the escalating pandemic. Dan Tadmore is a 16 year old year 11 student at an elite private school and has been a member of the notorious Wallstreetbets Reddit forum for 9 months. “Boomers no longer control the market,′ he says. Louis Trerise While indulging his newfound passion for investing his pocket money in the sharemarket, and enjoying a distraction from his hectic Year 10 study and sporting schedule at an elite private school, Mr Tadmore also inadvertently became an eyewitness to the plotting of a “short squeeze” that this week boiled over from the sub-reddit and shook global financial markets. That now-infamous attack by day traders sparked a 700 per cent rally in US stocks such as GameSpot, parent company of Australian electronics retailer EB Games. It wrongfooted institutional investors, culminating in a $US2.75 billion ($3.6 billion) rescue package for hedge fund Melvin Capital. Reddit founder Alexis Ohanian, visiting Australia with tennis superstar wife Serena Williams ahead of the Australian Open, said the influence of social media communities over the market was the “new normal”. With GameSpot rallying to dizzy new heights before correcting by 44 per cent in Thursday’s US trade, many of these Millennial traders made a lot of real money. Mr Tadmore cites a sub-reddit peer who claims to have invested $50,000 in a so-called YOLO [you only live once] trade that earned him a windfall of more than $9 million. Despite his front row seat to the burgeoning Reddit “short squeeze” — aimed at exposing institutional investors heavily short-selling certain stocks — Mr Tadmore himself held GameSpot stock for just one month, selling his 200-odd shares in December for $15 a pop and earning him a minor loss. He believed the enthusiastic plans of his fellow Redditors were simply too far-fetched. transferring the funds into Amazon stock on the basis it was a safer long-term bet. In hindsight the sell-off was a “stupid mistake”, he said, while adding: “Oh well, I’m young. I have time.” Australian-born US share trading platform Stake estimated nearly 4000 of its customers traded GameStop shares over the past two months, with volumes growing fivefold in January spurred on by the Reddit cheerleaders. Sixty-eight per cent of them were under the age of 34. Stake itself came under fire on social media after a technical glitch blocked customers from accessing the platform during throughout the fevered Thursday trading session in the US. A Stake spokeswoman rejected suggestions the popular fintech was intentionally restricting customers from trading, claiming instead that its infrastructure had become temporarily overloaded. “Customers are currently able to place trades on all stocks on Stake,” she said. But the restoration did little to appease angry Stake customers. “You guys have a lot to answer for,” one tweeted. “I’m never trusting your platform again. We are paying customers and none of us could sell or buy on your platform for the most important day.“ Another threatened: “I think a Class Action Lawsuit is on the way.“ John Winters, founder of online broker Superhero, sometimes described as “Australia’s Robinhood” watched the week’s events from the sidelines, given his platform’s restriction to ASX-listed shares. He said Superhero experienced relatively normal, albeit heightened, trading conditions, other than a bizarre rally in West Australian miner GME Resources, which investors mistakenly backed due to it sharing a ticker code with the New York Stock Exchange-listed GameSpot. Put in Robinhood’s position, Mr Winters said he’s “not sure what he would do” but would likely resist any attempt to restrict buying by customers. “That would create an uneven market.” he said. His hunch, however, was that the relatively more hawkish Australian regulator and market operator would intervene before this week’s chaotic scenes on the US bourse became remotely possible. “There are market integrity rules here,” he said. “While the US does have some circuit breakers the ASX is onto it straightaway.” Evidence of that came on Friday as GME Resources requested a trading halt after the ASX’s surveillance group detected “abnormal trading”. The Australian market’s relatively minnowish size and rules governing short-selling also render a Reddit-induced squeeze attack less likely, despite local hedge funds being on high alert. “There may be companies that you may wish to short but you’d never be able to because you have to borrow the stock in order to short it,” he said. “Short positions are reported to ASIC, it is a highly regulated activity.” Nonetheless, RMIT University academic Angel Zhong said a repeat of the GameSpot incident locally may not be impossible. “The saga has alarmed the short-sellers in Australia who may face a battle from retail investors,” Dr Zhong said. “There could be a price surge in the most shorted Australian stocks such as WebJet, A2 Milk, and Flight Centre.”
Of course... All of a sudden he is one of the good guys. We should all kiss his feet for holding unethical CEOs to the fire. Lol, what a hypocrite. He got his ass handed to him and lost a fortune. Potentially most of his company's assets, and needs to sell a bogus story of redemption. All this guy tries is to get his name off the front page of the wsj Don't make me laugh
Citron is a front organized by short hedge funds...they often attack perfectly health companies for their handlers
Without leverage? even on options? I don't think so. There are many changes regulators can implement. Like a minimum required for accounts, or age minimum... zero leverage on penny stocks... We retailers might lose some of the access that was granted over the last decade.
There's so many scams nowadays that they don't have to fake anything. And everything goes up, every losing retailer is worth $100 bln and every random delivery service is a trillion dollar company.