Thursday, February 2, 2017

How the Hell Did Bloomberg Do An Article On Andrew Left's Latest Short Target And Not Mention His NVIDIA and Tesla Short Fails?

Back on March 1, 2016 Citron's Mr. Left announced his Tesla short
The stock had closed the day before, Feb. 29, at $191.93 and after Left's announcement closed at $186.35.

It ended 2016 at $213.69, rather higher than the $100 target and $27.34 (14.67%) higher than the March 1 close.
Currently at $250.50 with no comment from the short seller.

On December 28, 2016 Mr. Left announced he was short NVIDIA.
The stock had closed at $117.32 on the 27th and closed at $109.25 after Citron tweeted.
NVDA is currently at $113.63 with earnings one week away and again no comment out of Mr. Left, crickets.

Two days before Citron announced the short we had said "lighten up" (not short) the stock we had been pitching long since $30 at $116.49. And after Left's tweet on the 28th we noted:

...Regarding Mr. Left and Citron, he was probably seeing the same thing we, and Investor's Business Daily and just about anyone else paying attention were seeing.

And calling for a short he's playing a dangerous little game. Here are a couple prior posts to get at what I'm trying to say:
Dec. 19  Is Short-Seller Muddy Waters Losing Its Mojo?
...Block told Bloomberg‘s Lisa Pham:
“I’m always a fan of shorting total frauds and Hong Kong has its share so it will always be a place for us,” Block said, commenting generally about listed companies in the city. “The trading volumes generally aren’t that good and I think there are a lot of stock manipulations in Hong Kong and that’s a function of the volumes being poor.”
Unfortunately, Muddy Waters’ recent track record is not good....MORE
At least he's talking the right stuff. In a bull market the only place to risk a short is in the questionable companies whereas in a bear going after the valuation shorts can also give you an acceptable risk/reward....
Anyhoo, here's the latest, from Bloomberg: 

The Short Seller Who Crushed Valeant Has Picked His Next Target
  • The short seller who took down Valeant bets against TransDigm
  • TransDigm’s Howley is among the best-paid CEOs in America
Andrew Left sure knows how to pick a fight.

A little more than a year after his improbable takedown of Wall Street darling Valeant Pharmaceuticals, the blustery short seller is at it again. And the head of Citron Research is using the same blueprint as he sets his sights on TransDigm and its founder and Chief Executive Officer Nicholas Howley.

To hear Left tell it, TransDigm is another Valeant waiting to happen. He alleges the same price-gouging and debt-fueled financial engineering to explain how the aircraft-parts supplier delivered Valeant-like stock returns exceeding 1,500 percent in the past decade -- and made Howley one of America’s best-paid executives. In the past five years alone, he took home $278 million. At Boeing, a company 30 times the size, CEO pay was less than half that.

“There’s a thin line between brilliant and being crazy,” Left told Bloomberg. “While it works, you’re brilliant, but when it fails, you’re irresponsible.”

The accusations rankled long-time investors and were met by howls on Wall Street for being inflammatory, flawed or inaccurate. Greg Rufus, who was TransDigm’s CFO for 15 years and was one of the chief architects of its growth, also strongly disputed Left’s assertions. Both Howley and the Cleveland-based company declined repeated requests for comment.

“If the guy was here, I’d read him the riot act,” said Rufus, who retired in September. “This company is nothing like Valeant.”

Still, some aren’t taking any chances. Since Citron published its report on Jan. 20, shares of TransDigm have slumped 13 percent, prompting it to delay a loan refinancing deal. And as President Donald Trump squeezes defense contractors like Lockheed Martin and Boeing, Left foresees an even bigger comedown....MORE

HT: Mr. Keohane at Alphaville's Further Reading post.

See also NVIDIA: How Have Citron Research's Previous Tweets Affected Their Targets? (NVDA; TSLA)
And 2014's Questions America Wants Answered: "Do Valuation Shorts Work Better Than Fraud Shorts?"

A Quick Victory Lap (and some wisdom from Warren Buffett) NVDA
Today's Fun Fact: "Nvidia Short Sellers Lost Roughly $4.4 Billion Last Year" (NVDA)

Short Selling Prerequisite: Empathy (and Charlie Munger quotes)
Short Selling and The Information Embedded In The Cost To Borrow Stock (TSLA)
Whitney Tilson On T2 Partners’ Netflix Short, Shorting Skills In General

We know this one pretty well: