First, let me preface this article by saying Citron is extremely transparent with their picks, motives and agenda. They do not mince words and they go about their research in a very serious, albeit full of shit, manner.
The Godly folks over at iBankCoin took a looksy under the hood of the Citron Research automobile and found a lemon (pun intended!). We audited their results, going back over a two year time frame (aka the only time frame that is relevant for a professional investor) and matched suggested short sale prices with current quotes. Before I discuss the results, it’s very important that you understand the mantra of Citron. They are not looking for swing trades, at least not according to their long drawn out publications. They are alleging fraud, on a fucking grand scale. The type of shit that sends people to prison to wash underwear and catch ice picks in the neck. These guys highlight companies that are not only cooking the books (in their opinion), but fucking deep frying them in gasoline.
So, at a very minimum, being the well followed and respected source for short sale ideas that they are, I expected to see monster winners. Total wipe-outs, if I might be so bold.
Here are the results.
Had you invested 10k every time Citron put out a report, over a two year time frame, your net loss would be a touch over 31%. Let me put this in layman’s terms for you: if this guy, or guys, were working for me and lost 31% for my investors, over a two year time frame, I’d slap him, or them, in the face with a hot slice of pizza, kick ‘em down a flight of stairs lined with mustard, then toss down severance packages (a bag of bricks). I am sure they did wonderful when the market was shitting the bed, in 2008-09. But who gives a shit? I’ve been banging out gains since LTCM went bust.
It gets better.
Within the herd of short sellers, Citron has great sway over the pack. They are viewed as an organization with a voice—real go-getters, speaking on behalf of Joe Public, out to get those fucking rittle [sic] Chinese fuckers with funny accents. When Citron issues a report, the stock drops. As a matter of fact, despite the abysmal longer term track record (which is elegantly laid out for all to see), on the day they issued reports, the targeted companies stock prices dropped more than 90% of the time. Basically, trading ahead of a Citron report is equal to minting your own money, bullet proof. On the other hand, and I am not being cynical, Citron reports serve as excellent discount mechanisms for serious, longer term, longs. Essentially, betting against these fuckers is like having your very own gold mine in your backyard.
Remember kids, it’s easy to accuse a company of being a fraud, but very hard to prove. However, I think it’s fair to say that I’ve proven, without a question, that Citron isn’t very good at what they do.
Grains of salt.