Why I Disagree w/ Citron Research’s Main Short Strategy
By: Andrew Kamal
Tags: Money, Stocks, Investing, Technology, Stock Market

Recently, Citron Research reiterated their short selling position on $PTON. They were wrong on $PTON previously, doubled down in April, and then they were still wrong. I’m not really into $PTON that much as I don’t know much about the exercise bike market.

Andrew Left also just shortened $LAZR as well. Both $PTON and $LAZR have surged in prices.

To an extent I actually do agree w/ Andrew Left on one of the recent things he said. If you were to go by revenues, the price of $LAZR is too high. Infact, I see how it is unwarranted. However, you must keep in mind that the market doesn’t go by the same traditional rules that it used to. The 21st century really introduced to us the concept of brand equity value.

Many stocks can easily be shortened by the traditionalist investment model. However, the traditionalist model isn’t innovative enough. This model doesn’t take into account intellectual property and other things that go beyond the balance sheet.

This is why when you seen Citron Research and other companies shorten Tesla in 2013, or other analyst in 2010 basically insinuating Tesla will crash, you should have ran. The Tesla shorts have got burnt for almost an entire decade if you really think about it.

This is also why for companies like $NNOX which I believe are new and innovative, shortening it wouldn’t make much sense. Many of the extra long investors on Nanox are looking at the factory announcements, looking at the TAM they can address, looking at the thousands of machines already up for pre or intent orders, looking at the IP portfolio, and even other catalysts. When you do the math, I think it can easily come out as undervalued.

Getting Nanox out of the way, this isn’t just another example of what I think short sellers will be wrong about. I think the current investment philosophy many of these firms are doing are wrong. Some of the more traditional or well respected activist investors like Bill Ackman don’t seem to be falling into the same trap (at least to an extent). However, when you look at research firms it is usually another whole story.

Many research firms try to go out of their way to look at a very constrained echochamber when it comes to investing. This is what prevents them from really being long on innovative or disruptive companies early on. When activist shorts went against specifically MLM or Ponzi companies, accounting scams, etc., many of them shined. However, instead of following that same model, they decided to go all out against high growth technology companies.

They only took into account a very limited view on what they considered a fair market value, occasionally jumped into large assumptions, and usually don’t look into demand surges or IP as much as they should. This is when many of the activist short firms started losing their way.

I do engage in research related to the sensory tech and medical device industry. However, I hold no relations to Nanox Imaging or working with Nanox Imaging. My only current conflict of interest is being long on its stock.

Disclosure: Please keep in mind, everything I say is on an opinion based basis. This is not meant to be taken seriously or as actionable financial advice. Do your own due diligence and any trades/investments you do is at your own risk. We are not responsible, proceed with caution and we are trying to voice an opinion not meant to warrant action. This is solely meant to be viewed as a non actionable opinion not meant to be taken as seriously or as a form of actionable advice.