Andrew Left, the activity short seller at the helm of Citron Research, will no longer produce short selling reports into suspected fraudulent or overvalued firms, shortly after receiving online abuse including death threats for his public short position in GameStock.
A recent report by Citron Research criticising GameStop’s business model and questioning its ability to survive the twin pressures of the pandemic lockdown and digitisation of the gaming industry was picked up by Reddit forum WallStreetBet, which is home to 4.5 million retail investors.
The sub-Reddit's constituents pooled their resources to buy GameStop and contributed to creating a short squeeze, while also taking to social media to hurl abuse and death threats at Left and Citron employees, eventually forcing the FBI to get involved.
The vigilante retail investors succeeded in sending GameStock’s share price into orbit and causing cost-to-borrow prices to spike several times higher than the common threshold for a ‘hot stock’.
Citron and Melvin Capital, another prominent short seller, were among those forced to cover their positions, enduring heavy losses in the process.
Explaining the decision to stop releasing short research in a YouTube video, Left says when he began publishing his research 20 years ago, the aim was to act as a counterweight to “the establishment”, but now he says his firm has “become the establishment”.
Left argues that during the first 15 years, Citron “uncovered more fraud than any non-governmental agency out there and helped bring down the drugs pricing in this country, against the better interest of the hedge funds, and we are proud of the work we have done”.
However, now he says, “it’s completely lost its focus,” and as such “the Citron narrative is going to change and have a pivot”.
Citron will now focus on its long position recommendations that offer health returns potential while also having “strong management teams, ethical business practices, business models that are forward-thinking and socially conscious,” Left continues.
Left says his first report as part of his new direction will be released on Monday, suggesting Citron can put its experience “to add some sanity and, most of all, some kindness back in this market”.
Left briefly alluded to the ongoing GameStop saga, saying: “if you choose to buy GameStop here it’s caveat emptor [a Latin term meaning ‘let the buyer beware’] you know what we think about their business model, it’s on you, too much has already been written.”
Following the video’s release, WallStreetBets forum thread titled ‘We did it boys!’ has garnered hundreds of comments in its first hour, with many GameStop investors reading Citron’s decision as proof their campaign to rattle Wall Street is working, and encouraging fellow activists to resist selling and banking profits.
