Pitbull Trading's  Instablog

It is now apparent that Andrew Left and the short sellers at Citron Research have risked their well-known reputation on their continued attack on Harbin Electric. It has been made clear throughout SEC filings, the buyout financing by China Development Bank and other regulatory statutes have been (to date) satisfied. The only thing investors are waiting on is a definitive proxy statement and a date for the vote in favor of the management led buyout, including CEO Tianfu Yang and Abax Capital, as well as other insiders. 

The past successes of Citron Research have possibly led to a high-level of hubris and shoddy detective work. Many of the accusations are supported by innuendo, guilt-by-association, and selective fact checking. The latest attempt at a 'hit job' came today and the stock was punished severely (being down 19% intraday). As the investors had time to read through Mr. Left's sloppy hit job, the stock ended up recovering and finished the day up nearly 5%. 

It obviously helped that Harbins' CEO Yang came out and stated a very clear rebuttal of Citron's accusations, saying, "a patchwork of fabricated evidence, falsehoods, selective use of information, and clearly biased and dishonest reporting, showing that the authors' only intention is to drive our stock price down. We are aware that there are over 7 million shares of short interest outstanding as publicly reported. We condemn this attempt to further hurt our shareholders and want to reassure them, once again, that we stand by the accuracy of all our filings with the Securities and Exchange Commission ("SEC"),".

I understand not being able to change your opinions and 'sticking to your guns', but according to this Bloomberg article, the owner of Citron research (Andrew Left) was, "disciplined by the National Futures Association for accusations in 1995 that he “cheated, defrauded and deceived commodity futures customers,” according to the association’s website."

"Let he who has not sinned cast the first stones" 

Mr. Left would do well to remember that sacred script. He is doing what most Americans would consider unethical and shady. Printing half-truths and poorly thought out 'gumshoe detective work' on his website without any clear evidence of any legal wrong doing. This is all while he has a devout horde of short-seller subscribers that are short Harbin Electric. (His firms' track record on Chinese stocks up to date is commendable).

This is another blatant case of manipulating the psychology of the crowd who simply copy trades without due diligence. A poop-and-scoop, if you will, rather than a pump-and-dump. It appears to most who have watched this circus that Citron Research has decided to roll the dice of its long-term credibility on the outcome of this buyout. The reporting work and facts presented are all but concrete and clearly based on innuendo and misleading information. It is a shame that what started out as a seemingly helpful researcher to investors, now appears to be nothing more than another greedy short-selling outfit all about the cash, not the truth.