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Pitbull Trading
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Strongly believe in Nassim Taleb's theories. Have a strong focus on the market psychology and behavioral finance aspect of equity trading. Prefer longer term trades for best risk/reward profiles. Still believe Buy & Hold strategies can be relevant in the current market.
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  • Citron Research Going 'All In' on Short of Harbin Electric (HRBN) 7 comments
    Aug 4, 2011 12:56 PM | about stocks: HRBN

    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.

    Disclosure: I have no positions in any stocks mentioned, and no plans to initiate any positions within the next 72 hours.
    Stocks: HRBN
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Comments (7)
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  • johnz
    , contributor
    Comments (270) | Send Message
    GEO is also all over it.


    9 Sep 2011, 03:22 AM Reply Like
  • alexcampbello
    , contributor
    Comments (278) | Send Message
    Two more proxy advisers back Harbin Electric CEO's buyout offer 10/18 08:00 AM




    * Says Glass Lewis & Co and Egan-Jones Proxy Services recommend deal


    Oct 18 (Reuters) - Chinese electric motor maker Harbin Electric said two more proxy advisers have asked its shareholders to vote in favor of the $754 million go-private offer by its chief executive.


    Glass Lewis & Co and Egan-Jones Proxy Services have advised shareholders to vote "for" the deal, Harbin said in a statement.


    On Monday, Harbin got support for the deal from proxy adviser Institutional Shareholder Services (ISS).


    Harbin CEO Tianfu Yang, along with private equity firm Abax Global Capital, had made the $24 per share offer to take Harbin private last October.


    The company has been a target of short-seller Citron Research, which has been raising questions about the deal and past activities of CEO Yang.


    A meeting of Harbin Electric shareholders to consider and vote upon the proposal to adopt the offer will be held on October 29.


    Harbin's shares closed at $22.44 on Monday on Nasdaq. (Reporting by Divya Sharma in Bangalore;Editing by Supriya Kurane)
    18 Oct 2011, 08:03 AM Reply Like
  • Andrew Shapiro
    , contributor
    Comments (2186) | Send Message
    Shareholder vote is not the issue. Of course proxy advisors are going advise shareholders vote to sell and get $24/share cash. If deal doesn't get funded the stock is going to get crushed. The issue is whether in fact banks and funding sources are really going to come up with the millions to pay to actually close this deal. The clock is ticking and we will all know quite soon.
    20 Oct 2011, 08:56 PM Reply Like
  • Pitbull Trading
    , contributor
    Comments (124) | Send Message
    Author’s reply » Deal Will close 3 days after the vote is approved. This was the hardest fought short battle I have ever seen, with Andrew Left and others refusing to back down, and HRBN's management defending themselves and shareholders vigorously.


    Just goes to prove that being unable to admit you might be wrong, no matter how strong your supporting thesis, is akin to hubris, and will get you money burned up.
    24 Oct 2011, 02:05 PM Reply Like
  • Andrew Shapiro
    , contributor
    Comments (2186) | Send Message
    Deal will close only when/and if funding sources actually fund. That may be 3 days after vote is approved or it may not. I note the large option premium that existed on the calls has now compressed.
    24 Oct 2011, 02:51 PM Reply Like
  • Pitbull Trading
    , contributor
    Comments (124) | Send Message
    Author’s reply » Just going by what IR has told me, and my experience from the CSR going private deal.


    I have no reason to doubt what Mrs. Christy Shue of Harbin has told me so far, as she has been very open, honest and helpful.
    24 Oct 2011, 02:54 PM Reply Like
  • alexcampbello
    , contributor
    Comments (278) | Send Message
    Approximately 90.7% of the Company's total outstanding shares of common stock voted in person or by proxy at the Special Meeting of Shareholders held earlier today in New York City. The Merger Agreement was approved by approximately 90.6% of the outstanding shares of Harbin Electric common stock and approximately 84.2% of total unaffiliated shares of Harbin Electric, satisfying the majority of unaffiliated stockholders voting requirement set forth in the Merger Agreement. Approximately 0.1% of the outstanding shares of Harbin Electric common stock were voted against the approval of the Merger Agreement.


    The Company currently anticipates closing the transaction in the following week. Under the terms of the Merger Agreement, Harbin Electric shareholders are entitled to receive $24.00 in cash for each share of Harbin Electric common stock that they hold, without interest and less any applicable withholding taxes. Letters of transmittal allowing Harbin Electric shareholders of record to deliver their shares to the paying agent in exchange for payment of the merger consideration will be mailed within two business days of the effective date of the merger. Shareholders who hold shares through a bank or broker will not have to take any action to have their shares converted into cash, as such conversions will be handled by the bank or broker.
    29 Oct 2011, 02:32 PM Reply Like
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