just watching it now
They are laughing it all the way to the bank.
Why people believe this type of sensationalist drivel is mindblowing. Here it is straight from the citron website disclaimer…and I believe this is the most important thing to keep in mind :
“Citron Research makes no representations, and specifically disclaims all warranties, express, implied, or statutory, regarding the accuracy, timeliness, or completeness of any material contained in this site.”
“Citron Research does not guarantee in any way that it is providing all of the information that may be available. We recommend that you do your own due diligence before buying or selling any security.”
They are short, they create some hype, they cash in. Not much more to it than that. If they can create any dip, day trading algorithms kick in causing short term disruption.
Scammers gonna scam.
I just watched the facial and eye movements of the presenter with the sound turned off. I would not buy a used car from this guy. Nothing scientific, simple body language. OTOH maybe he is just nervous.
No position in UBNT.
Thanks for posting upndn.
Left makes a good case for investing in Ubiquiti if you ask me. Of course, he points out Front Row and picks on it, but we’ve discussed that here.
It is somewhat disconcerting as we see in the stock price today, but this is a buying opportunity for me. Nothing in his report is new. UBNT must be a fraud because it is crushing its competitors in terms of profitability metrics??? That doesn’t jive with me. They’ve had outside accountants reviewing their books since they were defrauded and still use them today to a degree.
The business is run differently and, therefore, may make it an easy short target. But again, there is nothing new here. Left is simply saying this story is too good to be true. UBNT is not a house of cards. Who knows what will happen to the share price, but I certainly won’t be selling right now.
In fact, I’d like to see where the stock heads over the next days and weeks and even though I already own too much, I’ll probably be buying more. I wouldn’t be surprised if Pera decides to retire more stock too.
Pera’s response on twitter so far;
“I just put my head down and let the products and numbers speak for themselves.
My apologies to those affected by these clowns.”
And true to form, Left will be on CNBC Halftime report at 12 eastern
to pump his short or former short position…
UBNT is a Rule Breaker, Left sounds like an idiot in most of his points in the video. Many of his reasons that UBNT is “a total fraud” are some of the very reasons that UBNT is a rule breaker company.
(heads off to buy some November UBNT call options)
For anyone who can’t view youtube at the moment for whatever reason, here’s the written version.
Their 7 red flags.
At the end they mention how Pera’s option to buy the Grizzlies expires next month, and he will need to raise $200 million in order to do this. Driving down the stock price would hurt Pera if he does need to raise that much from his shares in UBNT.
I haven’t dug into this in-depth, but I think they have misinterpreted the option regarding the Grizzlies.
My suspicion is that the recent sell of a bit >1,000,000 shares by Pera was all that he needed for the upcoming deadline in October regarding buying out some of the other owners of the Grizzlies…which I mentioned on the Rule Breakers UBNT board.
Gotta say, the Citron video/report jolted me awake lots faster than a cup o’ coffee. The video didn’t hit any particular chords and didn’t cause me much concern. However, the written report discussed UBNT’s distributors and office location. The photos were disconcerting. Is there something going on here that warrants deeper examination? Of course. The claims should be readily and easily disproved. It bothered me that UBNT did not disprove those particular bits of weirdness immediately. In the fullness of time…
It may be a completely different deal, but I still smart from the Citron report on AMBA 2 years ago. Merit or not, I didn’t enjoy the ride. Sold half my UBNT this morning.
I sold cash covered short term puts. If they are exercised, I buy UBNT at a bargain price. If they expire, I’ve made a handsome return in under a month. Sounds like a win-win. BTW, I rarely trade options, but this one seemed too good to pass up.
Much as I take investing very seriously and put a lot of time and effort into the endeavor, I swear LUCK often plays a significant role. For example, earlier in the month, I posted I had sold my UBNT position for a nice profit (#31289). I intended to buy back those shares at a discount. Well, they’re now available for a significant discount, but I’m gonna sit on the sidelines and wait for clarifying information to arrive. The financial transactions between UBNT and its foreign distributors leave me with my antennae perked up.
I remember the Citron attack on VRX and recall that sinking feeling as Left ripped through the Valeant story. I still have the remains of my sizeable Valeant holding in my portfolio as a reminder. I watched the UBNT video at the youtube link provided above and it seems that, at worst, Andrew Left is mocking the company, its CEO and the content in the latest presentation report. I’m not worried and have bought a little more UBNT
Andrew Left isn’t always correct, but I think some of his accusations are worth taking very seriously. (I think he was dead right about Valeant.)
Definitely warrants a deeper examination. However, just reading (haven’t seen the video, just the written form) this makes me groan. There’s no effort in the arguments. Compare this to Bert’s deepdives. There’s barely any substance to these arguments and yet they give such an incredible reaction on the market!
Red Flag #1
The use of the word ‘misunderstood’ by Pera during a conference call. Citron states this is corporate fraud. What?!?!
Their operating margin is far superior compared with their competitors. Therefore, fraud.
We’ve been over this many times, and this is one of their strengths. They don’t need to invest in a marketing team. Their gross margins are average. But they run a tight ship, hence the higher operating margins.
“Frauds often claim some “operational advantage” over competitors to justify their outsized margins. This was common in the 2011 Chinese RTO scandals.”
He’s highlighting the evangelical community. He can’t believe people, out of the kindness of their heart, post on forums to help other people. The community is either made up BS or run by robots.
Ironic how we’re posting on a public forum ourselves right|?
Compares it to Apple, with a big fanatical fanbase. I have to say this is apples/oranges. UBNT products are still quite geeky and technical. In my experience, the internet is incredible in getting people to share knowledge out of the kindness of their heart. It’s probably one of the coolest realisations of the internet when you think about it - people help each other out for nothing in return.
Batna/Anteny 24 (Poland)
Ubiquiti’s sales to Batna are not disclosed in the 10-K, but Batna is constantly a top three accounts receivable distributor for UBNT.
This leads Citron to believe Batna/Anteny24 is one of Ubiquiti’s largest customers.
Batna/Anteny24 appears to be run out of a tent in the back of a house. Thanks to Google earth, Citron was able to provide this due diligence without having to go to Poland.
Well maybe this is worth looking at, however it’s such a pathetic argument. A google-earth photo shows a marquee infront of the HQ of one of their distributors. Maybe there is something there, but surely citron could’ve done a deeper dive into this and showed us something more concrete than this? Perhaps someone can look into this company for us for our own benefit?
I hate defending oneself after being attacked by a half-baked, suggestive argument. Such a cheap form of manipulation.
He’s wondering why domestic cash is flat whilst international cash is growing.
At some point also mentions no CFO, which leads to
High corporate turnover
Despite claiming to be the most efficient operator in its space, UBNT has more corporate turnover than Citron has ever seen in a public company
Well. Is this true? Has there been more people in/out the door than any other company that Citron has seen? Possibly. A lot of allegations here, but I suppose the #1 come back is that UBNT’s financials are audited by KPMG. One of the big four accounting firms. Pera went with KPMG after the scandals from a couple years ago with fraud. There’s always a possibility that they’re fooling KPMG.
#7 Corporate Culture
Again, the 2015 fraud where UBNT lost 40 odd million dollars. Well documented. Not hidden. This was when Pera took back control of his ship.
Also notes how Yu-Cheng is being charged with insider trading ahead of earnings in 2016. Yu-cheng was in charge of Taiwan operations from 2011-2015.
Nothing really here, but he does have a point about corporate culture. Ubiquiti doesn’t really have a good record of people sticking around with a great record of integrity. With conference calls and earnings reports, the integrity of management is absolutely essential.
UBNT’s HQ in san jose is now empty, therefore fraud. Ok, great. Their site says HQ is New York.
And Morgan Stanley drops coverage. We already know UBNT generally doesn’t appeal to wall street.
At Q2 2017, there were 5 analysts
At Q4 2017, there were 4 (yup, no Morgan Stanley)
Good to see Woo Jin Ho of Bloomberg still there after Pera in Q3 told him to do his homework.
Pera owns 70% of UBNT. If you were committing fraud, wouldn’t you slowly cash out? Heck, even if you weren’t committing fraud, wouldn’t you cash out some of that? Normal practice is to not put all your eggs in one basket. You have to be incredibly sure of yourself otherwise.
FWIW, I finally sold my crto (down 3% today although down 15% this past month) and nibbled on more UBNT (down 8%). Couldn’t help myself.
Pera offers to do an interview with Scott Wapner on CNBC
if Scott will do enough research to understand Ubiquiti’s products.
Here’s my naïve take: We were all wondering how Ubiquiti could have lost the entire 25% they gained on their extraordinary results and guidance. Well, evidently Citron and friends have been selling short and pushing the price down. They have fully established their short. But now they have a problem: How can they close out their position without the price rising too fast? They come out with this short report, which scares out a good number of longs and lures in a bunch of retail shorts. There’s enormous volume of people selling, and Citron buys every share they can get at under yesterday’s close. Then the price returns to normal after a week or so, and Citron is long gone, off to attack some other company.
As I said, just my naïve take.
Scammers gonna scam.
Citron has a well earned reputation and they have made mostly successful short calls. Taking a standard legal disclaimer as a basis shows your lack of understanding.
That doesn’t jive with me.
I haven’t read the report. I just saw CNBC interview of Andrew.
- Just because some questions were raised earlier doesn’t mean they are suddenly not valid
- The company’s margin is nowhere near that of any of its competitors.
- The company has no CFO, CTO, no one running the operations. And the company has best operational metric, far better than any of its competitors. I know an external agency is contracted for CFO services, still.
- A small board, with high turnover