On Andrew Left, CEO of Citron

Investment Analysis Clubs Saul’s Investing Discussions
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A neat find from Andrew Left’s wikipedia page:

"Left’s first job was with Universal Commodity Corp, a high-pressure commodities brokerage firm that hired salespeople to make cold calls and push “questionable investments.” Left quit in March 1994, after 9 months with the company. When the National Futures Association sanctioned the firm in December 1998, Left, along with every other former employee, was sanctioned for three years along with being required to take an ethics-training course as part of the probe into the firm for making false statements to sell commodity futures contracts. The National Futures Association stated Mr. Left “made false and misleading statements to cheat, defraud or deceive a customer in violation of NFA compliance rules…

…In April 1999, Left became president and CEO of Detour Media. He was named director of the company in November 1999. In 2002, his then employer Detour Media sued Left and prevailed on a $25,000 default judgment against him."

Sounds like the guy of guy where you want to believe every word he says!

Saul

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Sounds like the guy of guy where you want to believe every word he says!

Sounds like he’d fit right in:

“Monday, August 5, 2013…BERTON HOCHFELD, the former Manager of Hochfeld Capital Management, L.L.C.
(“Hochfeld Capital”), was sentenced today in Manhattan federal court to two years in prison in
connection with an investment scheme in which he stole more than $2 million from investors.
HOCHFELD pled guilty in January 2013 to one count of securities fraud and one count of wire fraud
before U.S. District Judge Paul A. Crotty, who also imposed today’s sentence…In addition to his
prison term, HOCHFELD, 66, of Stamford, Connecticut, was sentenced to three years of supervised
release. He was also ordered to forfeit $2,110,535.84.”

Ears

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Sorry Ears, but that’s not much of a find. Bert starts his Seeking Alpha description with it (see below), and we all know it. Andrew Left does no such thing.
Saul

Bert Hochfeld
Bert Hochfeld is a convicted felon and former hedge fund manager. He was convicted of mis-appropriating funds from his hedge fund in 2012.

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Saul, the web site of Citron Research (“About”) has a direct link to the Wikipedia listing of Andrew Left, a link that indeed contains the negative information about Mr. Left’s career:

http://www.citronresearch.com/who-is-citron-research/

ZuZu3

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Here is a recent article on Andrew Left and what he does.

https://www.nytimes.com/2017/06/08/magazine/the-bounty-hunte…
The Bounty Hunter of Wall Street
Andrew Left sniffs out corporate fraud — and gets rich doing it.
BY JESSE BARRONJUNE 8, 2017

It’s unsurprising that short-sellers tend to be aggressive men who are convinced that they see what other people miss and are comfortable with — or addicted to — risk.

For many years that risk was taken on in secret: Short-sellers would make their bets and passively wait for the market to move in their direction. The figure of the activist, who goes public with his positions, emerged into prominence in recent years. One crucial event in Wall Street history provided the foundation. In 2001, James Chanos, a hedge-fund manager, discovered an accounting scandal at Enron, then a little-known energy company in Texas, and shared his information with journalists from Fortune. The journalists got a best seller, Chanos got his money and Jeffrey Skilling, Enron’s chief executive, got 24 years at the Federal Prison Camp in Montgomery, Ala.

Short-sellers of Left’s generation are following this example but cutting out the middleman. You don’t need an office in a flashy building in the Battery, they have realized, or the validation of the press. If you build enough of a reputation, all you need are some Twitter followers and a website. Left has emerged at the forefront of this new guard. Unlike Chanos, who managed billions of dollars of other people’s money, Left invests his own, which exempts him from disclosing his holdings to the public. And now that his work has brought him national attention, he has found that others are willing to make it easier, by leaking documents to him and passing tips. In many cases, Left’s dossiers against his targets are not wholly his own but built using information from a confidential source. He is, in this sense, a bit like a journalist.
.
.
.
The interview concluded.

The tech was looking at Left. “You’re our best guest,” he said. “Our most controversial guest.”

This stuff sells, and definitely makes many people money. I see that CNBC is trying to get Robert Pera on the program to rebut. Everybody wins… Look, they even have me looking at CNBC…
https://twitter.com/JimUpndn/status/909799597618339842
https://twitter.com/ScottWapnerCNBC/status/90985313010338201…
https://twitter.com/ScottWapnerCNBC/status/90985362686840832…
https://twitter.com/ScottWapnerCNBC/status/90985497587395379…

Speaking of CNBC, here are some of Left’s shorts on CNBC:
https://www.cnbc.com/2017/08/10/short-seller-andrew-left-tar… (NVDA)
https://www.cnbc.com/video/2017/07/05/why-tesla-is-short-sel… (TSLA)
https://www.cnbc.com/2017/02/24/citrons-andrew-left-switches… (MBLY)
https://www.cnbc.com/2016/06/13/citrons-andrew-left-is-short… (FB) Left said. “I am not saying Facebook is a bad company (it) just will not be a $330 billion company in a year.”

Search “andrew left site:cnbc.com”

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One short of Left’s that to me seemed very plausible was the DuPont spinoff Chemours (CC). Left claimed that it was designed to go bankrupt with all the chemical hazard liability it inherited from DuPont, allowing DuPont to evade much of the liability. So far, it’s gone up quite a bit since he wrote about it in June, 2016.

That doesn’t mean he’s wrong, but it does point to a big hazard of shorting. I’ve been waiting for Sears and Valeant to die (or at least shrink quite a bit faster and not bounce around so much for so long) since mid-2016.

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Saul,

when you run out of arguments, you start bashing the person. Why focus on the person? Why not focus on the points raised?

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https://www.cnbc.com/2016/06/13/citrons-andrew-left-is-short…… (FB) Left said. “I am not saying Facebook is a bad company (it) just will not be a $330 billion company in a year.”

Nailed it! It was about $425B on 2017/06/13.

-FrickNFool

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when you run out of arguments, you start bashing the person. Why focus on the person? Why not focus on the points raised?

Not Saul. You need to take both it account, the reputation and the argument.

Denny Schlesinger

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when you run out of arguments, you start bashing the person. Why focus on the person? Why not focus on the points raised?

I saw the video. Unfortunately, CNBC had a really difficult time focusing on the points raised, because they kept letting Left change the subject without challenging him.

It is really difficult for me to understand why they didn’t challenge Left to justify how his assertions are reflected in the business and the numbers. They just kept letting him use hyperbole and false equivalencies to justify the fraud accusations.

Nowadays, any loudmouth businessman/jackass can get airtime (and profit from it) as long as his message can bring in enough viewers to make the media company money.

Nevertheless, shorts like this are part of the investing business. We just need to be good enough in our analyses to take advantage of these situations when they arise.

By the way, in addition to Tesla and Nvidia, Intuitive Surgical was attacked by Citron.

http://www.citronresearch.com/citron-updates-intuitive-surgi…

http://www.citronresearch.com/wp-content/uploads/2013/10/Int…

https://finance.yahoo.com/chart/ISRG#eyJib2xsaW5nZXJVcHBlckN…

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Nowadays, any loudmouth businessman/jackass can get airtime (and profit from it) as long as his message can bring in enough viewers to make the media company money.

Yes, it can be true. But I’m 95% sure that Left is a jackass who is full of crap (sorry for the language). But it also means that I can profit. And UBNT can profit. UBNT is buying back shares. I had been watching UBNT slowing dropping over the past weeks. I had no position in UBNT. On Saturday, I decided it was time to buy so I woke up early and bought shares on Monday morning…about 30 minutes the Left report came out. Doh! My timing wasn’t great there. In hindsight, I should have considered that someone might be shorting the stock. Yesterday, after I learned about the new $100M UBNT buyback program, I bought more shares.

What do I expect? I expect the shares to rise back up, probably in the next few weeks. I probably won’t stay in after it rises but up but I will be thanking the jackass after I’ve made my profit.

Chris

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It is really difficult for me to understand why they didn’t challenge Left to justify how his assertions

Andrew shared his notes with Jim Cramer beforehand and Jim looked at it and had nothing to push back. Just to be fair, Cramer did mention one of the board members is reputable, even though he didn’t like the small board and high turnover. On the other hand, Scott posted 4 questions on the twitter to “Robert Pera”, the CEO whom we all entrusted our money, had not answered it either. His only defense is we are buying back shares worth of $100M $$$.

I think the posters here are looking at this situation somewhat incorrectly. Don’t defend the company because you own the stock. Rather be overly critical because you own the stock. What is at stake is your money and you need to make sure it is absolutely in safe hands.

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His only defense is we are buying back shares worth of $100M $$$.

I anticipated this move and thought it was great. Why do you see it as his “only defsense”?

IMO - It was his BEST DFEENSE.

AJ

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Why do you see it as his “only defsense”?

Under normal circumstances, that is a good enough defense. But buybacks are not driving the value. Imagine, if UBNT can hire a reputable, experienced CFO, and increase the board from its current 4 members to regular size of 9, what it can do to UBNT’s reputation, stock price.

If you don’t realize it, currently CEO Pera has very little credibility with institutional investors, analysts, investment firms. You can argue, it doesn’t matter, but as the company size grows it is going to matter.

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I think the posters here are looking at this situation somewhat incorrectly. Don’t defend the company because you own the stock. Rather be overly critical because you own the stock. What is at stake is your money and you need to make sure it is absolutely in safe hands.

Please don’t confuse defending the company with calling out Left for unjustified fraud accusations. Cramer and the other guy let Left entirely control the dialogue and they should have been just a bit more probing and challenging. Perhaps they would have helped find something about which to be critical.

Regarding being critical, I’ll do this when the business strategy or execution slips.

Regarding making sure my money is in safe hands, Ubiquiti is a bit safer for me than it is for the people panicking, because I have been following the company now for a few years and, through my research and the help of the boards, I am pretty confident that the Citron attack is unwarranted. Besides, if all of my money had to be in safe hands, I wouldn’t be on this board trying to find the next great opportunities.

There is one thing I’d like to mention. It’s about the business model. I’ve been working in a sales type role in tech for more than 20 years and have seen first hand how sales people (many of whom remind me of Andrew Left) through bad incentives and greed, can ruin the long term fortunes of a company. Pera’s successful elimination of this layer, to me, is one of the primary reasons I’m investing in Ubiquiti.

Finally, I am really happy that Pera didn’t accept any invitations to respond to CNBC on Twitter. These guys are only looking for a fight and ratings. Pera should stay focused on the business.

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Kingran,
What is at stake is your money and you need to make sure it is absolutely in safe hands.

If that’s your fundamental goal, you shouldn’t be in the stock market at all. You’d be better off burying your money in a hermetically sealed container in some secret place.

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Finally, I am really happy that Pera didn’t accept any invitations to respond to CNBC on Twitter. These guys are only looking for a fight and ratings. Pera should stay focused on the business

And now that they have closed their shorts and gone long it’s quite possible they want to badger Pera into tearing them a new one, and creating an even bigger rebound in price?

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Please don’t confuse defending the company with calling out Left for unjustified fraud accusations

The guy who should be really defending is the CEO and he is not doing that. If you think you are defending the company by calling out Left on this board, you are mistaken. Left gets a much bigger forum and has a much bigger reach and he earned it. You are on the other hand, preaching to the choir.

Citron called out Valeant, literally anyone and every one of hedge fund world, mutual funds, all titans of finance were holding a huge stake in Valeant, meaning the company and its model is supposedly vetted by all of them. All the bankers who financed 10’s of billions for the acquisitions have vetted Valent.

With all due respect, if you think you know the company, its operation and have the ability to determine whether it is a fraud or not and you can determine Andrew is a fraud, you are delusional. Don’t get offended by my words, that is not my intent. I am just trying to drive a point here.

I reached out two of my friends, one is a mid-level manager running QA operations for CISCO, and another runs QA for Oracle database, to understand what kind of resources they would be looking out to do regression testing for the product cadence of UBNT and the numbers they mentioned makes me wonder, about the operations of UBNT. Based on their answers it makes me wonder whether UBNT’s has any operational infrastructure. No wonder their R&D budget is so low.

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If that’s your fundamental goal, you shouldn’t be in the stock market at all. You’d be better off burying your money in a hermetically sealed container in some secret place.

I disagree. When you drive, you know you could potentially get into an accident. And my fundamental goal is to be safe, drive safe and avoid accidents as much as possible. When you see the car next to you is making lot of erratic movements and the driver seems to be “intoxicated” and doesn’t have a good control of the vehicle, you don’t apply the logic of “well accidents are part of driving” and continue to drive along that vehicle, rather you avoid that vehicle.

Thanks for your suggestion but that is the worst piece of suggestion anyone can make.

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I sent an email to this law firm to see if they could provide any further information. Has anyone else ever done such a thing (contacted a law firm about their investigation following a public short attack)?

http://www.businesswire.com/news/home/20170920006209/en/Ubiq…

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