The recent New York Times profile on Andrew Left (@CitronResearch) is fascinating and worthy of a solid read. There are a ton of little nuggets in there even if, in some cases, it begs certain follow-up questions. The comments following the article are equally interesting, many of them decrying the author for pitching Left as this savior of the little man without any regard whatsoever for who might be affected by a stock decline of the sort suffered by Valeant Pharmaceuticals ($VRX)(spoiler alert: lots of Moms and Pops...but also a lot of hedge funds who checked into the "hedge fund hotel").
A few things left us curious:
1. Track Record. The article notes that Left has a positive track record. But unlike Jim Chanos, another reputed short seller, Left needn't disclose his holdings and manages his own money. So how does the author KNOW this? He backs up the statement with this: "On average, the value of companies he writes about drop 10 percent in a year, and some drop as much as 95 percent." Well, on average, how many of Left's investments does he actually write about? Isn't the denominator there important?
2. Abstract References. Why not more detail behind the referenced jewelry chain masquerading as a subprime lender? Presumably this is Signet Jewelers ($SIG)(which has now sold its financing business)? Wouldn't it make sense to highlight a business that caters to that demographic?
3. Lacking Disclosures. Left's observation that companies don't disclose information for a reason is interesting. With negative free cash flow and increasing heaps of debt AND no transparency behind viewership of original content, Netflix ($NFLX) comes to mind. If the numbers were bananas, they'd presumably justify the high content costs, yeah? We'd think that, as a basic matter, any analyst trying to understand the billions spent on such content would want to know what some of the metrics are there. Similarly, Apple ($AAPL) doesn't line-item Apple Watch sales; instead, it embeds those sales in a catchall line-item of "Services." That, too, should give some cause for concern (though Mary Meeker says 25% of Americans now own wearables).