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Don't Let Citron Research Sour You on Plug Power


Angie's List has fallen since, but it's obvious that the initial reaction was a knee-jerk shakeout of weak hands. There are other examples, and as a full-time trader I witness most of them. Citron rightfully made a name for itself exposing Chinese frauds but its record with American stocks isn't as impressive.

For instance, Tesla Motors (TSLA). On July 30, 2013, the electric-car manufacturer was trading near $136 when Citron announced a short position on the stock. Initially shares dropped, falling almost $10. Yet two days later, the shares had fully recovered and Citron was underwater in its short position.

About a week later, on Aug. 8, Citron announced it added to its short position at a time when shares were about $157, $21 higher than the entry announcement. Once again the shares fell, but by Aug. 23 the shares moved above $160.

Defending its position, Citron Research stated:

"So when Tesla floated its secondary in May at $92/share, Musk was giving a sign. At that price, he thought he was being ambitious to raise over $3 billion at that price per share."

Compare that to Citron's comments on Plug Power on Tuesday:

"The company sold another $22.4 million worth of stock at 15% discount to prior day closing price ($5.75). Even Marsh himself could not ever dream this stock would ever get over $5."

Citron Research makes a point to advise readers that Plug Power's CEO Andrew Marsh wouldn't even buy shares at 15 cents, and management didn't participate in any of the capital raises. However, while perhaps technically correct, it's disingenuous to omit Marsh's purchases shortly after the last two capital raises. Marsh bought over $45,000 worth of stock in two transactions during 2013 according to SEC filings.

Insiders and institutions own over 30% of the shares, a significant percentage considering how many funds won't own stocks under $5, and the company doesn't pay a dividend.

According to Citron Research, the only people claiming these stocks can go higher are the CEOs. Over a dozen investment funds think otherwise.

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