This Day On The Street
Continue to site right-arrow
ADVERTISEMENT
This account is pending registration confirmation. Please click on the link within the confirmation email previously sent you to complete registration.
Need a new registration confirmation email? Click here
TheStreet Open House

Investors Should Beware of Citron Research, Plug Power

Stocks in this article: PLUGGACRSCEI

NEW YORK (TheStreet) -- TheStreet's Robert Weinstein produced some of his best work ever Wednesday afternoon in Don't Let Citron Research Sour You on Plug Power.

It prompted me to recall two similar situations I injected myself into back in my Seeking Alpha days. Both provide valuable lessons on not filtering out red flags, particularly as you're entering emotional territory on the volatile stock of the day.

I'll review the aforementioned instances in a minute, but first ...

I have no position on or in Plug Power (PLUG); however, Weinstein's article resonated with me, primarily because it raised red flags investors need to consider with respect to every stock they buy or sell short. And, if you're dealing in smaller names, thinly-traded equities, penny stocks or battleground stocks, you need to not only consider red flags, but seek them out.

You have to scrutinize your original conviction -- what you think you know -- to the point where you aggressively take the other side. For some of us, it's not possible to effectively check ourselves. We cannot remove emotion -- and the damaging investor psychology it can create -- from the equation, so we have no business wading in risky territory.

I know this because back in my trading and investing days (TheStreet's editorial policy prohibits me, a full-time employee, from holding positions in individual stocks other than TheStreet (TST)), I got burned one too many times chasing any and all of the above. I learned -- the hard way -- to just stay away from the battleground and, if a group like Citron was involved, ignore the situation completely.

Of course, the principal at Citron, Andrew Left, wasn't happy with Weinstein's reporting. While I have no opinion on PLUG or the veracity of Citron's research, I do believe we need more people like Weinstein calling out people like Left, holding them accountable and making them answer the difficult questions.

As Robert wrote:

You may not have been aware of that information when Left appeared on Comcast's (CMCSA) CNBC on Tuesday to talk about Plug Power. The network apparently decided it was reasonable to allow Left to state his case without another guest challenging his claims. the result was a turkey shoot.
It's not unusual for the market to quickly brush off a negative Citron Research report and continue higher. I know this from firsthand experience. After shorting falling stocks in the immediate aftermath of negative reports and watching my short reverse back higher too many times, I've learned to remain skeptical about Left's research.

So, of course, Left wasn't happy. Weinstein published information -- that's available to any investor if they know where and take the time to look -- that lays out facts surrounding Left's history and Citron's track record. This data couldn't be more material to the situation surrounding PLUG, a situation triggered by Citron itself.

Left's angry response, which, as I understand it, came with the typical attendant threats doesn't surprise me. I've been there before. And, while the situations aren't necessarily analogous, they speak to one another in real ways. Additionally, they provide the lesson that we should not only scrutinize third-party research groups that take short (and, as Weinstein noted, sometimes long) positions, but we should scrutinize companies themselves.

1 of 3

Select the service that is right for you!

COMPARE ALL SERVICES
Action Alerts PLUS
Try it NOW

Jim Cramer and Stephanie Link actively manage a real portfolio and reveal their money management tactics while giving advanced notice before every trade.

Product Features:
  • $2.5+ million portfolio
  • Large-cap and dividend focus
  • Intraday trade alerts from Cramer
  • Weekly roundups
TheStreet Quant Ratings
Try it NOW
Only $49.95/yr

Access the tool that DOMINATES the Russell 2000 and the S&P 500.

Product Features:
  • Buy, hold, or sell recommendations for over 4,300 stocks
  • Unlimited research reports on your favorite stocks
  • A custom stock screener
  • Upgrade/downgrade alerts
Stocks Under $10
Try it NOW

David Peltier, uncovers low dollar stocks with extraordinary upside potential that are flying under Wall Street's radar.

Product Features:
  • Model portfolio
  • Stocks trading below $10
  • Intraday trade alerts
  • Weekly roundups
Dividend Stock Advisor
Try it NOW

Jim Cramer's protege, David Peltier, identifies the best of breed dividend stocks that will pay a reliable AND significant income stream.

Product Features:
  • Diversified model portfolio of dividend stocks
  • Alerts when market news affect the portfolio
  • Bi-weekly updates with exact steps to take - BUY, HOLD, SELL
Real Money Pro
Try it NOW

All of Real Money, plus 15 more of Wall Street's sharpest minds delivering actionable trading ideas, a comprehensive look at the market, and fundamental and technical analysis.

Product Features:
  • Real Money + Doug Kass Plus 15 more Wall Street Pros
  • Intraday commentary & news
  • Ultra-actionable trading ideas
Options Profits
Try it NOW

Our options trading pros provide daily market commentary and over 100 monthly option trading ideas and strategies to help you become a well-seasoned trader.

Product Features:
  • 100+ monthly options trading ideas
  • Actionable options commentary & news
  • Real-time trading community
  • Options TV
To begin commenting right away, you can log in below using your Disqus, Facebook, Twitter, OpenID or Yahoo login credentials. Alternatively, you can post a comment as a "guest" just by entering an email address. Your use of the commenting tool is subject to multiple terms of service/use and privacy policies - see here for more details.
Submit an article to us!
DOW 17,195.42 +221.11 1.30%
S&P 500 0.00 -2.75 -0.14%
NASDAQ 4,566.1380 +16.9120 0.37%

Brokerage Partners

Rates from Bankrate.com

  • Mortgage
  • Credit Cards
  • Auto

Free Newsletters from TheStreet

My Subscriptions:

After the Bell

Before the Bell

Booyah! Newsletter

Midday Bell

TheStreet Top 10 Stories

Winners & Losers

Register for Newsletters
Top Rated Stocks Top Rated Funds Top Rated ETFs