This Day On The Street
Continue to site
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

Investors Should Beware of Citron Research, Plug Power

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 - Get Report); 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.

Must Read: Oil's Uncertain Future

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

Check Out Our Best Services for Investors

Action Alerts PLUS

Portfolio Manager Jim Cramer and Director of Research Jack Mohr reveal their investment tactics while giving advanced notice before every trade.

Product Features:
  • $2.5+ million portfolio
  • Large-cap and dividend focus
  • Intraday trade alerts from Cramer
Quant Ratings

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
Stocks Under $10

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

Product Features:
  • Model portfolio
  • Stocks trading below $10
  • Intraday trade alerts
14-Days Free
Only $9.95
14-Days Free
Dividend Stock Advisor

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
  • Updates with exact steps to take - BUY, HOLD, SELL
Trifecta Stocks

Every recommendation goes through 3 layers of intense scrutiny—quantitative, fundamental and technical analysis—to maximize profit potential and minimize risk.

Product Features:
  • Model Portfolio
  • Intra Day Trade alerts
  • Access to Quant Ratings
Options Profits

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

Product Features:
  • Actionable options commentary and news
  • Real-time trading community
SYM TRADE IT LAST %CHG
SCEI $0.05 0.00%
GACR $0.00 0.00%
PLUG $1.76 0.00%
AAPL $113.29 0.00%
FB $91.01 0.00%

Markets

Chart of I:DJI
DOW 16,643.01 -11.76 -0.07%
S&P 500 1,988.87 +1.21 0.06%
NASDAQ 4,828.3250 +15.6170 0.32%

Free Reports

Top Rated Stocks Top Rated Funds Top Rated ETFs