Left's Citron hedge fund posts 43 pct gain in first year

Grand Canyon Education

06/01/2020 23:55

By Svea Herbst-Bayliss
    BOSTON, Jan 6 (Reuters) - Andrew Left, who has long targeted
companies that he thinks are over-valued through his work at
Citron Research, told investors on Monday that his new hedge
fund returned 43% after fees in 2019, its first year in
business.
    Left also made a prediction that home furnishing company RH,
one of his winners last year, may make a tempting takeover
target for someone.
    "In 2019, our first full year of operation, Citron Capital,
LP ("Fund") generated a gross return of 56.4% and net return of
43.3%," Left wrote in the letter seen by Reuters.
    While the fund bet that certain stocks would climb, Left
also bet that certain ones would drop, writing "the Fund's
average exposure during 2019 was 75.8% long and 80.3% short."
    Left said that winners on the long side included Bausch
Health  BHC.TO , RH  RH.N , and Snap  SNAP.N  and on the short
side included Ligand Pharmaceuticals  LGND.O , Jumia
Technologies  4JMAy.F , and Grand Canyon Education  LOPE.O .  
    After investing only his own wealth for roughly two decades,
Left in 2018 began laying the groundwork for Citron Capital, his
hedge fund. By raising outside capital, Left has more firepower
to go after some of the biggest U.S. companies.  urn:newsml:reuters.com:*:nL2N1X91AR
    Citron has not disclosed the size of its hedge fund.
    For this year, Left said RH, whose stock price closed at
$212.77 on Monday, may be bought. "We believe the company has
matured to a point that we might see it acquired in 2020."
    He also said he is sticking by his bet that shares in
Peloton Interactive, whose stock closed at $29.75 on Monday,
will fall. "Citron put a one-year price target of $5 and we
stand by it as $5 makes this still a $1.5 billion company."
    Neither RH nor Peloton responded immediately to emails 
seeking comment.
    Left also gave investors lessons that he learned last year;
reminding himself and others to stay away from what he calls
"big story 'cult stock'" companies and sticking with what he
does best: exposing fraud.
    He also said that this year will be a year of growth and
that he is looking to expand beyond his home base in Los
Angeles.
    

 (Reporting by Svea Herbst-Bayliss with additional reporting by
Lawrence Delevingne; editing by Richard Pullin)
 ((svea.herbst@thomsonreuters.com; +617 856 4331; Reuters
Messaging: svea.herbst.thomsonreuters.com@reuters.net))