Citron Capital, led by Citron Reserch's Andrew Left, released their first investor letter today, covering the first half of 2019. The fund says that despite gross returns of 36.6% and net returns of 24.7%, "it has been an extraordinarily challenging environment to be a short seller."
In the letter, they say they are "betting against frauds" in the IPO market and single out Jumia Technologies, a name that Citron has publicly called a "fraud" several times over. They also say they bet on Revolve, which the letter says has a "disruptive business model" - and they say they traded around a position in Beyond Meat:
We were able to find opportunities in the IPO market betting against frauds (e.g., Jumia Technologies) and betting on disruptive business models (e.g., Revolve). While Citron can’t justify Beyond Meat’s (BYND) absurd valuation, we cannot ignore unfavorable technical dynamics (e.g., tight float and high borrow cost). We were able to capitalize on trading around our position in Beyond Meat, which was another top contributor to fund performance during 1H 2019.
The fund said that Wayfair was its biggest loser for the first half of the year and that it remains short the name. Unlike other letters, Citron's does not talk much macro at all:
Unlike many fund managers who use their investor letters as an opportunity to opine on the macro environment, the managers of Citron would like to reassure our investors that our focus remains on finding and trading around asymmetric opportunities on both the long and short side with processes and insights that have been developed over the past 20 years.
You can read the entire letter here: