Citron Fund is managed by Andrew Left, who runs Citron Research
In its annual investor letter for 2019, Citron Capital said it generated a gross return of 56.4% and net return of 43.3% in its first full year of operation. Additionally, the fund named RH (RH) as its top long idea for 2020 and Peloton (PTON) as its top short idea.
FIRST FULL YEAR OF OPERATION: Citron Capital said in its annual investor letter that it generated a gross return of 56.4% and net return of 43.3% in its first full year of operation. The fund noted that its top winners on the long side included Bausch Health (BHC), RH and Snap (SNAP), and on the short side included Ligand Pharmaceuticals (LGND), Jumia Technologies (JMIA), and Grand Canyon Education (LOPE).
TOP PICKS FOR 2020: In the letter, Citron Capital also named RH as a top long idea for 2020 with a price target of $300, and Peloton as a top short idea with a price target of $5.
"RH is the only luxury platform with no competition, a tremendous moat, a brand that is loved by millennials, and a business that has yet to go international, and most importantly the most desirable buildings in almost every major U.S. city. If tomorrow we applied the Tiffany & Co [TIF] takeout multiple to RH, the stock would trade at $350," the letter read. Back in January of 2019, Citron Research had called RH "the most compelling story in retail," adding that it saw suitors lining up to buy "this rare trophy asset with 0 competition." At the time, Citron had set a $250 price target on the stock.
Regarding Peloton, the fund said that, "Citron put a one-year price target of $5 and we stand by it as $5 makes this still a $1.5B company. Citron is very comfortable with our position as we know CEO Foley is trying to prop the stock up ahead of its lock-up expiry in March."
PRICE ACTION: In afternoon trading, shares of RH have gained over 1% to $211.91, while Peloton’s stock has slipped about 0.5% to $30.46.