Citron’s Left Vows to Stick With Cyberdyne Short After 33% DropBy and
Cyberdyne has said that Citron’s research is inaccurate
Cyberdyne said Monday it’s reapplying for FDA approval
Short seller Andrew Left says he’s sticking with his bearish bet on Japan’s Cyberdyne Inc. even after the stock tumbled.
“There’s a long way to go,” Citron Research’s Left said in a phone interview from California. Cyberdyne, which makes robot exoskeletons for physical therapy, has seen its stock lose about a third of its value since Citron said in mid-August that the Japanese company was the most ridiculously priced stock in the world. “The fall has only just begun.”
Cyberdyne has been a frequent target of negative research this year, including from Hong Kong hedge fund Oasis Management, California-based Citron and Japanese bear Well Investments Research. The company has strongly denied the allegations, saying they are misleading and inaccurate. While the short sellers say the company is overvalued compared with peers, Cyberdyne says its technology is unique and not comparable. The company’s products include robotic limbs that assist patients with spinal difficulties.
Short sellers borrow stock and sell it, hoping to profit by repurchasing it later at a lower price. They’ve entered the Japanese market this year, reigniting debate about the practice. Supporters say the research makes markets more efficient and keeps misbehaving corporate managers in check, while opponents argue the methods often resemble market manipulation.
Left pointed to a statement from Cyberdyne on Monday that the company had reapplied to the U.S. Food and Drug Administration for approval of its HAL robot suit as a medical device, which he described as meaning that Cyberdyne is back to stage one on this process.
“With this FDA announcement, what they’ve said is that even if things work out well, you’re not going to see any revenue for at least four years,” Left said.
Shinji Uga, chief financial officer of Cyberdyne, took issue with that view of the FDA application, saying it’s positive for the company’s efforts in the U.S.
“We’ve had a discussion with FDA and we think that FDA has deepened its understanding,” he said. “We have begun the process toward the medical device approval in which it will be found that our products are new and different from other ones. It’s a big step for our business."
Uga declined to comment on Left saying that he’s still short the stock. Cyberdyne shares were little changed in Tokyo trading.
“The latest twist in the FDA application saga is one example to support our thinking,” said Yuki Arai of Well Investments, a local bear who published research on Cyberdyne this year. He says he sells his reports to overseas hedge funds before they’re published but doesn’t take positions in their subjects himself. “The stock decline has already been significant and that shows our report was broadly accepted by market participants.”
Cyberdyne’s stock has fallen about 46 percent from a record high in May. Still, analysts remain confident in the company and say it’s poised to bounce back to about that level in the next 12 months. Five of six strategists tracked by Bloomberg recommend buying more shares, while one says maintain current positions.
Left’s bets haven’t all been winners. Facebook Inc. shares, for example, rose after he announced a short in June. Also that month, he said performance-chemicals maker Chemours Co. was going to zero. It closed Monday at $19.28.
Left reiterated that he’s planning an appeal after a Hong Kong tribunal ruled that he must repay profits and refrain from trading in the territory for five years because he published “false and/or misleading” claims in a 2012 report on a real estate company.
On Cyberdyne, he says he expects to publish further reports in the future.
“This is going much lower,” he said. “Yes, I plan on updating my research as appropriate.”