Is GameStop (GME -19.73%) making believers out of short-sellers? Hardly. But Citron Research founder Andrew Left says that after losing 100% of his short position in the video game retailer, he's giving up telling investors what stocks to bet against. From now on, his Citron Research site will only tell investors what stocks to buy.
A force for good
Left still doesn't like GameStop's stock, but the reformed short-seller says in today's market short-selling just isn't worth it.
"Young people want to buy stocks. That's the zeitgeist. They don't want to short stocks, so I'm going to help them buy stocks," he told The Wall Street Journal.
Image source: Getty Images.
It also didn't help that some stock traders reportedly hacked his social media accounts and personal information and left threatening, harassing messages for him and his two children because he had staked out a short position in GameStop.
"The risk-reward of being a short seller is not worth it; it's not worth it for me or my family," Left said.
Citron Research has been a leading voice in uncovering overvalued, overhyped stocks and shorting them. Selling a stock short is essentially a bet a stock's price will fall. An investor borrows shares from a broker and then tries to sell the stock on the open market. When the price falls, the investor buys the shares back and pockets the difference. It's like a regular stock purchase, but in reverse.
But when a stock's price instead rises, the short-seller is on the hook for unlimited losses. GameStop's stock has soared tenfold in two weeks as a massive "gamma squeeze" enveloped its shares.
Left says he will now put the same skepticism he used in uncovering stock frauds toward finding good companies to buy. Maybe GameStop will make a believer out of him yet.
