Citron’s Andrew Left Defends His China Record, Considers Legal Action After Personal Attacks [INTERVIEW]

Earlier this week, a group of top Chinese tech execs banded together to defend US-listed Chinese stocks from being bashed by short sellers. But their primary target was one man, Andrew Left, the financial blogger and analyst behind Citron Research. To tell his side of the story, Andrew agreed to chat with us about his work, and the recent controversies that led to some cross-Pacific mud-slinging.

Speaking via Skype, the Citron founder defended his record on China tech stocks, conceded to an error, and suggested he’d be looking into legal action against the likes of Kai-Fu Lee, the former head of Google China, and Zhou Hong-yi, the CEO of Qihoo (NYSE:QIHU), who collectively set up the CitronFraud website which personally branded Andrew a man with “a record of fraud.”

Citron’s Andrew Left

Andrew begins by defending his work on CitronResearch, claiming that “of the 10 Chinese stocks” he has reported on, “Only one is really trading today: Qihoo. Two are way down, the rest are charged with fraud.” An example is his post on Longtop Financial in April of 2011, a month before the Chinese financial software company was charged with fraud and subsequently delisted. Prior to that, Longtop had been sailing along nicely with clean audits from Deloitte “for six consecutive years.” But others he lists are still trading even after sustained attacks by Andrew and some other short sellers, such as Deer Consumer (NASDAQ:DEER) which is currently at an all-time low of $2.26.

He adds:

Why go after the guy with a good record? I have a body of work in China, but… are you kidding me? My record speaks for itself. […] It’s proven that my track record is right. Only Qihoo hasn’t played out.

If Kai-Fu Lee really wants to help, he’ll say: We will not do business with any company misrepresenting to western investors.

But a key part of the attempt at undermining Citron is by pointing out the conflict of interest in short sellers – that they’re profiting from their moves against stocks. Is this true of Andrew in his year-long tirade against Qihoo, and his recent praise of Sohu (NASDAQ:SOHU)? “Of course I invest my own money,” Andrew concedes, but stresses that doesn’t alter the facts he puts forward, or the research that he does.

On Researching

And what of that research into Chinese stocks? Though all US-listed stocks must submit financials in English, most of their services are in Chinese and can be tough to navigate and understand. The Beijing-based analyst Bill Bishop has been keen to learn who helps Andrew with his Chinese homework. Andrew sort of explains:

I get 50 emails a day from Chinese people who want to work for me.

But then Andrew declines to name a particular source, individual, or company that might be working with him. Aside from all that, he says that a lot of this info is in broad daylight. “It’s all in the filings,” he laughs.