Citron Names Top Long And Short Ideas For 2020

In the "annual investor letter for 2019" published Monday, Citron Capital LLC managing partner Andrew Left named his top picks for long and short ideas for the year 2020.

Benzinga · 01/07/2020 13:35

In the "annual investor letter for 2019" published Monday, Citron Capital LLC managing partner Andrew Left named his top picks for long and short ideas for the year 2020.

RH Headed For Acquisition

The activist short-seller picked home furnishings company RH (NYSE: RH) as the best long bet, claiming that it is headed for acquisition in 2020.

The California-based company was also one of the biggest winners for Citron, along with Bausch Health Companies Inc. (NYSE: BHC) and Snap Inc. (NYSE: SNAP), the letter said.

According to Left, potential buyers for RH could include French luxury goods giant LVMH Moet Hennessy Louis Vuitton SE (OTC: LVMUY), e-commerce giant Amazon.com Inc. (NASDAQ: AMZN), and Berkshire Hathaway Inc. (NYSE: BRK-A) (NYSE: BRK-B).

If Tiffany & Co. (NYSE: TIF) could fetch a "luxury premium" for its acquisition by LVMH, then RH acquisition will be a much more lucrative deal, according to Left.

"If tomorrow we applied the Tiffany & Co takeout multiple to RH, the stock would trade at $350," he said.

RH's shares closed 1.61% higher at $212.77 on Monday.

Peloton Stock Dropping To $5

Left reiterated his earlier assertion that Peloton Interactive Inc. (NASDAQ: PTON) is a grossly overvalued company compared to its peers like Fitbit Inc. (NYSE: FIT) and Planet Fitness Inc. (NYSE: PLNT).

The company whose shares last closed at $29.75 on Monday will be worth $5 by the end of the year, Left claimed.

"[Peloton CEO John Foley] should have nothing to be ashamed of as at $5 he will still have the most valuable exercise equipment company in the world," the critic wrote.