By CCN.com: Formidable short-seller Citron Research this morning slammed legendary Madoff whistleblower Harry Markopolos following his 170-page General Electric “fraud” report. GE stock tanked almost 12% Thursday on the news but recovered 9% to $8.74 on Friday.
Citron, who claimed 2018’s top activist short-seller crown, was not impressed with the damning communiqué, proclaiming it “a sad day for the activist short-selling community.”
Markopolos claims that the fraud at GE is so dramatic, the scale could be compared to an Enron and WorldCom combined.
Speaking with CNBC, he broke down the numbers of the long-term care business – suggesting the company may actually file for bankruptcy.
No Love Lost Between These Two Short-Sellers
Short sellers play a vital role in the market. Most notably, they provide a line of defense against company insiders looking to juice up their stock by any means.
Up until more recently, they were even labeled as “un-American.” The usually close-knit sell-side community now features celebrity-like traders such as Jim Chanos, Markopolos, and Citron’s very own Andrew Left.
That didn’t stop Andrew Left from lambasting his fellow trader though. In an interview with Cheddar, Markopolos heavily criticized GE for relocating their “scam” to his hometown of Boston. According to Citron, that was enough to call Markopolos’ entire reputation into question:
“The arrogance of that statement alone discredits his whole argument. So, it would have been ok if they were in another town? Is Harry the financial chief of Massachusetts?”
GE Stock Rebounds, But For How Long?
Yesterday’s plunge below the $9.00 mark threatened to breach a new low for 2019 after stalling around $7.65. This year’s low was co-incidentally established on the first trading day in January around $7.00.
Buyers may have a tough time breaking through the previous support-now-turned-resistance at the key $9.00 level. The bigger worry, however, is the long-term outlook for General Electric (NYSE: GE).
Despite Friday’s rebound, the stock is perilously close to breaking down into territory not seen in 25 years:
According to Citron, the company is so adamant about the bull case that they actually joined a number of GE insiders along with fabled hedge fund manager Stan Druckenmiller in buying yesterday’s dip.
CCN.com reached out to Citron for further comment but had not heard back by press time.