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July 17, 2019

1H 2019 Investor Letter

With the market rallying 17.4% in 1H 2019 to close near all-time highs, it has been an
extraordinarily challenging environment to be a short seller. Citron Capital, LP (“Fund”) had an
average exposure of 66% long and 82% short during 1H 2019.

For 1H 2019, the Fund generated a gross return of 36.6% and net return of 24.7% after fees and
expenses. Our top two winners on the short side were Ligand Pharmaceuticals (LGND) and
Jumia Technologies (JMIA) and on the long side were Revolve (RVLV) and Zillow (Z).

We were able to find opportunities in the IPO market betting against frauds (e.g., Jumia
Technologies) and betting on disruptive business models (e.g., Revolve). While Citron can’t
justify Beyond Meat’s (BYND) absurd valuation, we cannot ignore unfavorable technical
dynamics (e.g., tight float and high borrow cost). We were able to capitalize on trading around
our position in Beyond Meat, which was another top contributor to fund performance during
1H 2019.

Our biggest loser was Wayfair (W), which we remain short along with Chewy (CHWY). These
are two business models with valuations that do not reflect the challenges of achieving
profitability in the ecommerce market.

Going into the second half of 2019, on the long side we’re most excited about our position in
Invitae (NVTA). While Invitae was a contributor to fund performance during 1H 2019, we
continue to add to our position at current levels. One of Citron’s biggest mistakes in our 17-
year history was shorting Exact Sciences (EXAS). We underestimated the multiple premium that
the market was willing to award to differentiated diagnostic testing businesses. Citron is now
turning lemons into lemonade. We see Invitae as the clear winner within the mega trend of the
genetic testing market and expect the stock to trade to $100 in the next 24 months.
Unlike many fund managers who use their investor letters as an opportunity to opine on the
macro environment, the managers of Citron would like to reassure our investors that our focus
remains on finding and trading around asymmetric opportunities on both the long and short
side with processes and insights that have been developed over the past 20 years.

Cautious Investing to All,


Citron Capital LLC

Notes and Disclosures


Citron Capital is an exempt reporting investment adviser registered with the California
Department of Business Oversight. Citron Capital manages a pooled investment vehicle, Citron
Capital, LP (“Fund”). Fund returns presented are unaudited, net of all fees and expenses,
including accrued but unpaid performance fees. Further disclosures regarding the risks
associated with the firm’s investment approach are contained in the Fund’s offering
memorandum and the firm’s Form ADV. Additional information is available upon request. Past
performance may not be predictive of future results. All investments involve risk including the
loss of principal. It should not be assumed that investments made in the future will be
profitable.
This document does not constitute a recommendation, an offer of securities or an offer to
provide investment advisory services. It should not be construed as an offer to sell or the
solicitation of an offer to purchase interests in the Fund in any jurisdiction. Such offer can be
made only by means of the offering documents of the Fund. Interests in the Fund are offered
within the United States exclusively to accredited investors under Rule 506(b).
Forward-Looking Statements
This letter contains forward-looking statements, which reflect Citron Capital's views. These
forward-looking statements are identified by reference to words such as “expect”, “continue”,
“may”, “will”, “should”, “approximately”, “predict”, “intend”, “plan”, “estimate”, “anticipate”
or other comparable words. These forward-looking statements are subject to various risks,
uncertainties and assumptions. Accordingly, there are or will be important factors that could
cause actual outcomes or results to differ materially from those indicated in these statements.
Should any assumptions underlying the forward-looking statements contained herein prove to
be incorrect, the actual outcome or results may differ materially from outcomes or results
projected in these statements. None of the Fund, Citron Capital or any of their respective
affiliates undertakes any obligation to update or review any forward-looking statement,
whether as a result of new information, future developments or otherwise.