ChromaDex Corp (NASDAQ:CDXC) Locked In A Bull/Bear Battle

Shares of ChromaDex Corp (NASDAQ:CDXC) are locked in a bull/bear battle after an anonymous short seller posted a damaging article on the blog Seeking Alpha. The short seller forecasts downside of 70% to 80% due to the company's association with financier Barry Honig. After the article was published, shares erased 50% of their value and dropped from $5 to $2.50 at one point, so the short seller almost reached his/her target on the very first day. ChromaDex in turn responded and said:

"The report appears to be a blatant and transparent attempt by a shortseller or shortsellers to profit from an immediate and precipitous decline in the company's share price through the use of an opinion piece published anonymously and laden with misinformation, innuendo and the use of selective historical information. It is also important for investors in ChromaDex and other stakeholders to carefully consider the statement the author made on the last page of his/her editorial attacking the company: 'I am/we are short CDXC. I wrote this article myself, and it expresses my own opinions. ChromaDex is exploring its options in response to this attack."

Now the premise of the short seller is that the mere fact that Barry Honig is involved makes ChromaDex a short. Now we ask if Barry Honig's name is so tainted, why does he not hide his involvement? Matter of fact, he and the company touted his association when he was appointed to the board of directors. The press release said:

Barry Honig is a specialist in corporate finance and structuring. He currently serves as Chairman of InterCLICK (ICLK), a $150 million NASDAQ company. Since its inception in June 2007, Mr. Honig has been instrumental in growing the company's annual revenues from $3 million to over $125 million. Since 2003, Mr. Honig has served as a consultant to numerous emerging growth companies in all stages of the corporate lifecycle, from startup through IPO/APO. His expertise includes capital restructuring, debt financing, capital introductions, and mergers and acquisitions. Since 2004 he has been the President and founder of GRQ Consultants Inc., an investor and consultant to early-stage companies. From 1998 to 2001, he worked at Ramius Capital, trading in distressed equities, arbitrage, long/short and other specialized trading strategies. Mr. Honig graduated from George Washington University with a degree in Economics.

As anyone familiar with small cap companies and venture capital knows, those involved will have their share of successes and failures. It's part of the business. We don't feel it's fair to target one individual and argue that a company is a short because of his/her involvement. We would much rather the short seller focus on the company itself - its financials, products, business practices, accounting, etc. We did not see any of that in the short seller's article.What we do find when we Google Barry Honig is that he buys a lot of stock. Just this week, he reported a 9.99% stake in TowerStream Corp and bought 40,000 more shares of Pershing Gold Corp where he is a director and 10% owner. These disclosures do not strike us as coming from a guy that's trying to hide in any way shape or form.Currently trading with a market cap of $116 million, we'll leave it up to Mr Market to decide whether ChromaDex is a buy or a sell. We're not going to issue a recommendation here. We just don't feel it's fair to target Barry Honig in regards to CDXC. Focus on ChromaDex's business. Is the company growing revenues? Showing a profit? Do consumers like its products? Is management executing? Is the company showing improvement quarter after quarter? Judge CDXC based on its own merits. That is the art of investing and picking stocks.We will be updating Insider Financial as soon as we know more. For continuing coverage on CDXC, sign up for our free newsletter today and get our next hot stock pick!Disclosure: We have no position in CDXC and have not been compensated for this article.