Welcome to The Bear Cave! Our last premium articles were “Problems at Primerica (PRI)” and “More Problems at eXp World Holdings (EXPI)” and our next premium investigation comes out Thursday, May 16.
New Activist Report
Viceroy Research published a 109-page report on Globe Life (NYSE: GL — $7.29 billion), a supplemental life insurance company that operates through a network of independent salespeople. Viceroy focused on the company’s American Income Life (AIL) subsidiary and concluded that “Globe Life is rotten from top to bottom.” Viceroy wrote, in part,
“AIL operates under a Multi-Level-Marketing structure, which is not itself problematic, but has created the perfect petri dish for fraudulent, dishonest, and unethical conduct.”
Viceroy reviewed AIL’s training and marketing materials and “[concluded] that fraudulent, dishonest, and misleading sales tactics are core to AIL’s operations” and also showed cases where AIL agents would defraud the company by creating fictitious policies in order to maximize commissions. In addition, Viceroy highlighted cases where AIL used deceptive websites for lead generation, had reps who held influential positions at unions that AIL would use for lead generation, and employed high-producing sales agents with prior criminal convictions.
Viceroy’s investigation into Globe Life was “Viceroy’s longest investigation by far, and [was] compiled on the review of over 11,000 documents.” Viceroy concluded,
“Given the number and seriousness of the issues at Globe Life, and the ongoing investigations and their financial situation, we do not believe that a target price can be assigned at this time.”
Three weeks ago, Fuzzy Panda Research also published a blockbuster investigation into Globe Life that sent the stock down ~55% in one day and warned that “multiple Globe Life executives will likely be going to prison for insurance fraud.”
Recent Resignations
Notable executive departures disclosed in the past week include:
CFO of Driven Brands Holdings (NASDAQ: DRVN — $1.90 billion) resigned after one year “to pursue a professional opportunity at a privately held company.” The company’s prior CFO resigned in May 2023 after three years and the company’s former Chief Accounting Officer resigned in April 2021 after just one year. The company is down ~55% since its January 2021 IPO.
CEO of Peloton Interactive (NASDAQ: PTON — $1.26 billion) “entered into a Transition Agreement” after two and a half years. The company’s Chief Marketing Officer and Chief Product Officer both departed last year as well.
CFO of Coca-Cola Europacific Partners (NASDAQ: CCEP — $33.1 billion), a large European Coca-Cola bottling company, resigned after 11 years “to join Diageo plc as CFO later this year.” The company is overseen by a 17-person board and has disclosed eight board departures in the last three years.
CEO of Chegg (NYSE: CHGG — $532 million) resigned and will become Executive Chair after 14 years leading the company. In March, the company’s Chief Marketing Officer retired after thirteen years and in October 2023 the company’s CFO also retired after 12 years. In January, The Bear Cave called Chegg “a billion-dollar company headed to zero.”
CEO of Trupanion (NASDAQ: TRUP — $825 million) resigned after 24 years but will continue as Chair of the Board. The company also disclosed that “the resignation was voluntary.”
Chief Operating Officer of BlackRock TCP Capital Corp (NASDAQ: TCPC — $880 million) “verbally informed BlackRock TCP Capital Corp of his intention to resign from his position as Chief Operating Officer of the company to pursue other business opportunities outside of BlackRock” after just six weeks. In April, the company’s Chief Compliance Officer stepped down after 17 years “due to his expanding roles in different parts of the BlackRock organization.”
Chief Revenue Officer of DigitalOcean Holdings (NYSE: DOCN — $3.12 billion) stepped down after one and a half years “upon the commencement of employment of a successor.” The company’s CEO, CFO, Chief Operating Officer, Chief Product Officer, and Chief Accounting Officer have all resigned in the last eighteen months.
Chief Operating Officer of Coursera (NYSE: COUR — $1.51 billion) transitioned “to [a] strategic project role” after one and a half years. This week, the company’s Chief Revenue Officer also transitioned “to [a] strategic project role” after four and a half years. The company is down ~80% since its April 2021 IPO.
Data for this section is provided by VerityData from VerityPlatform.com
Introducing Cool Stock Tweets!
Hi there, Edwin here! I recently launched a new free newsletter: Cool Stock Tweets. Every Sunday at 6pm ET, Cool Stock Tweets shares a list of the most interesting long idea pitches from Twitter. Each email takes just a minute to read and includes links to 10-15 stock-specific tweets. You can read the last edition here and learn more at CoolStockTweets.com
If you enjoy reading The Bear Cave for short idea generation, you’ll love reading Cool Stock Tweets for long idea generation. Sign up here.
What to Read
“Federal prosecutors are examining financial transactions at Block, owner of Cash App and Square” (NBC)
“Edward Siedle, a former Securities and Exchange Commission lawyer who represents the former employee and participated in the discussions with prosecutors, said, ‘It’s my understanding from the documents that compliance lapses were known to Block leadership and the board in recent years.’”
“Is Hunterbrook Media a News Outlet or a Hedge Fund?” (New Yorker)
“Central to Hunterbrook’s pitch is a promise to help solve a slice of journalism’s current business-model crisis. Investigations are notoriously expensive, and fewer and fewer outlets are able to sustain them. Koppelman told me, ‘The experiment we’re running is very specifically: Can you do investigations into companies that are committing wrongdoing, and can you break news in parts of the world that have been left behind by mainstream outlets—and do it profitably?’”
“SEC Charges Audit Firm BF Borgers and Its Owner with Massive Fraud Affecting More Than 1,500 SEC Filings” (SEC)
“As a result of their fraudulent conduct, they not only put investors and markets at risk by causing public companies to incorporate noncompliant audits and reviews into more than 1,500 filings with the Commission, but also undermined trust and confidence in our markets. Because investors rely on the audited financial statements of public companies when making their investment decisions, the accountants and accounting firms that audit those statements play a critical role in our financial markets. Borgers and his firm completely abandoned that role, but thanks to the painstaking work of the SEC staff, Borgers and his sham audit mill have been permanently shut down.”
Tweets of the Week
Until next week,
The Bear Cave