The Bear Cave #100

New Activist Reports, Recent Resignations, and Tweets of the Week

Jan 16, 2022

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New Activist Reports

Jehoshaphat Research published on BWX Technologies (NYSE: BWXT — $4.45 billion), a supplier of nuclear components and fuel to the U.S. government and commercial nuclear power industry. Jehoshaphat Research alleged major accounting irregularities at the company including “27 straight quarters of positive project accounting revisions” around long-term projects. In addition, the company has hidden liabilities such as an underfunded pension and environmental exposure obligations. Jehoshaphat highlighted that the company’s CFO and Chairman both unexpectedly resigned last quarter, and compared the accounting problems at BWX Technologies to Babcock & Wilcox Enterprises (NYSE: BW), a thermal energy company that has fallen ~90% since being spun out from BWX in 2015.

Twitter user @unemon1 published on VOXX International Corp (NASDAQ: VOXX — $251 million), a Florida-based electronics distributor. Unemon claimed that “proprietary import data” showed a strong downward consumption trend of the company’s equipment from China. In addition, Unemon highlighted that the company delayed filing an 8-K concerning a November 2021 $40 million adverse arbitration judgment that would wipe out the VOXX’s existing cash and force the company to issue new equity.

Recent Resignations

Notable executive departures disclosed in the past week include:

CFO of Howard Hughes Corp (NYSE: HHC — $5.59 billion) was “terminated” after less than nine months on the job. The company has had four different CFOs in the last two years.
CEO of Bark Inc (NYSE: BARK — $706 million) resigned after one and a half years “to remain closer to his family in Seattle.” In November, the company’s CFO also resigned “to spend more time with his family.” The stock has fallen nearly 60% since its June 2021 SPAC merger.
CEO of EZCORP Inc (NASDAQ: EZPW — $367 million) resigned after one and a half years and “has accepted a position at another company.” EZCORP has also had four different CFOs over the last five years.
CFO of Micron Technology (NASDAQ: MU — $109 billion) “is departing to join Intel Corporation as its CFO.”
Principal Accounting Officer of Summit Therapeutics (NASDAQ: SMMT — $234 million) resigned after seven months as the result of “a personal decision.” The company also dismissed PwC UK as its auditor in May 2021.
Chief Operating Officer of UpHealth (NYSE: UPH — $340 million) resigned after ten months. The company has fallen over 75% since its June 2021 SPAC merger.
Treasurer of Chubb Ltd (NYSE: CB — $84.5 billion) resigned after eight months. The company’s CFO of 20 years also resigned in July 2021.
President of Fidelity National Information Services (NYSE: FIS — $71.9 billion) “is resigning to pursue other opportunities” less than eleven months after being promoted to that role. In September 2021, Mark J. Hawkins resigned as a director less than three months after joining because “the Board was informed [of] a conflict of interest.” The company’s Chief Accounting Officer also retired in May 2021 after less than two years. In addition, in April 2021, Lee Adrean, another director, decided “not to stand for re-election” after two years “to have more time to pursue other personal interests.”
Chief Accounting Officer of Delek Logistics Partners LP (NYSE: DKL — $1.82 billion) resigned after eleven months. The company has had five different CFOs over the last five years.
Chief Accounting Officer of Steelcase Inc (NYSE: SCS — $1.44 billion) “notified the Company of her intention to resign to pursue another opportunity” after a little over one year.
Chief Operating Officer of ModivCare (NASDAQ: MODV — $1.81 billion) “departed the Company” after a little over one and a half years.
Chief Commercial Officer of Sovos Brands (NASDAQ: SOVO — $1.43 billion) “accepted an offer from another company to serve as its Chief Executive Officer.” Sovos went public in September 2021.
Chief Accounting Officer of Veris Residential (NYSE: VRE — $1.71 billion) “terminated the employment of its Chief Accounting Officer.” In addition, the CFO recently disclosed his “decision to leave the company to pursue other opportunities upon the completion of his contract.” Veris Residential has had four different CFOs over the last five years.

Data for this section is provided by InsiderScore.com

What to Read

“Elon Musk’s Tesla Asked Law Firm to Fire Associate Hired From SEC” (WSJ)

“A partner at law firm Cooley LLP got an unexpected call late last year from a lawyer for one of the firm’s most famous clients, Elon Musk’s Tesla, with an ultimatum. The world’s richest man wanted Cooley, which was representing Tesla in numerous lawsuits, to fire one of its attorneys or it would lose the electric-vehicle company’s business, people familiar with the matter said. The target of Mr. Musk’s ire was a former U.S. Securities and Exchange Commission lawyer…”

“Idea Brunch with Luis V. Sanchez of LVS Advisory” (Sunday’s Idea Brunch)

“I do not screen out ideas based on high valuation multiples or quirks from an initial read of the financial statements. There is an obsession in the investment analyst community turning over many rocks quickly by getting to a ‘no’ as quickly as possible to focus on better ideas. Considering that most financial analysts are trained to look for similar traits, screening out ideas quickly will leave a pile of stocks that everyone else is also looking at.”

“Resources for Asia-focused investors” (Asian Century Stocks)