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The Bear Cave #101

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

Edwin Dorsey
Jan 23
15
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The Bear Cave #101
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Welcome to The Bear Cave — your weekly source of short-seller news. If you are new, you can join here. Please hit the heart button if you like today’s newsletter and reply with any feedback.


New Activist Reports

Spruce Point Capital published on TaskUs Inc (NASDAQ: TASK — $2.80 billion), an outsourced content moderation company that IPO’d in June 2021. Spruce Point said the company has a “broken business model” because revenue per employee has been declining while costs have been rising. Spruce Point highlighted that employee growth has stalled according to LinkedIn data and found that the company understates employee attrition by only counting departures of employees who leave after 180 days. Spruce Point estimated that true employee attrition is around 45%. In addition, Spruce Point found the company’s receivables from some major clients, like Facebook, have exploded – a sign of potentially dissatisfied customers.

Twitter user @unemon1 published on Sonos Inc (NASDAQ: SONO — $2.93 billion), a wireless speaker company. Unemon argued the company has experienced a one-time benefit from the pandemic-fueled stay-at-home spending boom that has nearly tripled its stock. Unemon sees sales growth “decelerating sharply” based on a downtick in Sonos app downloads and a decline in online reviews. In addition, Unemon cited competition from Apple’s HomePod, Amazon’s Echo, and Google’s Nest speaker as an additional headwind.


Recent Resignations

Notable executive departures disclosed in the past week include:

  1. CFO of Archer Aviation (NYSE: ACHR — $790 million) resigned after a little over six months. The company went public via SPAC in September 2021 and has since fallen nearly 70%.

  2. CEO of XpresSpa Group (NASDAQ: XSPA — $149 million) resigned “for personal reasons” after a little over one year.

  3. CFO of European Wax Center (NASDAQ: EWCZ — $1.35 billion) resigned after a little over one year “to pursue other opportunities.” The company IPO’d in August 2021.

  4. CFO of Hain Celestial Group (NASDAQ: HAIN — $3.42 billion) “informed the Company of his intention to resign to pursue another opportunity” after a little over two years. The company has had five different CFOs in the last ten years.

  5. CFO of Kraft Heinz Co (NASDAQ: KHC — $45.3 billion) disclosed he “will be stepping down from his role effective March 1, 2022” after about two and a half years. The company previously settled SEC charges of accounting fraud from the last quarter of 2015 to the end of 2018.

  6. CEO of Cross Country Healthcare (NASDAQ: CCRN — $665 million) “retired” after a little over three years.

  7. President of Olo Inc (NYSE: OLO — $2.29 billion) resigned after a little over two months on the job. The company IPO’d in March 2021.

  8. Chief Operating Officer of Sarcos Technology and Robotics (NASDAQ: STRC — $1.11 billion) was “terminated” after eight months. The company has fallen 20% since its September 2021 SPAC merger.

  9. President of the marketplace division for LendingTree (NASDAQ: TREE — $1.171 billion) resigned after nine months.

  10. Chief Commercial Officer of Zymeworks (NYSE: ZYME — $522 million) was terminated as part of “a restructuring of the Company's workforce, with a target of reducing employee headcount by at least 25%.”

  11. General Counsel of Clover Health (NASDAQ: CLOV — $1.20 billion) “stepped down” after a little over two years.

  12. CFO of Avangrid (NYSE: AGR — $17.9 billion) resigned after three and a half years because he “accepted a position as Vice President of Finance of the Pittsburgh Steelers.”

Data for this section is provided by InsiderScore.com


What to Read

“Short-Seller Cohodes Sues MiMedx Over Defamation Claims” (BloombergLaw)

“A short-seller who sought to expose accounting fraud at skin-graft maker MiMedx Group Inc. claimed in a defamation lawsuit that the company waged an illegal campaign to discredit him, including hiring a private investigator to dig up bogus allegations about his activities.”

“Idea Brunch with Zack Buckley of Buckley Capital Management” (Sunday’s Idea Brunch)

“I took a trip to China for two months to visit companies I either owned or had on my watchlist. It was an exciting time to be involved in the incredible boom both the Chinese economy and Chinese consumer were experiencing. When I went to visit, I was astonished by what I found. The state of the operations and the level of fraud that was occurring were alarming. I visited 50 companies during my trip and issues with these businesses ranged from empty warehouses, accounting inconsistencies, fake tours, and bogus sales. At the end of my trip, I thought 2 out of the 50 companies I visited were investable, but those turned out to be more sophisticated frauds too! It didn’t take long to develop serious skepticism, and I ended up leaving China with short positions initiated on many of these businesses.”

“The Biotech Investor's Resources” (The Parallax View)

“Happy 2022! In the spirit of Asian Century Stocks and Edwin Dorsey’s investor resource lists, we’re sharing out our biotech-focused resources that tackle both sci & biz, starting with the most obvious…”

“Last Sane Man on Wall Street” (NY Mag)

“Nathan Anderson exposes — and bets against — corporate fraud. But short-selling a market this frothy can be ruinous.”


Tweets of the Week

Twitter avatar for @LSValueLong Short Value @LSValue
Are there any good short trades left? Not just shitcos that are clearly zeros trading down +75%, I’m talking Shitco + good trade-setups? $LCID prob the only great setup left.

January 20th 2022

6 Retweets61 Likes
Twitter avatar for @Post_MarketPost M. @Post_Market
Spend some time this weekend figuring out what that actual share counts of your holdings are and what you have to believe for them to produce 10% of their market cap in cash at some point in the future. It’ll make you a lot of money some day.

January 21st 2022

37 Retweets687 Likes
Twitter avatar for @forwardcapForward Cap @forwardcap
TAM is overrated While this data point can provide helpful context, what ultimately matters is the company’s ability to execute. The best leaders create enough value to expand their TAM, while many executives today mis-categorize their TAM to appease investors 1/9

January 17th 2022

11 Retweets92 Likes
Twitter avatar for @mikebeckhamsmMike Beckham @mikebeckhamsm
Our brand sells millions of units through Amazon each year. Contrary to public sentiment, they've been a great partner to our business. But 2022 is a major crossroads because Amazon retail will likely shrink this year My thoughts on what's wrong and how to fix it (1 of many)

January 16th 2022

128 Retweets684 Likes
Twitter avatar for @RagingVenturesRaging Capital Ventures @RagingVentures
Having managed money for a long time through many cycles, a few thoughts on how to stay mentally fit when things are tough (as they are now): — If you’re not sleeping well, or are overly fixated on a position, reduce your exposure(s) so you regain your composure and sanity. 1/6

January 22nd 2022

21 Retweets259 Likes
Twitter avatar for @mcubanMark Cuban @mcuban
Mark Cuban's drug company launches pharmacy, promising striking savings on generic drugs
Mark Cuban’s drug company launches pharmacy, promising striking savings on generic drugsThe pharmacy’s initial inventory launch consists of 100 generic drugs. MCCDPC aims to bypass co-called middlemen and markups and boasts that it reflects actual manufacturer prices along with a flat 15% fee.fiercehealthcare.com

January 19th 2022

809 Retweets3,878 Likes
Twitter avatar for @quantian1Quantian @quantian1
$PTON should try a Japan-style shareholder gift- buy 1,000 shares, get a free bike. Get rid of excess inventory and return capital at the same time.

January 23rd 2022

2 Retweets147 Likes
Twitter avatar for @ParikPatelCFADr. Parik Patel, BA, CFA, ACCA Esq. 💸 @ParikPatelCFA
This is called “securing the bag”
Image

January 19th 2022

330 Retweets5,840 Likes

Until next week,

The Bear Cave

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