The Bear Cave #109
New Activist Reports, Recent Resignations, and Tweets of the Week
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New Activist Reports
Iceberg Research published on Lilium NV (NASDAQ: LILM — $906 million), an early-stage German electric aircraft company. Iceberg Research highlighted that “none of Lilium’s demonstrators have flown for more than three minutes even after seven years of work” and found that the company’s battery partner has “a history of misrepresenting battery performance.” Moreover, Iceberg notes that the company has completed less than fifty regulatory test flights compared to 1,000 for competitor Joby Aviation. Iceberg also criticized promotional behavior by the company and wrote,
“Lilium announced in August 2021 that Brazilian airline Azul ordered 220 jets for $1bn. We believe the deal is more akin to a ‘marketing agreement’: Lilium offered cheap shares to Azul in exchange for the right to market an established company as a partner. Such stock-for-image deals rarely lead to real business.”
Lilium is down roughly 70% from its September 2021 SPAC merger and around 2/3 of the company’s total shares were unlocked for potential sale this week.
Peabody Street Research published on Red Violet Inc (NASDAQ: RDVT — $389 million), a Florida-based data broker that sells personal data to realtors, private investigators, collection agencies, and others. Peabody Research highlighted that a Red Violet subsidiary “is currently being sued for providing an inaccurate criminal record to a third-party background check company” and that the company’s negligence “opens pandora’s box for litigation.” In addition, Peabody Street highlighted low employee reviews on Glassdoor and argued the company’s “reliance on commodity data providers makes them susceptible to increased competition [and] their inability to turn a profit is further cause for concern.”
Red Violet stock is up over 370% in the last five years. Follow Peabody Street Research @Peabody_street on Twitter.
Infinite Nuance published on upcoming IPO Halo Technologies (ASX: HAL), an Australian financial services conglomerate. Infinite Nuance criticized the company’s executive compensation plan tied to EBITDA and questioned why the majority of the company’s revenue comes from related-party customers. Infinite Nuance also questioned the company’s rich valuation and wrote,
“At IPO, Halo will have a fully diluted market capitalization of $176 million at the minimum level of offer, and historical pro-forma trailing EBITDA of $1.9m. Using the forward FY22 EBITDA performance target of $2.5m as a guide, Halo will list at 70.4x EBITDA.”
Recent Resignations
Notable executive departures disclosed in the past week include:
CFO of Membership Collective Group (NYSE: MCG — $1.59 billion) resigned after one and a half years “due to factors outside the Company.” The company is down nearly 40% since its July 2021 IPO.
CFO of Guess Inc (NYSE: GES — $1.37 billion) resigned after a little over two years “to pursue another opportunity at a privately-held company as CFO.”
CFO of Bally's Corp (NYSE: BALY — $1.61 billion) resigned after three years “to pursue other interests and opportunities.”
CEO of Carlotz Inc (NASDAQ: LOTZ — $192 million) resigned after eleven years. The company is down nearly 90% since its January 2021 SPAC merger.
Javier Saade and Chris Terrill, board members of Porch Group (NASDAQ: PRCH — $788 million), both resigned after a little over one year. In August 2021, two SPAC sponsor board members of the company resigned after eight months “after helping guide Porch through a successful transition into the public markets.” Last month, new activist “ManBearChicken” criticized the company for its “unsustainable business model.”
Eric Singer, a board member of Velodyne Lidar (NASDAQ: VLDR — $507 million), resigned after nine months. The company has fallen nearly 75% since its June 2020 SPAC merger.
Elon Musk resigned from the board of Endeavor Group Holdings (NYSE: EDR — $13.5 billion) after a little over one year. The company is up 8% since its April 2021 IPO.
Data for this section is provided by InsiderScore.com
What to Read
“Problems at Freedom Holding Corp (FRHC)” (The Bear Cave)
“Freedom Holding Corp (NASDAQ: FRHC — $3.54 billion) operates retail stock brokerages, banks, and margin lending services in Russia and Eastern Europe. Headquartered in Almaty, Kazakhstan, Freedom Holding Corp employs over 1,000 people in Russia, owns a stake in the Saint Petersburg Stock Exchange, has the majority of its brokerage branches in Russia, and has ties to Russian government officials and banks sanctioned for money laundering.”
“Oatly’s Growing Pains Trip Up Pioneer of Oat Milk” (WSJ)
"Since 2019, the oat milk market in the U.S. has grown by roughly 330%, Oatly said. The company had the market largely to itself when it started out, but rapid growth in demand attracted rivals, and Oatly’s supply shortages gave them room to grow."
“George Soros: Putin and Xi put the world at risk of complete destruction” (Financial News)
“Russia’s invasion of Ukraine was the beginning of a third world war that has the potential to destroy our civilization.”
Tweets of the Week
Until next week,
The Bear Cave