The Bear Cave #111

New Activist Reports, Recent Resignations, Stock to Watch, and Tweets of the Week

Apr 03, 2022

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New Activist Reports

Grizzly Research published on Emerita Resources Corp (TSX: EMO — CAD$542 million), a Canadian gold and resource mining company with assets focused in Spain. Grizzly Research highlighted the company’s ties to Stan Bharti “an infamous stock promoter” involved in promotions like Flora Growth (NASDAQ: FLGC), which fell 90%+ from its peak, and numerous others. Emerita stock is up over 800% in the last year on hopes that it will win the rights to the Aznalcóllar mine in Spain. However, a private investigator engaged by Grizzly “uncovered government emails that outlined that [Emerita] was banned from one Spanish region due to reckless behavior.” In addition, the company’s lawyer, Ramón Escudero Espín, was previously sentenced for “illegal interference."

White Diamond Research published on Global Tech Industries Group (OTC: GTII — $395 million), a “cutting edge technologies” conglomerate. White Diamond alleged the company has “a long history of failed acquisitions of random businesses done for stock promotion” and highlighted that the company paid over $400,000 in stock to a consultant to identify a Picasso print for the company’s “Meta art gallery.” White Diamond also summarized the company’s incorporation history, writing,

“Global Tech Industries Group, Inc (GTII), was incorporated in 1980 and was first called Western Exploration and Mining Company. In 1981 it changed its name to Nugget Exploration, Inc; in 1999 it reverse-merged with GoHealth.MD, Inc., At the time of the reverse merger the company had no significant businesses. In 2004 it became Tree Top Industries and subsequently Global Tech Industries Group, Inc. in 2016, as it is called today.”

Recent Resignations

Notable executive departures disclosed in the past week include:

CEO of NeoGenomics (NASDAQ: NEO — $1.54 billion) “stepped down” after eleven months. In March, the company’s Chief Operating Officer also resigned after only nine months. The Florida-based genetic testing company is down 75% over the last year.
CFO of Porch Group (NASDAQ: PRCH — $661 million) “mutually agreed to begin a search for [a] successor” after two and a half years. In March, two Porch board members resigned and in February new activist “ManBearChicken” criticized the company for its “unsustainable business model.”
CFO of Latch Inc (NASDAQ: LTCH — $597 million) resigned “to pursue other opportunities” after three years. The company is down ~60% since its June 2021 SPAC merger.
John Ballbach resigned from the board of Waters Corporation (NYSE: WAT — $18.7 billion) after just seven months.
CEO and President of Volta Inc (NYSE: VLTA — $521 million) resigned less than one year since their company went public via SPAC. The stock is down nearly 70% since its August 2021 merger.
Chief Scientific Officer of Karyopharm Therapeutics (NASDAQ: KPTI — $638 million) “entered into a transition agreement” after a little over one year.
Chief Accounting Officer of Unity Bancorp (NASDAQ: UNTY — $290 million) “tendered her resignation after accepting an opportunity at another bank” after a little less than two years. The company has had five different CFOs in the last three years and is audited by RSM LLP.
EVP of the Shop Now, Pay Later division of Rent-A-Center (NASDAQ: RCII — $1.45 billion) resigned after a little under two years. Rent-A-Center stock is down nearly 50% in the last three months.
Controller for Sonder Holdings (NASDAQ: SOND — $1.05 billion) resigned “to pursue a new professional opportunity” after a little under two years. The company is down over 50% since its January 2022 SPAC merger.
Chief Revenue Officer of UiPath Inc (NYSE: PATH — $11.4 billion) resigned “to pursue other opportunities” after a little over two years. The company is down ~70% since its April 2021 IPO.
Chief Nuclear Officer of Pinnacle West Capital (NYSE: PNW — $8.96 billion), an Arizona utility company, retired after a little less than three years.

Data for this section is provided by VerityData from VerityPlatform.com

Stock to Watch: Tattooed Chef (TTCF)

New research platform, DuDil.net, published a note on accounting irregularities at Tattooed Chef (NASDAQ: TTCF — $1.01 billion) and wrote, in part,

“Five days after Tattooed Chef, a plant based frozen food brand, belatedly filed its annual report March 16, 2022, the company’s auditor, BDO USA LLP., quit. But not before identifying what is, by our count, Tattooed Chef’s seventh control deficiency since becoming a public company 17-months ago.”

In January 2022, The Bear Cave also published on peculiarities at Tattooed Chef and wrote,

“Tattooed Chef’s audit committee is chaired by Edward Gelfand, 73, who is qualified because of his experience ‘as corporate securities counsel for several SEC-reporting public companies.’ The companies mentioned in his biography are QS Energy (OTC: QSEP), which has fallen 99% since its 1998 IPO and currently trades for three cents, RightsCorp Inc (OTC: RIHT), which has fallen 94% since its 2013 IPO and also currently trades for three cents, Greenwave Technology Solutions (OTC: MSRT), which has fallen 96% since its 2015 IPO and currently trades for four cents, and PPOL Inc, a Japanese telegraph company that had its securitization revoked by the SEC in 2012.”

The Bear Cave noted that the underwriter and sponsor of the SPAC that took Tattooed Chef public have a checkered history and wrote, in part,

“The Forum Merger Corporation II SPAC was led by David Boris, a seasoned SPAC executive who continues to serve on the board of Tattooed Chef… Mr. Boris was previously a director of Pacific Special Acquisition Corp, a SPAC that merged with Borqs Technologies (NASDAQ: BRQS), which has fallen ~96% since its July 2017 merger. Before that, Mr. Boris also served on the board of Trio Merger Corp. That SPAC merged with SAExploration in 2013. SAExploration declared bankruptcy in August 2020.”

Caveat emptor.

What to Read

“Idea Brunch with Matt Sweeney of Laughing Water Capital” (Sunday’s Idea Brunch)

“Over the preceding decade or so I had met and read about many investors who crushed the market in no small part by putting the odds of success strongly in their favor, and I was determined to do the same with LWC. This meant deliberately choosing to stay small, ignoring the indexes, having a super high hurdle rate for inclusion in the portfolio, and being sure to only accept limited partners that fully understand the difference between the value of a business and the price that business may be afforded by the stock market. I view these attributes as sustainable competitive advantages that are very obvious, yet unattainable for most investors. However, they are foundational to LWC and have contributed greatly to our past performance.”

“Recent SEC Enforcement Developments” (Harvard Law School)

“In order to provide an overview for busy in-house counsel and compliance professionals, we summarize below some of the most important SEC enforcement developments from the past month, with links to primary resources.”

“Big Stock Sales Are Supposed to Be Secret. The Numbers Indicate They Aren’t.” (WSJ)