The Bear Cave #113

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

Apr 17, 2022

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New Activist Reports

Blue Orca Capital published on Innovative Industrial Properties (NYSE: IIPR — $4.68 billion), a medical marijuana REIT focused on sale-leaseback transactions. Blue Orca Capital warned of “imminent risk of default at its largest tenant” and highlighted that the tenant tried and failed to merge with a SPAC led by Justin Bieber’s manager Scooter Braun. Blue Orca also highlighted that Innovative Industrial Properties consistently pays above-market prices in sale-leaseback transactions and risks severe markdowns if tenants default. Blue Orca found the company’s publicly traded tenants have fallen ~50% in the last year, which may be a proxy for struggles in the industry.

Blue Orca Capital concluded,

“IIPR’s stock price is a bet that its tenants can continue to pay rent at above market rates for the next 15–20 years. Tenant quality is paramount, making the severe distress and default of IIPR’s largest tenant a hammer blow to IIPR’s perception as a safe, boring REIT. As tenants struggle, we think investors will find much less value in IIPR’s property portfolio than they previously assumed.”

The “Up in Smoke” newsletter also criticized the company in December 2020 and focused on the changing regulatory landscape.

White Diamond Research published on Reliq Health Technologies (TSXV: RHT — CAD$136 million), a Canadian software company focused on community-based healthcare. White Diamond said Reliq is “masquerading as a healthcare technology company” with little substance and “almost 100% downside.” White Diamond highlighted that Reliq’s founders “have a history of stock promotion” and that the company has a pattern of misleading press releases. For example, in one recent press release Reliq said,

“We are thrilled to partner with MaxMD to leverage the rich data their technology platforms can provide for clinicians, healthcare systems and payors… we are excited to introduce their client base to our Remote Patient Monitoring and Chronic Care Management solutions.”

However, a MaxMD spokesperson emailed White Diamond Research and wrote,

“MaxMD does not have a business relationship with Reliq [and] does not use or have any experience with [its] technology.”

White Diamond also published examples of Reliq announcing “partnerships” with large corporations, when in reality Reliq was just a standard customer.

Recent Resignations

Notable executive departures disclosed in the past week include:

CEO of Petrobras (NYSE: PBR — $93.3 billion) resigned after one year because of a “new board of directors.” The company has had five different CEOs and four different CFOs in the last five years.
CEO of Editas Medicine (NASDAQ: EDIT — $1.14 billion) resigned after a little over one year.
CFO of Enjoy Technology Inc (NASDAQ: ENJY — $372 million) resigned after a little over one year “to pursue other opportunities.” The company has fallen nearly 70% since it merged with a SPAC in October 2021.
CFO of MaxCyte (NASDAQ: MXCT — $582 million) resigned after one and a half years “to pursue other interests.”
CFO of Hyzon Motors (NASDAQ: HYZN — $1.18 billion) resigned after one and a half years. Blue Orca Capital previously called the company “a Chinese Lordstown Motors.” Hyzon stock is down over 50% since its July 2021 SPAC merger.
CFO of Squarespace (NYSE: SQSP — $3.28 billion) “announced her intention to resign in order to pursue opportunities” after two years. The company is down ~50% since its May 2021 IPO.
CFO of Moderna Inc (NASDAQ: MRNA — $66.7 billion) resigned after two years.
CFO of Dentsply Sirona (NASDAQ: XRAY — $10.7 billion) resigned after a little under three years “to assume a chief financial officer position at another public company.”
Teri List-Stoll resigned from the board of Oscar Health (NYSE: OSCR — $1.87 billion) after a little over one year. The company disclosed the resignation “was related to her pursuing another board opportunity.”
CEO of RBB Bancorp (NASDAQ: RBB — $448 million) “resigned effective immediately following the completion of an internal investigation” after nearly fifteen years. The investigation “was conducted by an independent outside law firm on behalf of a special committee of the Board of Directors [and] identified violations of company policies and procedures, including those relating to personnel decisions, as well as resulting adverse effects on officer and employee morale.” In February, the company’s Chief Lending Officer also resigned. RBB Bancorp is audited by Eide Bailly LLP and is flat since its July 2017 IPO.
Chief Accounting Officer of Calavo Growers (NASDAQ: CVGW — $682 million) had his position “eliminated” after two years. The company has had four different CEOs and five different CFOs in the last three years.

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

What to Read

Elon Musk’s Letter to Twitter Board (SEC)

“I invested in Twitter as I believe in its potential to be the platform for free speech around the globe, and I believe free speech is a societal imperative for a functioning democracy. However, since making my investment I now realize the company will neither thrive nor serve this societal imperative in its current form. Twitter needs to be transformed as a private company… Twitter has extraordinary potential. I will unlock it.”

“Idea Brunch with Adam Wilk of Greystone Capital Management” (Sunday’s Idea Brunch)

“I had no idea how the dots would connect later on in life through investing, but there are an incredible amount of parallels between the two disciplines of investing and running an NBA team.”

“An Entrepreneur’s Perspective – Interview with Adam Wyden” (Raging Capital Ventures)

“I had some success investing my own modest bankroll in the turbulent months of 2009 and steadily developed the confidence to run other people’s money in addition to my own. I launched the fund with less than $1m in 2011 and today we manage nearly $300m (and I am the largest investor).”