The Bear Cave #115

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

May 01, 2022

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New Activist Report

Viceroy Research published an update on Adler Group SA (ETR: ADJ — EUR850 million), a Luxembourg-based real estate company. In October, Viceroy called the company “a hotbed of fraud” and alleged the company siphons off cash to friends of management in related-party transactions. Viceroy’s report led to an investigation by KPMG, the company’s auditor, which ended this week without verifying or refuting Viceroy’s fraud allegations. Viceroy highlighted that Adler withheld documents from KPMG by claiming they were legally privileged and ignored requests for supplemental documentation. Moreover, Viceroy contacted aggrieved suppliers for an Adler subsidiary that “had outstanding invoices of ~€78m, which do not appear to be reflected in ADJ’s interim accounts.” Following its investigation KPMG will be adding this sentence to Adler’s financials:

“The auditor has not been able to obtain sufficient appropriate audit evidence to provide a basis for an audit opinion on these annual accounts.”

Recent Resignations

Notable executive departures disclosed in the past week include:

CFO of 3D Systems Corporation (NYSE: DDD — $1.48 billion) stepped down after a little over one and a half years “to accept a new career opportunity.” The company has had four CFOs over the last five years and is audited by BDO.
CFO of SmartRent Inc (NYSE: SMRT — $943 million) “will step down” after a little under two years. The company is down over 50% since its August 2021 SPAC merger.
CFO of Cogent Communications Holdings (NASDAQ: CCOI — $2.81 billion) resigned after two years.
CFO of Redbox Entertainment Inc (NASDAQ: RDBX — $271 million) resigned after two and a half years “to spend more time with her family.” Last week, seven Redbox board members also resigned. The company was up over 100% this week on an apparent short squeeze but still remains down 40% since its October 2021 SPAC merger.
CFO of Perimeter Solutions (NYSE: PRM — $1.66 billion) resigned “pursuant to a mutual agreement” after a little over three years. Earlier this month, Kevin M. Stein, the CEO of TransDigm, “decided not to continue as a director” of Perimeter Solutions after only five months. Perimeter went public through a “reverse takeover” of a London-based acquisition vehicle in November 2021.
CFO of Custom Truck One Source (NYSE: CTOS — $1.62 billion) shared “his intention to resign for another opportunity at a private company” after a little under four years. The company is down ~35% since its July 2019 SPAC merger.
Chief Revenue Officer of Juniper Networks (NYSE: JNPR — $10.2 billion) “provided notice of his intent to resign from the Company in order to pursue another career opportunity” after just eight months.
Andrew Wheeler and Molly Hemmeter are not standing for re-election as board members of Benson Hill Inc (NYSE: BHIL — $742 million). The company is down ~65% since its September 2021 SPAC merger.
Chief Commercial Officer of LiveRamp Holdings (NYSE: RAMP — $2.14 billion) stepped down “to pursue another opportunity outside the organization” after a little under one year. In February the company’s Chief Product Officer resigned after seven months “due to personal reasons.”
Dr. Susan Athey notified Rover Group (NASDAQ: ROVR — $1.14 billion) “that she will be resigning from the Company's board of directors” and audit committee effective August 2022. Last month, the company’s CFO also announced she will depart in August 2022. Rover Group is down ~40% since its August 2021 SPAC merger.
CEO of US Well Services Inc (NASDAQ: USWS — $64.1 million) resigned after five years and “announced plans for the transition of the leadership team.” The company is down 97% since its November 2018 SPAC merger.

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

What to Read

“Idea Brunch with Dan Roller of Maran Capital Management” (Sunday’s Idea Brunch)

“A fellow emerging manager put some data out a few years ago: something like fewer than 1% of funds have a portfolio manager with the majority of his or her net worth invested alongside that of his or her clients, and fewer than 1% have the conviction to have a single 10%+ position. Mohnish Pabrai has also shared some data that fewer than 1% of fund managers outperform the market by 3%+ annually over longer periods of time. I want to be in that last 1%, and I think the structural choices I’ve made will help me get there.”

“‘Weak Sauce’: Elon Musk’s 2018 Feud With Saudi Fund Revealed” (Bloomberg)

“I read the article. It is weak sauce and still makes me sound like a liar. It is filled with equivocation and in no way indicates the strong interest you conveyed in person.”

“How Prudential’s Big Tech Bet Went Sour” (WSJ)

“In late 2019, Prudential Financial Inc aid $2.3 billion for a three-year-old data-science startup that promised to modernize the age-old business of selling life insurance. The deal for Assurance IQ has badly missed its financial targets and left Prudential facing questions from regulators. In February, Prudential said it wrote down the investment by roughly half.”