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The Bear Cave #115

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

Edwin Dorsey
May 1
10
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The Bear Cave #115
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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 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:

  1. 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.

  2. 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.

  3. CFO of Cogent Communications Holdings (NASDAQ: CCOI — $2.81 billion) resigned after two years.

  4. 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.

  5. 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.

  6. 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.

  7. 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.

  8. 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.

  9. 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.”

  10. 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.

  11. 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.”


Tweets of the Week

Twitter avatar for @SantangelReviewSantangel's Review @SantangelReview
1/ I’ve been looking for this video for over a decade. Until recently, it was COMPLETELY scrubbed from the internet. This is the only interview with Warren Buffett’s wife Susie and it is an rare and remarkable window into understanding Warren.
Remembering Susan Buffett - Charlie RoseCharlie remembers his friend Susan Buffett, wife of Warren Buffett and president of the Buffett Foundation.charlierose.com

April 29th 2022

205 Retweets982 Likes
Twitter avatar for @bgurleyBill Gurley @bgurley
An entire generation of entrepreneurs & tech investors built their entire perspectives on valuation during the second half of a 13-year amazing bull market run. The "unlearning" process could be painful, surprising, & unsettling to many. I anticipate denial. Some thoughts:

April 29th 2022

2,199 Retweets15,442 Likes
Twitter avatar for @JeffBezosJeff Bezos @JeffBezos
Bill is without doubt one of the smartest people I know and always worth listening to. Most people dramatically underestimate the remarkableness of this bull run. Such things are unstoppable … until they aren’t. Markets teach. The lessons can be painful.

Bill Gurley @bgurley

An entire generation of entrepreneurs & tech investors built their entire perspectives on valuation during the second half of a 13-year amazing bull market run. The "unlearning" process could be painful, surprising, & unsettling to many. I anticipate denial. Some thoughts:

April 30th 2022

960 Retweets8,449 Likes
Twitter avatar for @Jasonjason@calacanis.com @Jason
There is a significant pullback in the private markets right now. If you are raising a round, close it quickly and fairly… but don’t over optimize is my best advice. Even at your last round’s valuation, which could be a bummer I know, but things have changed dramatically.

April 28th 2022

80 Retweets915 Likes
Twitter avatar for @awealthofcsBen Carlson @awealthofcs
Boring stocks this year: Berkshire Hathaway +13% Hershey's +17% Johnson & Johnson +9% John Deere +13% Exciting stocks this year: Nvidia -32% Shopify -68% Netflix -65% Facebook -44%

April 26th 2022

437 Retweets4,404 Likes
Twitter avatar for @charliebilelloCharlie Bilello @charliebilello
Coinbase Valuation History... Jan 2015 (Series C): $470 mil. Aug 2017 (Series D): $1.6 bil. Oct 2018 (Series E): $8 bil. Jan 2021 (Secondary Sale): $54 bil. Feb 2021 (Secondary Sale): $77 bil. Feb 2021 (Secondary Sale): $100 bil. Apr 2021 IPO: $65 bil. Today: $29 billion $COIN

April 25th 2022

98 Retweets638 Likes
Twitter avatar for @TSOH_InvestingAlex Morris (TSOH Investment Research) @TSOH_Investing
YouTube's Revenues: ~$30 billion a year YouTube Rev Growth Rate (YoY): +14% LinkedIn's Revenues: ~$14 billion a year LinkedIn Rev Growth Rate (YoY): +34%

April 26th 2022

4 Retweets109 Likes
Twitter avatar for @BucknSFBuck @BucknSF
Stocks where downside prob limited over next 3yrs due to intersection of business quality, multiple and M&A potential: AVLR, ESTC, WIX, TWLO, BL, APPF, FROG, KLTR, FRSH, CRM, WEAV, PATH

April 29th 2022

9 Retweets201 Likes
Twitter avatar for @WallStCynicDiogenes @WallStCynic
$ORA at 60x declining EPS, continues to associate itself with “interesting” characters.

Nate Anderson @ClarityToast

The SEC just charged $ORA's recent head of M&A (departed January '22) with insider trading, along with a friend she tipped a deal to. The DoJ just filed an indictment against the friend but not the $ORA employee yet. https://t.co/VsjGwl9tYF https://t.co/IbmH0aHONl

April 26th 2022

1 Retweet20 Likes
Twitter avatar for @BigRiverCapita1Big River @BigRiverCapita1
"We could get the stock up..." This comment from the $MPW call today perfectly captures mgmt.'s strategy since IPO. Conceal problems and deliberately misrepresent the true picture to investors b/c they need to issue equity to fund new deals to keep the game going.

April 28th 2022

1 Retweet4 Likes
Twitter avatar for @StockJabberEdwin Dorsey @StockJabber
Bill Hwang owned over 70% of GSX, 60% of Discovery, and 50% of IQIYI, all without any disclosure🤯 https://t.co/qyL8sUcW6b

Doomberg @DoombergT

Unbelievable scandal https://t.co/umgHsnFGFF

April 27th 2022

79 Retweets488 Likes
Twitter avatar for @BongripCapitalScamath Pariahapitaya @BongripCapital
@BluthCapital 100pct. Absurd that Feds aren’t all over the pattern of 1- absurdly large OTM short dated call buying 2- absurdly large unexplained pre-open moves Deliberately aggressive buying during minimal liquidity periods is the definition of manipulation.

April 28th 2022

3 Retweets74 Likes
Twitter avatar for @rgashayeriRyan Ashayeri @rgashayeri
We are hiring for our day 1 investment team at Square Wave Capital. Please reach out if interested.
Image

April 14th 2022

4 Retweets26 Likes
Twitter avatar for @cmsinternCMS intern @cmsintern
are ya winning son?
Image

April 27th 2022

593 Retweets12,039 Likes

Until Thursday,

The Bear Cave

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