The Bear Cave #117

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

May 15

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New Activist Reports

Hindenburg Research published on Twitter (NYSE: TWTR — $31.1 billion), the social media platform that is potentially being acquired by Elon Musk. On Monday Hindenburg wrote,

“Musk Holds All The Cards. We See a Significant Risk That The Twitter Deal Gets Repriced Lower.”

Hindenburg highlighted that since the deal was announced the NASDAQ has fallen significantly, Twitter disclosed it overstated some user metrics, and the $1 billion breakup fee is low relative to the acquisition size.

Later that day, Elon Musk responded to Hindenburg:

Elon Musk @elonmusk

@HindenburgRes Interesting. Don’t forget to look on the bright side of life sometimes!

However, on Friday, Elon Musk tweeted that the deal is “temporarily on hold pending details supporting calculation that spam/fake accounts do indeed represent less than 5% of users.” Twitter shares were down 17% this week.

White Diamond Research published on A2Z Smart Technologies (NASDAQ: AZ — $126 million), an Israeli security products company. White Diamond said the company was renamed from a former pump-and-dump scam, Inrob Tech, which “was backed by hedge funds that were charged by the SEC with securities fraud, and its general counsel was sentenced to 34 months in prison.” White Diamond also highlighted that the company pays its CEO about $1 million per year, despite generating only $2.7 million in revenues in 2021.

An anonymous and unknown activist published on Willscot Mobile Mini Holdings (NASDAQ: WSC — $7.92 billion), a mobile storage company. The report reads, in part,

“WSC went public in 4Q17 in a tortured, self-dealing transaction involving the firm’s private equity owner. The company’s business is leasing modular office and storage units, often seen on construction sites. At the core it is a debt-dependent financial business correlated with construction.”

The company is up around 270% since its November 2017 SPAC merger.

Citron Research tweeted bearishly on Lemonade (NYSE: LMND — $1.30 billion), an app-oriented insurance company that claims to make significant charitable donations:

Citron Research @CitronResearch

$LMND Can you believe over $400 mil of insider selling as they were touting ESG and charity bullshit to cover up for a busted insurance lead company. This goes away and no one cares

Recent Resignations

Notable executive departures disclosed in the past week include:

CFO of Moderna Inc (NASDAQ: MRNA — $54.9 billion), Jorge Gomez, departed “effective immediately” after one day. Moderna disclosed, “Mr. Gomez's departure follows the public disclosure on May 10, 2022 by Mr. Gomez's former employer, Dentsply Sirona, of an ongoing internal investigation into certain matters, including financial reporting.”
CFO of IO Biotech Inc (NASDAQ: IOBT — $207 million) was terminated “by mutual agreement, effective immediately” after just eleven months. The company is down ~50% since its November 2021 IPO.
CFO of Solo Brands Inc (NYSE: DTC — $454 million) resigned after a little over one year. The company is down nearly 75% since its October 2021 IPO.
CFO of SeaWorld Entertainment (NYSE: SEAS — $4.13 billion) resigned after about two years. The company has had five different CEOs and three different CFOs over the last five years.
CFO of Kura Sushi (NASDAQ: KRUS — $360 million) resigned after about two years “for personal reasons.”
CFO of HF Foods Group (NASDAQ: HFFG — $286 million) “departed” after two years. In March 2020, Hindenburg Research alleged the company was backed by pump-and-dump artists and “transacted with at least 43 separate related-party entities.” HF Foods Group has fallen roughly 45% since its August 2018 SPAC merger and is audited by Friedman LLP.
CFO of Integral Ad Science (NASDAQ: IAS — $1.75 billion) resigned after two and a half years “in order to pursue other opportunities.” The company has fallen nearly 40% since its July 2021 IPO.
CFO of Compass Inc (NYSE: COMP — $2.33 billion) resigned “to pursue opportunities” after almost four years. The company has fallen ~75% since its April 2021 IPO and a member of the company’s audit committee also resigned in December.
CFO of Wheels Up Experience (NYSE: UP — $606 million) resigned after four years. The company is down 75% since its July 2021 SPAC merger.
Chairman of Archer Aviation Inc (NYSE: ACHR — $962 million) resigned “effective immediately” after only eight months. The company is down 60% since its September 2021 SPAC merger and in January the company’s CFO resigned after only six months.
Chief Medical Officer of Ventyx Biosciences (NASDAQ: VTYX — $759 million) “ceased to be Chief Medical Officer” after eight months. The company is down ~20% since its October 2021 IPO.
Jorge Gomez notified Pear Therapeutics (NASDAQ: PEAR — $570 million) “that he was resigning as a member of the Company's board of directors and all committees thereof effective immediately” after nine months. The company is down nearly 60% since its November 2021 SPAC merger.
Dr. Karl-Thomas Neumann resigned as a member of the Board of Directors at AEye Inc (NASDAQ: LIDR — $769 million) after eleven months. The company is down over 50% since its August 2021 SPAC merger.
Chief Legal Officer of SunPower Corporation (NASDAQ: SPWR — $2.64 billion) resigned after a little over a year. The company has also disclosed five director departures in the last six months.
General Counsel of XL Fleet (NYSE: XL — $191 million) resigned after a little over one year “to pursue other interests.” In March 2021, Muddy Waters wrote that the company’s general counsel had “sent threatening emails to former employees warning them about speaking with investors.” The company is down nearly 90% since its November 2020 SPAC merger.
Chief Commercial Officer of PureCycle Technologies (NASDAQ: PCT — $1.34 billion) entered into a separation agreement and “will no longer serve as the Chief Commercial Officer of the Company effective May 13, 2022 and [his] last day of employment with the Company will be September 30, 2022, or earlier date as determined by the Company solely in its option.” In May 2021, Hindenburg Research highlighted that the company’s executive team “collectively took 6 companies public prior to PureCycle. All have failed, resulting in 2 bankruptcies, 3 delistings, and 1 acquisition after a ~95% decline.” PureCycle is now down 75% since its March 2021 IPO.
CEO of Seagen Inc (NASDAQ: SGEN — $24.9 billion) “has taken a leave of absence” after nearly twenty years as CEO. The company disclosed that it “is aware of an alleged incident of domestic violence that occurred recently at Dr. Siegall's home. Dr. Siegall has denied these allegations and has informed the Company that he is engaged in a divorce.”

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

What to Read

“Bolt Built $11 Billion Payment Business on Inflated Metrics and Eager Investors” (NYT)

“In a rush to show growth, Bolt often overstated its technological capability and misrepresented the number of merchants using its service, some of the people said. In presentations to investors, it included the names of customers before verifying whether those merchants were able to use its technology.”

“Moderna Says It Wasn’t Aware of Investigation Into Its New CFO” (WSJ)

“Moderna released new details about the abrupt departure of Chief Financial Officer Jorge Gomez, saying that it didn’t know of an internal investigation by his former employer Dentsply Sirona until it was disclosed Tuesday. Within an hour of learning of the investigation Tuesday, top Moderna executives, including Chief Executive Stéphane Bancel, met with external lawyers to discuss the matter further, Moderna said Friday.”

“Short Sellers Bet Tether, Crypto’s Central Bank, Is Vulnerable to a Run” (WSJ)

“Tether said that delivering a full audit remains a priority. It admitted no wrongdoing as part of its settlement with New York’s attorney general. Tether’s attorneys argued in court filings that additional disclosure of its reserve investments would harm its competitive position in the market and that revealing its chief investment officer’s name would ‘constitute an unwarranted invasion of privacy.’”