The Bear Cave #119

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

May 29, 2022

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New Activist Reports

Sumerian Research published a Twitter thread on Bright Green Corp (NASDAQ: BGXX — $979 million), a cannabis grower focused on plant-based therapies and research. Sumerian highlighted the company has no lock-up on insider selling and has no full-time employees outside a CEO and CFO. Sumerian noted that the company’s chairman is a car salesman and the company’s CFO, Elmasri Saleem, was previously CFO for a company charged by the SEC for an illegal coin offering. Bright Green Corp went public through a direct listing on May 20 and currently has no revenue.

New activist Eclipse Research published on Dave Inc (NASDAQ: DAVE — $859 million), a Mark Cuban-backed mobile banking company. Eclipse Research alleged that the company “is little more than an over-inflated balloon of fintech hype” and highlighted the company’s reliance on user “tips” rather than interest and fees. In addition, Eclipse Research noted “a coming deluge of lockup expirations, insider shareholders, executives, early investors, and SPAC management are poised to trample retail shareholders on their way to the exit.” Dave is now down ~75% since its January 2022 SPAC merger

Overlooked Alpha published “It's Not Too Late To Short Boating Stocks” and highlighted OneWater Marine (NASDAQ: ONEW — $531 million), Malibu Boats (NASDAQ: MBUU — $1.20 billion), and Mastercraft Boat Holdings (NASDAQ: MCFT — $420 million) as potential shorts. Overlooked Alpha believes that the pandemic has led to a large pull forward in demand and the companies will now be facing a multi-decade downtrend driven in part by longer useful boat lives, a more robust boat resale market, and weaker societal and environmental trends towards boat buying. Overlooked Alpha also highlighted cost inflation in the supply chain and macroeconomic pressure on the demand side for $100K+ boats.

Hindenburg Research tweeted that it is preparing to publish an investigation into Serhat Gumrukcu, the founder and largest shareholder of Enochian Biosciences (NASDAQ: ENOB — $283 million), a biopharmaceutical company trying to cure HIV. After Mr. Gumrukcu was arrested as part of a “murder-for-hire conspiracy.”

Recent Resignations

Notable executive departures disclosed in the past week include:

Interim CFO of Navitas Semiconductor Corp (NASDAQ: NVTS — $990 million) stepped down after nine months. The company is down 20% since its October 2021 SPAC merger.
CFO of MeridianLink Inc (NYSE: MLNK — $1.47 billion) resigned after a little over a year “to pursue a new role at a private equity firm.” In October the company’s Chief Revenue Officer also departed and the company is down ~25% since its July 2021 IPO. The company is audited by BDO LLP.
CFO of CareDx (NASDAQ: CDNA — $1.39 billion) “notified the company of his intent to resign to pursue another career opportunity” after a little over a year. The company has had four different CFOs over the last three years.
CFO of CuriosityStream (NASDAQ: CURI — $83.4 million) resigned after a little over two years “to pursue another opportunity.” The company is down ~85% since its October 2020 SPAC merger and The Bear Cave previously highlighted the company’s misleading investor metrics.
Chief Accounting Officer of Qualys Inc (NASDAQ: QLYS — $5.37 billion) resigned after just four months due to “a personal decision.” The company’s prior Chief Accounting Officer resigned after only ten months and the company is audited by Grant Thornton.
Chief Commercial and Growth Officer of Amwell Corp (NYSE: AMWL — $1.03 billion) resigned after ten months. The company is down ~80% since its September 2020 IPO.
Chief Accounting Officer of Bed Bath & Beyond Inc (NASDAQ: BBBY — $737 million) resigned after one year “to pursue another opportunity.”
Chief Accounting Officer of Agree Realty Corporation (NYSE: ADC — $5.19 billion) “retired” after three years. The company has had eight CFO transitions in the last ten years and is audited by Grant Thornton. Agree Realty’s current CFO is 30 years old.

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

What to Read

“SEC Halts Alleged Ongoing $39 Million Fraud by Hedge Fund Adviser” (SEC Enforcement)

“According to the SEC’s complaint… EIA and Middlebrooks deceived investors in their hedge fund… by making repeated false statements about the fund’s performance and total assets; providing falsified investor account statements; misrepresenting that the fund had an auditor; and creating and disseminating a fake audit opinion to investors. The SEC’s complaint also alleges that EIA and Middlebrooks misused new investor money to make Ponzi-like payments to other investors in the fund in order to continue to deceive investors into believing that the fund was profitable. According to the complaint, Middlebrooks also misappropriated investor funds for personal use, including for jewelry and credit card payments.”

“Seligman’s Short Strategy Has Paid Off Handsomely” (Institutional Investor)

“The biggest contributor in the first quarter was online used car company Carvana, a major year-end long position of Tiger Global Management, D1 Capital Partners, and Whale Rock Capital Management, according to regulatory filings. It was followed by short positions in video game software maker Unity Software; Chinese real estate platform KE Holdings; electric vehicle maker Rivian Automotive; and September 2022 calls on the Invesco QQQ Trust… Other winning short positions for Seligman in the first quarter came from several electric vehicle plays, including Hylion Holdings, Electric Last Mile Solutions, the electric scooter rental company Bird Global, and TuSimple, a developer of autonomous trucking services.”

“EV Startup’s Streak With No Auditor Adds to Company’s Woes” (Bloomberg Law)

“The Troy, Mich.-based commercial vehicle maker has been looking for a new auditor for more than three and a half months—20 times the average length it takes a company to replace an auditor, according to research firm Audit Analytics.”