🐻The Bear Cave #12🐻

New Activist Reports, An Exclusive Interview with Gabriel Grego, and More

May 04, 2020

Welcome to The Bear Cave — your weekly source of short-seller news. Feedback and sharing are always appreciated. If you are new, you can join our email list here.

New Activist Shorts

Citron Research released a follow-up report on Inovio Pharmaceuticals (NASDAQ: INO — $1.50 billion) calling it “The COVID-19 Version of Theranos.” Inovio stock is up 220% year-to-date.

Citron Research also released a second report on the Chinese online education giant GSX Techedu (NYSE: GSX — $8.88 billion). Citron wrote,

“Since the publication of the initial report, we have received four to five correspondences a day from either former employees, competitors, or most likely investors from mainland China who have provided us evidence of: Multiple undisclosed related party transactions, Fake enrollment figures (i.e., brushing of students), [and] Misappropriation of funds by teachers.”

GSX stock is up roughly 350% since its June 2019 IPO.

Grizzly Research published an update on 58..com (NYSE: WUBA — $7.66 billion).

Spruce Point Capital disclosed it was short Forescout Technologies (NASDAQ: FSCT — $1.57 billion) in an open-letter tweet highlighting concerns that its private equity buyer, Advent, might walk away.

Koneko Research disclosed a “small short position” in AG Mortgage Investment (NYSE: MITT — $95 million).

Michael King, a private investor, tweeted out a one-page short thesis on the distressed energy REIT, Corenergy Infrastructure Trust (NYSE: CORR — $161 million).

White Diamond Research published a follow-up on BioSig Technologies (NASDAQ: BSGM — $232 million) about why its coronavirus drug “likely won’t work.” The stock is up about 200% in the last six weeks.

Buyersstrike wrote about how alleged stock promoters could potentially earn millions selling CytoDyn Inc (OTC: CYDY — $1.54 billion) stock. Culper Research previously published two reports on CytoDyn and its “Coronavirus Promotion Tour.” CytoDyn stock is 230% year-to-date on hopes that its HIV drug could help treat coronavirus.

Chris Carey from ShareSleuth criticized Salt Lake City based Co-Diagnostics Inc (NASDAQ: CODX — $370 million) for ties to stock boiler rooms. White Diamond Research previously criticized the company, writing:

“Co-Diagnostics issues a PR almost every day regarding its coronavirus test. But it hasn’t mentioned a single customer, be it a lab, University, hospital, or government who has bought, used or vouched for its Logix Smart coronavirus test.”

CODX stock is up nearly 1,400% this year.

Interview with Gabriel Grego

This week I interviewed activist short-seller Gabriel Grego, who has exposed numerous foreign frauds including Folli Follie, Globo plc, and Bio-on. In the interview, Gabriel discloses a non-activist short position in Wirecard. Listen to the interview on PodBean or watch it on YouTube:

Timeline: Introduction (0:00), “Corporate Sociopaths” (1:00), Working with Hindenburg Research (2:50), Aphria (6:05), Rejecting Ideas (6:50), Accounting Issues (9:35), Wirecard (12:35), Akazoo (18:20), Auditors (21:15), The future of activist research (24:35), Favorite activists (29:30), Coming up with Ideas (33:45), Halted Stocks (37:00), Globo Plc & Bio-On (38:40), Concluding Remarks (43:50)

Follow Gabriel and his fund on Twitter @QCMFunds

What to Read

“Warren Buffett’s Optimistic? Pessimistic? No, Realistic” (NYT)

“His positivity, even during difficult economic moments, always radiated with a clear sense of certainty. After all, he is known as the Oracle of Omaha. That’s why it was unsettling to hear him repeatedly say “I don’t know.”

“Bill Ackman: Getting Back Up” (The Knowledge Project)

“I’ve always had this view that success is not a straight line up. If you read the stories of successful people, almost every successful person has had to deal with some degree of hardship, whether that hardship is personal hardship, health-related hardship, or a business issue.”

“Activist Hohn Calls on Wirecard to Remove CEO Markus Braun” (Bloomberg)

“Billionaire activist investor Christopher Hohn has called on Wirecard AG to remove Chief Executive Officer Markus Braun after an independent audit of past revenues criticized the German payments processor for internal ‘shortcomings.’”