The Bear Cave #120

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

Jun 05, 2022

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 Reports

Hindenburg Research published on Enochian Biosciences (NASDAQ: ENOB — $189 million), a biopharmaceutical company focused on gene modification cell therapy. Hindenburg highlighted that Serhat Gumrukcu, the company’s co-founder, “scientific founder,” “inventor,” and largest shareholder, was arrested last week as part of a murder-for-hire plot. The victim, Gregory Davis, was murdered 19 days before Gumrukcu was scheduled to be in court for felony fraud allegations raised by Davis. Hindenburg’s investigation also found that Gumrukcu was previously arrested by Turkish authorities in 2012 “on accusations of falsely posing as a doctor and charging a desperate family $275k to treat a terminally ill cancer patient, who subsequently died.” Gumrukcu later fled the country. In sum, Hindenburg estimates Gumrukcu and his spouse siphoned about $20 million from Enochian Biosciences through “license agreements” and their stake in the company is currently worth around $90 million.

Kerrisdale Capital published on Lightwave Logic (NASDAQ: LWLG — $775 million), a photonic device company. Kerrisdale highlighted that shares have risen ~10x since June 2021 in tandem with promotional press releases and management presentations. However, the company has been perpetually stuck in “development stage” status for thirty years and Kerrisdale wrote,

“LWLG has never commercialized a single product and we don't think it ever will. The business is worthless, and it won't be long before the company returns to the penny-stock status it occupied its entire history before the meme-stock pump of 2021.”

Since the Lightwave’s March 2008 IPO, the company’s total revenue has been approximately six thousand dollars.

Helios Capital published on Local Bounti (NYSE: LOCL — $479 million), an indoor farming company focused on “starting a new chapter in agriculture.” Founded in 2018, the company grows seedlings in a vertical farm and then transports them to a greenhouse for the remainder of their growth cycle. Local Bounti currently trades at ~600x revenue and Helios called the model unsustainable with misleading investor metrics. Shares are down ~50% since the company’s November 2021 SPAC merger.

Buyersstrike published on Northwest Biotherapeutics (OTC: NWBO — $649 million), a development stage pharmaceutical company looking to develop cancer treatments. Buyersstrike alleged the company has minimal real scientific product and is using paid advertorials at scientific events and social media promotion to build retail hype.

Recent Resignations

Notable executive departures disclosed in the past week include:

CFO of Renovacor (NYSE: RCOR — $37.5 million) resigned after three months. The company is down nearly 80% since its September 2021 SPAC merger.
CEO of Landstar System Inc (NASDAQ: LSTR — $5.68 billion) “will depart from the company to pursue another professional opportunity” after a little over one year.
CFO of Riot Blockchain (NASDAQ: RIOT — $789 million) “will retire from his position as Chief Financial Officer and move into a new role as a senior advisor” after about one and a half years. The company has had four different CFOs and five different CEOs in the last five years. Riot is audited by Marcum LLP and has fallen ~80% in the last year.
CFO of Redwire Corp (NYSE: RDW — $285 million) “stepped down” after a little less than two years. The Bear Cave previously criticized Redwire for “aggressive SPAC projections and spurious metrics” back in December 2021. The company is down ~55% since its September 2021 SPAC merger.
Russell H Frisby Jr resigned from the board of Southwest Gas Holdings (NYSE: SWX — $6.27 billion) after just fifteen days following demands from activist investor Carl Icahn.
Chief Merchandising Officer of Big Lots (NYSE: BIG — $683 million) was “terminated without cause” after a little under two years.
Chief Technology Officer of Shutterstock (NYSE: SSTK — $2.16 billion) resigned after two and a half years. The company’s CEO also “resigned to pursue other business opportunities” last month.

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

What to Read

“Expatriate Executives Flee Saudi Arabia’s Bad Bosses” (WSJ)

“In the summer of 2020, two videogame companies canceled sponsorship deals with Saudi Arabia’s planned city-state of Neom following fan complaints about the country’s human-rights record. Neom Chief Executive Nadhmi al-Nasr called an emergency meeting on a weekend and asked his communications team why it hadn’t warned him this might happen. ‘If you don’t tell me who is responsible,’ Mr. Nasr said, according to people with direct knowledge of the meeting, ‘I’m going to take a gun from under my desk and shoot you.’”

“Rivian’s Great EV Expectations Meet the Harsh Reality of Manufacturing” (WSJ)

“Car factories around the world routinely churn out models around the clock. About eight months after production on Rivian’s electric trucks started, executives recently marked a milestone in uninterrupted work days: The company’s plant ran at full speed for an entire 10-hour work shift for the first time.”

“Tiger Global’s Hedge Fund Lost 52% for the Year Through May” (WSJ)

“Tiger also said that starting in June, it would pay out investors exiting from those funds with both cash and shares in a new side pocket it would create containing stakes in private companies that would be paid out as those investments are realized. Tiger, which manages about $75 billion across its public and private-equity funds, said the value of its private investments had become a far larger proportion of its funds as its portfolio of public stocks continued to lose money.”