The Bear Cave #125
New Activist Reports, Recent Resignations, and Tweets of the Week
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New Activist Reports
Culper Research published a follow-up report on Veru Inc (NASDAQ: VERU — $1.07 billion), a women’s health company that recently pivoted to making a drug to treat COVID-19 in hospitalized patients. Culper criticized the company’s new Phase III trial data and alleged that the placebo group was not comparable to the treatment group because the placebo group “saw an outrageous 62% mortality rate.” Culper also pointed out that the company’s principal scientific investigators have been involved in past COVID-19 drug blowups like INmune Bio (NASDAQ: INMB), which fell over 60% from its highs, Sorrento Therapeutics (NASDAQ: SRNE), which fell over 80% from its highs, and RedHill Biopharma (NASDAQ: RDHL), which fell over 90% from its highs.
In May, Culper Research criticized Veru for having most of its test sites in countries like Bulgaria and Mexico and said the company is “run by a team of alleged frauds and failures” with “a history of alleged sham science.”
Overlooked Alpha published on Texas Roadhouse (NASDAQ: TXRH —$5.34 billion), a restaurant chain with over 600 franchises across 49 states and 10 countries. Overlooked Alpha called the company “one of the best macro shorts remaining” and highlighted rising beef and labor costs as headwinds for the company. Overlook Alpha noted that the company has only fallen ~13% this year and predicted the market is “going to see a cyclical restaurant business facing margin compression and a slowing, if not reversing, top line — and it’s going to sell the stock off hard.”
Notable executive departures disclosed in the past week include:
CFO of GameStop (NYSE: GME — $9.79 billion) was “terminated effective immediately” after one year. The company has had six different CEOs and five different CFOs in the last five years.
CFO of Lottery Inc (NASDAQ: LTRY — $57 million) was “terminated” following an independent investigation after around eight months on the job. The company is down nearly 90% since its October 2021 SPAC merger.
CEO of Republic First Bancorp (NASDAQ: FRBK — $240 million) resigned after one and a half years and is “claiming the company breached his employment agreement.” This week the company also added a new independent board member following “the United States Court of Appeals for the Third Circuit reversing the decision of the United States District Court for the Eastern District of Pennsylvania, which appointed a custodian to oversee the Company.” In June 2021, the company replaced BDO LLP as its auditor with Crowe LLP.
CFO of WD-40 Company (NASDAQ: WDFC — $2.38 billion) announced his plans to retire after fifteen years with the company. WD-40’s CEO will also be retiring in August after twenty-five years. The company fell ~13% this week on disappointing earnings.
Chief Business Officer of AbCellera Biologics (NASDAQ: ABCL — $3.29 billion) “is no longer with the company” after eleven months. The company is down ~80% since its December 2020 IPO.
Connor Schell resigned from the board of World Wrestling Entertainment (NYSE: WWE — $4.74 billion) after a little over one year “due to an increased slate of responsibilities” outside the company. Two days ago, the Wall Street Journal reported that Vince McMahon, the company’s controlling shareholder who has temporarily stepped down as CEO, paid $12 million in settlements to four women “to keep secret allegations of sexual misconduct and infidelity.”
Chief Accounting Officer of Centessa Pharmaceuticals (NASDAQ: CNTA — $556 million) resigned after a little over one year “to pursue another professional opportunity.” The company is down ~70% since its May 2021 IPO.
Chief Legal Officer of Virgin Galactic Holdings (NYSE: SPCE — $1.89 billion) resigned after about two and a half years. In February 2022, the company’s chairman, Chamath Palihapitiya, resigned “to pursue other opportunities.” The company is down nearly 30% since its October 2019 SPAC merger.
Data for this section is provided by VerityData from VerityPlatform.com
The Bear Cave is looking deeply at the de-SPAC market with a focus on de-SPACs above $5 that may be misleading investors and de-SPACs trading below $2 with long cash runways and turnaround potential.
If you know of any de-SPACs we should look at, please hit reply or email email@example.com. The Bear Cave will be sharing our findings in an upcoming special investigation. Stay tuned!
What to Read
“How the man behind the Apple Store presided over a SPAC catastrophe” (FT)
“In Johnson’s telling, Enjoy’s powerful back-end technology was the secret to its success. ‘Powered by machine learning and analytics, Enjoy’s algorithm and proprietary technology optimize the customer experience in real time to track inventory and improve efficiency,’ he said last year.”
“An Entrepreneur’s Perspective – Reinventing Early-Stage Venture Investing” (Raging Capital Ventures)
“We see this unity of opposites in a lot of creative startup founders. They tend to be both insiders and outsiders at the same time. A bit of a paradox.”
“That Fancy University Course? It Might Actually Come From an Education Company.” (WSJ)
“2U Inc (NASDAQ: TWOU) isn’t a university, but it sometimes looks like one. The online education company uses the “.edu” email addresses of partner universities to recruit students for them. It funds scholarships. The company also uses equipment that makes it look as if its recruiters are calling from universities’ area codes.”
“Problems at Toronto-Dominion Bank (TD)” (The Bear Cave)
“An analysis by The Bear Cave finds that TD Bank has more fraudulent account opening complaints than every other bank except Wells Fargo. In addition, hundreds of consumer complaints reviewed by The Bear Cave show a pattern of misconduct regarding fraudulent accounts, unnecessary products, and excessive fees. In sum, TD Bank appears to be a losing proposition that victimizes customers.”
Tweets of the Week
Until next week,
The Bear Cave