The Bear Cave #127

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

Jul 24, 2022

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New Activist Reports

Overlooked Alpha published on Kulicke and Soffa Industries (NASDAQ: KLIC — $2.89 billion), a Singapore-based semiconductor equipment manufacturer. Overlooked Alpha wrote that Kulicke and Soffa Industries “could be one of the biggest victims of what looks like a coming cyclical shift in the chip space” and predicted that new markets for the company’s products are less appealing than investors expect. Ultimately, Overlooked Alpha concluded that “earnings here [are] most likely are going to plunge, someway, somehow.”

Spruce Point Capital published on Skechers USA (NYSE: SKX — $5.96 billion), a California-based athletic shoe company. Spruce Point alleged that Skechers’ “business is deteriorating and that financial pressures are mounting” and highlighted that channel checks found inventory and sales issues. Spruce Point also noted that ten members of the founding families of Skechers now work at the company and it is ripe with “nepotism, self-enrichment, rampant related party transactions, and remarkably poor corporate governance.”

Culper Research published on Energy Vault Holdings (NYSE: NRGV -- $791 million), a company that plans to build gravity-based energy storage towers. Culper Research wrote,

“In our view: NRGV’s scientific and economic claims about the Vault hold no grounding in reality and the company’s order book and financial projections are not to be relied upon. NRGV’s 180-day lock-up expires in the next 3 weeks, and we think shares are going much lower. We have also submitted our research to the SEC prior to the release of this report.”

For example, Culper highlighted that one major Energy Vault “customer,” DG Fuels, has a history of announcing multi-billion-deals that never come to fruition. Culper predicted the company will have a “gravitational pull to zero.”

White Diamond Research published on Veru Inc (NASDAQ: VERU — $1.13 billion), a women’s health company that recently pivoted to making a drug to treat COVID-19 in hospitalized patients. White Diamond highlighted that the company has “an unprecedented small study size” for its drug’s phase III trials and highlighted that the phase III placebo group has “an extremely high mortality rate” of 62%. Culper Research also previously highlighted irregularities in the company’s clinical trials.

Jehoshaphat Research published on Hannon Armstrong Sustainable Infrastructure Capital (NYSE: HASI — $2.91 billion), a renewable energy investment company. Jehoshaphat Research said that the company relies heavily on gain-on-sale accounting of very long duration loans – which works wonderfully when rates are steady or decreasing, but horrifically in a rising rate environment. Jehoshaphat concluded,

“We think nearly 50% of HASI’s earnings are going away this year because of things that have already happened. [This] also puts the dividend at risk.”

Muddy Waters also published on the company last week and said the company’s “accounting is so complex and misleading that its financial statements are effectively meaningless.”

Recent Resignations

Notable executive departures disclosed in the past week include:

CFO of Copart Inc (NASDAQ: CPRT — $28.9 billion) resigned after a little less than two years to become CEO of Lazydays Holdings (NASDAQ: LAZY — $158 million).
CEO of Cardlytics (NASDAQ: CDLX — $459 million) resigned after a little over two years and is also leaving the board. The company’s Chief Legal Officer of eight years also departed last month and the stock is down ~80% this year.
CEO of Invitae Corp (NYSE: NVTA — $502 million) resigned after five and a half years. The stock is down over 90% in the last twelve months.
CEO of Lottery Inc (NASDAQ: LTRY — $42 million) resigned after seven and a half years. The company’s CFO was “terminated” two weeks ago and the company is down over 90% since its October 2021 SPAC merger.
Chief Commercial Officer of iRhythm Technologies (NASDAQ: IRTC — $4.47 billion) entered into a “resignation and release agreement” after just six months. The company has had four different CEOs in the last three years.
Senior Vice President of Special Projects at Ping Identity (NYSE: PING — $1.65 billion) resigned after nine months “to pursue other opportunities.” The company’s Chief Operating Officer, Chief Legal Officer, and Chief Accounting Officer have all resigned in the last year. Ping Identity is roughly flat since its September 2019 IPO.
Chief Commercial Officer of Eagle Pharmaceuticals (NASDAQ: EGRX — $511 million) “separated” after ten months. The company’s Chief Medical Officer also “separated” in December 2021 after a little over one year.
Chief Strategy Officer of Duck Creek Technologies (NASDAQ: DCT — $1.89 billion) “departed as a result of the decision to eliminate her position” after two years. The company’s CFO and COO also both left earlier this year. The company is down ~65% since its August 2020 IPO.

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

What to Read

“Nate Koppikar’s Orso Partners Soars on Tech Shorts” (Institutional Investor)

“The tech industry is a ‘house of cards’ that is collapsing in on itself, according to short seller Nate Koppikar, whose Orso Partners bet against tech stocks to earn an estimated 85 percent during the first half of 2022… Koppikar’s view may sound counterintuitive — layoffs will reduce the companies’ costs, of course, and potentially help margins. But, he told investors in the letter, ‘Tech, unlike other sectors, disproportionately sells to itself.’”

“Idea Brunch with Marc Cohodes” (Sunday’s Idea Brunch)

“I saw a company that I thought would be a huge winner called Data Access Systems and put half of what I had into it. What was worse is that I told my friends and others about Data Access Systems and it turned out to be a total fraud. I was so pissed off that I vowed that this would never happen again.”

“Blots on a Field?” (Science)