The Bear Cave #129
New Activist Reports, Recent Resignations, and Tweets of the Week
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New Activist Reports
Iceberg Research published on Victoria plc (London: VCP — GBP462 million), an English roll-up of carpet and flooring businesses. Iceberg Research alleged that Victoria plc engaged in spurious acquisitions that “raise serious concerns over the integrity of its financial statements.” For example, in October 2016 Victoria plc acquired Ezi Floor for ~£17 million. The Ezi Floor entity had been created just three weeks before the acquisition, had ties to a Victoria plc executive, and appears to have minimal real operations. Iceberg speculated that the company’s spurious acquisitions were to enrich insiders or inflate sales. Iceberg also highlighted that two of Chairman Geoff Wilding’s past ventures ended in failure and Mr. Wilding recently purchased a $65 million yacht called “Resilience.”
Night Market Research published on Ondas Holdings (NASDAQ: ONDS — $226 million), a developer of industrial wireless networks that recently pivoted to autonomous drones. Night Market claimed that “esoteric regulatory language shields poor execution” and said that the company’s pivot to autonomous drones was a “broken story” with negligible revenue. Above all, Night Market found that the Ondas “founders, largest investor, and board member [are] associated with past investor wipeouts.” For example, the chairman of the company’s audit committee has been a director or officer of 16 other companies – 14 of the 16 went on to fall over 90%.
Notable executive departures disclosed in the past week include:
CFO of Momentive Global (NASDAQ: MNTV — $1.15 billion) departed after a little over one year for “personal reasons.” The company’s Chief Sales Officer also resigned this week, the company’s President resigned in February, and the company’s Chief Accounting Officer resigned in August 2021 to “pursue an opportunity outside of Momentive.” In addition, two board members have resigned in the last six months and the company has had five different CFOs in the last five years.
CEO of Weave Communications (NYSE: WEAV — $356 million) resigned after a little over one and a half years and is leaving the board. The company’s Chief Legal Officer also resigned in May and the company’s Chief Operating Officer resigned in April. The company is down ~70% since its November 2021 IPO.
CFO of Cazoo Group (NYSE: CZOO — $738 million) resigned after about two and a half years. The company is down over 90% since its August 2021 SPAC merger.
CEO of ModivCare Inc (NASDAQ: MODV — $1.48 billion) “is no longer serving as Chief Executive Officer or as a member of the Board of Directors.” In June, the President of the ModivCare Home division resigned after six months “to pursue another career opportunity.” In January, the company’s Chief Operating Officer “departed” after a little over one and a half years. In addition, in May 2021 the company’s Chief Accounting Officer resigned after just nine months “to pursue another career opportunity” and that same month the company’s general counsel also resigned after a little less than two years. The company has had four different CEOs and four different CFOs in the last five years.
CEO of Jeld-Wen Holding Inc (NYSE: JELD — $1.19 billion) resigned after about four years and is also resigning as Chairman. The company’s President of North America also resigned in May after two years and the company’s CFO resigned in March. The company is down ~45% since its January 2017 IPO.
Chief Commercial Officer of Accel Entertainment (NYSE: ACEL — $1.09 billion) resigned after two and a half years “to pursue other interests.” The company’s CFO also retired in May and the company is up ~20% since its November 2019 SPAC merger.
Chief Product Officer of PayPal Holdings (NASDAQ: PYPL — $110 billion) retired after four years. In May, the company’s CFO departed and in December the company’s Chief Legal Officer resigned. PayPal is down ~65% over the last twelve months.
Ivan Tavrin, Chairman of Nexters Inc (NASDAQ: GDEV — $1.25 billion*), resigned after almost one year “and will no longer be involved in the corporate governance, management or operation of the company.” Mr. Tavrin is a Russian oligarch and led the SPAC that merged with Nexters, a Russian mobile games company that has been suspended since February following Russia’s invasion of Ukraine. The company also disclosed that Igor Bukhman and Boris Gertsovskiy would be leaving the board.
Data for this section is provided by VerityData from VerityPlatform.com
The Bear Cave has some exciting investigations planned for the remainder of 2022. If you know of any companies that are misleading investors or harming customers, we are looking for new ideas too!
Please hit reply with any companies that deserve additional scrutiny. The Bear Cave primarily focuses on U.S. companies with market capitalizations between $1 billion and $10 billion.
What to Read
“What Drove This Hedge Fund to Crash 84% in Six Months?” (WSJ)
“And then there is Marcho Partners a tech-focused fund founded by a onetime deputy of tech investor Chamath Palihapitiya. The London-based fund, which had over $1 billion in assets under management at its peak, was down nearly 84% through June 30… Behind the dismal results: a leveraged bet on a relatively small number of highflying growth stocks that have plummeted in value, such as Shopify and British online used-car retailer Cazoo Group.”
“How a celebrity CEO's rule of fear helped bring down hot startup Zilingo” (Bloomberg)
“Investigators hired by the board also questioned her about three sets of revenue numbers for FY21 that Zilingo had shared with external parties: $190 million, $164 million and $140 million. Bose explained to them that the $190 million had been circulated before the year closed and before the cancellation of masks and other orders. The $140 million was used in a due diligence report for fundraising, while the $164 million included uninvoiced revenue, according to a document seen by Bloomberg. But another document the company shared with a potential investor, seen by Bloomberg News, shows Zilingo’s net revenue for the year was about $40 million.”
“Litquidity’s Only Employee Departs Meme Account to Launch Investor Relations Firm” (Bloomberg)
“Mark Moran, a Centerview Partners alum, is leaving Litquidity after 10 months to start a firm focused on promoting public companies to retail investors.”
Tweets of the Week
Raging Capital Ventures @RagingVentures$MSEX is down from $110+ last September to $81 today, but with 1.5% yield, it is now relatively more expensive vs. bond yields than it was before! https://t.co/8CrVwessNX
Keubiko🇺🇦 @KeubikoTo add more context, this mature company that's been around for decades and reached "critical mass" years ago, is showing negative operating leverage, with operating expenses accelerating away from gross profit. The gross margin shrinkage is fueling the dumpster fire. $TRUP https://t.co/GJfSLzA0Ez https://t.co/LQtEBsYIgJ
The New York Times @nytimesFor years, Democrats and even some Republicans have called for closing the so-called carried interest loophole. An agreement reached last week would have taken a small step to narrow it. Changes demanded by Senator Kyrsten Sinema will preserve it. https://t.co/qd5TgbRDS4
Until next week,
The Bear Cave