The Bear Cave #131

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

Aug 21, 2022

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New Activist Reports

Keith Dalrymple, an independent short seller, published on Cyxtera Technologies (NASDAQ: CYXT — $1.71 billion), a Coral Gables, Florida-based data center company that went public via SPAC. Dalrymple highlighted increasing data center competition and an “excessive debt load” of ~$2 billion as headwinds for the company. The report also noted that insiders, SPAC sponsors, and PIPE investors have filed to sell around 130 million shares. Cyxtera Technologies is roughly flat since its July 2021 SPAC merger.

Anonymous Twitter user @restrinct published on Marqeta (NASDAQ: MQ — $4.43 billion), a card issuing and payment solutions company. Restrinct said that “the current business model is unsustainable” and aided by one-time pandemic tailwinds. Restrinct predicted that the company’s exposure to growth-oriented consumer startups would “now drag them down as [venture capital] dries up” and competition from other fintech companies like Stripe will continue to intensify.

Recent Resignations

Notable executive departures disclosed in the past week include:

CFO of Moderna Inc (NASDAQ: MNRA — $58.7 billion) resigned after four months. His predecessor was fired after just one day.
CEO of Hyzon Motors (NASDAQ: HYZN — $570 million) departed “effective immediately” after two years. Blue Orca Capital previously called the company “a Chinese Lordstown Motors” and the company’s CFO departed in April. Hyzon stock is down over 75% since its July 2021 SPAC merger.
CFO of Paymentus Holdings (NYSE: PAY — $1.39 billion) resigned after a little over two years “for personal reasons.” The company’s General Counsel also departed in October 2021 after one and a half years and the company is down ~35% since its May 2021 IPO.
Chief Growth Officer of Weber (NYSE: WEBR — $2.88 billion) departed after nine months. In addition, the company’s Chief Marketing Officer resigned this week, the company’s CEO departed in July and the company’s Chief Accounting Officer retired in June. Weber is down ~45% since its August 2021 IPO.
Chief Operating Officer of Starbucks (NASDAQ: SBUX — $102 billion) has his position “eliminated” after a little over one year. The company’s CEO and General Counsel both departed in April and the company is down ~25% this year amid ongoing tensions with unionizing workers.

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

What to Read

“SEC Charges Eagle Bancorp and Former CEO with Failing to Disclose Related Party Loans” (SEC Enforcement)

“The SEC’s order against Eagle finds that, from March 2015 through April 2018, Eagle failed to include loans to Paul’s family trusts totaling at times nearly $90 million in the related party loan balances included in its annual reports and proxy statements… The SEC’s order also finds that, following a December 2017 short seller’s report asserting Eagle had made significant undisclosed loans to Paul’s family trusts, Eagle and Paul falsely stated in press releases, news articles, and meetings with investors that the trust loans were not related party loans and that Eagle was in compliance with all related party loan requirements. The SEC’s order finds that even though Eagle’s independent auditor and primary regulator concluded that the trusts were related parties under GAAP and banking regulations, respectively, Eagle again failed to disclose the trust loans as related party loans in its 2017 annual report.”

“WWE Says Probe of Vince McMahon Is ‘Substantially Complete’” (WSJ)

“The internal investigation found roughly $20 million in expenses that should have been recorded in the company’s financial statements, including $14.6 million that Mr. McMahon agreed to pay women to settle allegations of sexual misconduct from 2006 to 2022, according to people familiar with the deals. Earlier this month, the company disclosed additional payments in 2007 and 2009 totaling $5 million that it said were unrelated to the allegations of misconduct that led to the investigation.”

“Student makes $110mn trading meme stock favorite Bed Bath & Beyond” (FT)

“A 20-year-old university student has made a roughly $110mn gain by selling a stake in struggling retailer Bed Bath & Beyond, after its stock price soared during a month of frenzied trading reminiscent of last year’s meme stock boom. Jake Freeman, an applied mathematics and economics major at the University of Southern California, acquired nearly 5mn shares in Bed Bath & Beyond in July…”