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New Activist Reports
Spruce Point Capital published on Broadridge Financial Solutions (NYSE: BR — $22.3 billion), a corporate services and financial technology company. Spruce Point called the company “a low value-added business process outsourcer with rising financial stress and dubious technology prowess.” Spruce Point highlighted website and disclosure changes that appear to indicate diminishing market dominance and identified high executive turnover in the company’s sales, marketing, business development, and finance functions. In addition, Spruce Point questioned the efficacy of the company’s $1.0 billion technology partnership with UBS Wealth Management and claimed the company did an expensive acquisition to help mask “falling profits and declining organic cash flow.” Spruce Point concluded,
“We estimate 65% –75% downside as investors hold BR accountable for its dubious actions, and recognize its peak leverage, and limited excess cash for debt reduction headed into an economic correction leave it more vulnerable this cycle.”
Viceroy Research published on Truecaller (Stockholm: TRUE — kr15.3 billion), a Swedish caller ID and spam detection company. Viceroy called the company “a Swedish adware & spyware app” and said the company is “on the brink of redundancy” following consumer data protection regulations like GDPR. Viceroy alleged the company moved its substantive operations to India in an attempt to evade European privacy regulations and Viceroy highlighted that the company “has been subject to two Public Interest Litigation cases in India [with one] ongoing in the High Court of Bombay.” Viceroy also alleged that Truecaller has been spamming its users with ads to provide a short-term revenue boost and noted that the company’s auditor in India was the same auditor used by Wirecard.
Bleecker Street Research published on Joby Aviation (NYSE: JOBY — $2.63 billion), an electric aircraft development company. Bleecker Street described the company as “Tesla meets Uber in the sky… [with] some of the most egregious guidance of any SPAC we have seen.” For example, the company told investors it plans to manufacture 100 aircraft in 2024 even though government records obtained through a public records request say it only plans “to build up to 10 planes per year in the next couple of years.” Bleecker Street concluded, “we are short shares of Joby, and expect it to collapse over the next several years crushed by longer than expected approval timeline and smaller manufacturing operations than it has conveyed to investors.”
The company is down ~60% since its August 2021 SPAC merger.
Recent Resignations
Notable executive departures disclosed in the past week include:
CFO of Astra Space (NASDAQ: ASTR — $164 million) resigned after two years “to pursue other professional opportunities.” The company is down ~95% since its July 2021 SPAC merger.
CFO of FleetCor Technologies (NYSE: FLT — $13.2 billion) resigned after two years “to join a private equity backed software company.” The company’s President of Corporate Payments and President of North America Fleet both departed this year as well.
CFO of Splunk Inc (NASDAQ: SPLK — $12.2 billion) resigned after three and a half years to pursue a new opportunity. The company’s President of Products and Technology departed in June 2022 after just one year and the company’s Chief Growth Officer departed in March 2022 after just eleven months.
CFO of Rent-A-Center (NASDAQ: RCII — $1.04 billion) departed after a little under four years. The President of the company’s lease-to-own Acima division also departed in March 2022 after two years and the company is down ~65% this year.
Chief Commercial Officer of Paya Holdings (NASDAQ: PAYA — $807 million) had her role eliminated after just eleven months. The company is down ~40% since its October 2020 SPAC merger.
General Counsel of Enhabit Inc (NYSE: EHAB — $697 million) stepped down after four years. The company is down ~45% since its June 2022 spinoff from Encompass Health (NYSE: EHC — $4.51 billion).
Data for this section is provided by VerityData from VerityPlatform.com
What to Read
“Short Sellers Upended a Small Farm Real-Estate Company. This Is What It Looked Like.” (WSJ)
“Broadly, U.S. authorities have cracked down on various forms of market manipulation. The government has now broadened its scope to include a number of short sellers and whether they engaged in illegal trading tactics while investing in various companies, The Wall Street Journal previously reported. Investigators are also looking at how short sellers disclosed their positions and collaborated with others, people familiar with the matter said.
The Justice Department and the Securities and Exchange Commission have been examining the Farmland incident as part of that inquiry, zeroing in on how Mr. Mathews worked with Sabrepoint, people familiar with the matter said.”
“Wall Street to Pay $1.8 Billion in Fines Over Traders’ Use of Banned Messaging Apps” (WSJ)
“The fines, which many of the banks had already disclosed to shareholders, underscore the market regulators’ stern approach to civil enforcement. Fines of $200 million, which many of the banks will pay under the agreements, have typically been seen only in fraud cases or investigations that alleged harm to investors.
But the SEC, in particular, has during the Biden administration pushed for fines that are higher than precedents, saying it wants to levy fines that punish wrongdoing and effectively deter future potential harm. The SEC’s focus on record-keeping is likely to be extended next to money managers, who also have a duty to maintain written communications related to investment advice.”
Tweets of the Week
Until Thursday,
The Bear Cave