The Bear Cave #138

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

Oct 09, 2022

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New Activist Reports

Iceberg Research published on Quantum Computing Inc (NASDAQ: QUBT — $78 million), a software company “on a mission to accelerate the value of quantum computing for real-world business solutions.” Iceberg Research called the company “a zero” and noted that “QUBT booked sales of $96,724 in the first half of this year, of which ~86% had not been collected at the end of June.” Iceberg highlighted that the company spent $85 million in stock to acquire QPhoton, which had only two employees on LinkedIn and almost no web presence or substantive operations. Iceberg concluded,

“QUBT failed to sell its software and we do not expect it to be any better at selling hardware, its latest venture… Shareholders can also expect heavy dilution as QUBT won’t last for more than 10 months without raising fresh capital. We are short QUBT and we expect the stock to drop to zero.”

Night Market Research published an update on Zentek Ltd (NASDAQ: ZTEK — $152 million), a Canadian mining company that pivoted to nanotechnology for face masks. Night Market said the company’s “highly touted face mask opportunity fizzled out” and as a result of poor sales, the company’s distribution partner was forced into receivership. Zentek is now pivoting into making coated HVAC filers and Night Market believes that “shareholders strung along by Zentek’s claims of massive near-term opportunities will be disappointed.”

Viceroy Research published an update on Truecaller (Stockholm: TRUE — kr14.7 billion), a Swedish caller ID and spam detection company. In its update, Viceroy alleged that most of the company’s information collection “consists of non-consenting, non-user data.” In addition. Viceroy emphasized that documents show Truecaller “is subject to tax proceedings in Sweden and investigations in India” despite the company’s denials. Last week, Viceroy said the company was “spyware” and “on the brink of redundancy” following consumer data protection regulations like GDPR.

Recent Resignations

Notable executive departures disclosed in the past week include:

CFO of Deluxe Corporation (NYSE: DLX — $714 million) “is stepping down to assume a senior role at a former employer” after just a little over one year. In April, the company’s Chief Accounting Officer also departed after a little less than three years.
Chief Accounting Officer of Yext (NYSE: YEXT — $569 million) resigned after just three months. The company’s Chief Revenue Officer also resigned in June after a little over a year and the company’s longtime CEO and CFO both departed in March.
Joanne Isham is stepping down from the board of Redwire (NYSE: RDW — $169 million) after a little over one year. The company is down ~75% since its August 2021 SPAC merger and was previously criticized by The Bear Cave for “aggressive SPAC projections and spurious metrics.”
Executive Vice President of People and Culture at Torrid Holdings (NYSE: CURV — $438 million) “was given notice that her appointment... was ending” after two years. The company’s CFO also departed in April after a little over one year and the company is down ~85% since its July 2021 IPO.
General Counsel of Gelesis Holdings (NYSE: GLS — $79 million) resigned after two and a half years. The company is down ~90% since its January 2022 SPAC merger.
Javier G. Teruel, a member of the board and audit committee of Starbucks Corporation (NASDAQ: SBUX — $99.8 billion), is resigning “effective immediately” after 17 years. The company’s Chief Accounting Officer announced “an unpaid sabbatical leave” in August, and the company’s CEO and General Counsel both departed in April. Starbucks has had four different CFOs in the last ten years.

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

What to Read

“Founders of Gotham and Portsea join forces in new short selling fund” (FT)

“The new firm is set to launch early next year and will be one of a handful of hedge funds focused on short selling. It will hold a portfolio of 15 to 20 short positions, hedged by holding baskets or indices of stocks. When Yu and De Weck find what they believe to be a particularly compelling target, they may take a very concentrated bet against the stock in a separate vehicle… While GIP plans to go public with a small number of its positions, most bets will be kept private.”

“Apollo names former German regulator chief as senior adviser” (Reuters)

“Global investor Apollo has appointed the former president of Germany's financial regulator, Felix Hufeld, as a senior adviser, he confirmed on Wednesday. Hufeld, a prominent figure in German finance who left the BaFin regulator following the collapse of the payments company Wirecard, declined to elaborate further.”

“Idea Brunch with Dalius Tauraitis of Special Situation Investments” (Sunday’s Idea Brunch)

“On a weekly basis, we run through a continuously expanding list of sources — regulatory filings, datasets, blogs, forums, other investment idea platforms, FinTwit, hedge fund letters, etc. — and dig deeper into the cases that pique our interest… Over the years we have developed some pattern recognition on these special sits and that helps quite a bit with the initial filtering – you tend to have a gut feeling on which trades are worth paying more attention to.”