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New Activist Reports
There were no new activist reports this past week. However, The Bear Cave would like to draw attention to Fulgent Genetics (NASDAQ: FLGT — $1.15 billion), a genetic testing company that pivoted to coronavirus test kits. In January 2021, The Bear Cave published on the company and wrote, “a series of related party transactions raise concerns about whether the company is being run in the best interest of shareholders.” At the time, The Bear Cave noted that multiple executives were transferring stock into blind trusts and Fulgent had purchased furniture from a company owned by the CEO’s wife.
On Friday, Leonard Post, a board member and Chair of the Governance Committee, resigned after just three months. In addition, John Bolger, Chair of the company’s Audit Committee, resigned in September after six years. The company disclosed that Mr. Bolger’s “decision to resign was not due to any disagreement with the Company on any matter relating to the Company’s operations, policies or practices.” That sentence is omitted from the company’s disclosure about Mr. Post’s resignation this week.
Last quarter, Fulgent disclosed it “became aware that the SEC is conducting a non-public investigation when we received a subpoena requesting information regarding certain of our Exchange Act reports for 2018 through the first quarter of 2020.” In addition, Fulgent “received a [Civil Investigative Demand] issued by the U.S. Department of Justice pursuant to the False Claims Act related to its investigation of allegations of medically unnecessary laboratory testing, improper billing for laboratory testing, and remuneration received or provided in violation of the Anti-Kickback Statute and the Stark Law.”
Today, Fulgent Genetics has only three board members. One is Michael Nohaile, who joined in August. Another is Linda Marsh, a Senior Executive Vice President of AHMC Healthcare, a for-profit hospital that does business with Fulgent. The third is Ming Hsieh, the company’s founder and CEO.
Tomorrow after the close Fulgent will report Q3 earnings.
Recent Resignations
Notable executive departures disclosed in the past week include:
CEO of TuSimple Holdings (NASDAQ: TSP — $579 million) was “terminated without cause” after eight months. In addition, TuSimple disclosed that “an ongoing investigation by the company’s Audit Committee [determined that] during 2021 company employees spent paid hours working on matters for Hydron Inc” which has significant operations in China and is privately owned by TuSimple’s co-founder. The disclosure comes after a WSJ investigation. TuSimple is down ~94% since its April 2021 IPO.
CFO of Tyra Biosciences (NASDAQ: TYRA — $273 million) resigned after a little less than two years. The company’s general counsel also departed in March after just seven months and the company is down ~65% since its September 2021 IPO.
CEO of Herbalife Nutrition (NYSE: HLF — $1.59 billion) “stepped down” after two and a half years and is also leaving the board. The new CEO is Michael O. Johnson, who also served as the company’s CEO from 2003 to 2017 and as interim CEO in 2019-2020. Herbalife stock is down ~60% over the last twelve months.
CFO of ESS Tech Inc (NYSE: GWH — $567 million) resigned after almost four years. The company’s Chief Accounting Officer also resigned in September after a little over one year and Bonitas Research previously criticized the company for concealing failed battery deployment tests. ESS Tech is down ~65% since its October 2021 SPAC merger.
Chief Accounting Officer of SJW Group (NYSE: SJW — $2.13 billion) “is no longer employed by the company” after just nine months.
Chief Revenue Officer of Freshworks (NASDAQ: FRSH — $3.53 billion) is leaving after a little over two years. The company is down ~75% since its September 2021 IPO.
Chief Product Officer of Coinbase (NASDAQ: COIN — $13.2 billion) resigned after a little less than three years. The company is down ~80% since its April 2021 IPO and was previously criticized by The Bear Cave for “failing leadership and a busted business model.”
Data for this section is provided by VerityData from VerityPlatform.com
What to Read
“Tiger Global Halts New Chinese Equities Investments” (WSJ)
“Longtime China investor Tiger Global Management has hit pause on investing in Chinese equities, said people familiar with the matter, as the firm reassesses its exposure to the world’s second-largest economy after President Xi Jinping cemented his control over the country…”
“SEC Accountant Warns of Heightened Fraud Risk Amid Recession Fears, Market Selloff” (WSJ)
“Wall Street’s top watchdog is warning that the market selloff and fears of a recession could encourage more companies to cook their books, and it is pressuring auditors to catch them…”
“Former CEOs of MoviePass and Parent Company Charged in Securities Fraud Scheme” (DoJ)
“Farnsworth and Lowe allegedly made false claims that HMNY possessed and used technologies – like ‘big data’ and ‘artificial intelligence’ platforms – to generate revenue by analyzing and monetizing the data MoviePass collected from subscribers. However, the indictment alleges that Farnsworth and Lowe knew HMNY did not possess these technologies or capabilities to monetize MoviePass’s subscriber data or incorporate these technologies into the MoviePass application…”
Tweets of the Week
Until next week,
The Bear Cave