The Bear Cave #151

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

Jan 8

Welcome to The Bear Cave! Our last premium articles were “Problems at Six Flags Entertainment (SIX)” published on December 15 and “More Problems at Rumble (RUM)” published on January 5. The next premium investigation comes out Thursday, January 19.

New Activist Reports

Citron Research tweeted critically on Luminar Technologies (NASDAQ: LAZR — $1.43 billion), a vision-based lidar company for self-driving cars. Citron criticized the leadership’s use of jargon and lack of tangible results.

Citron Research @CitronResearch

$LAZR stock looks like it is heading under $1. CEO Austin Russel uses every bit of jargon and double speak at CES to avoid the fact that his company will not see any meaningful revenue in near future. Does this quote give your confidence?

Citron Research also tweeted out an article reporting that Luminar’s 26-year-old CEO bought an $83 million house. Luminar is down ~60% since its December 2020 SPAC merger.

Fiat Lux Partners published a rebuttal to Spruce Point Capital on Saputo Inc (Toronto: SAP — CAD$14.3 billion), a Canadian dairy and cheese roll-up. Fiat Lux wrote, “Spruce Point’s report contains numerous critical errors which mischaracterize the financial state of the company.” Specifically, Fiat Lux said the company’s “new potential fraud warning” highlighted by Spruce Point is a standard disclosure under new U.K. auditing standards. Fiat Lux also said Spruce Point’s arguments of an underfunded pension liability were based on “unreasonably aggressive inflation assumptions” outside of standard economic forecasts.

Fiat Lux Partners is a new group that describes themselves as “short activists calling out weak short activism.” They are @FiatLuxPartners on Twitter.

Recent Resignations

Notable executive departures disclosed in the past week include:

CEO of Petrobras (NYSE: PBR — $63.6 billion) received an “early termination” after just six months. The company has had eight different CEOs in the last five years.
CFO of Thorne HealthTech (NASDAQ: THRN — $193 million) resigned “effective immediately” after nine months. The company is down ~65% since its September 2021 IPO.
CEO of Stitch Fix (NASDAQ: SFIX — $403 million) “agreed that she would step down from her employment with the Company and from the Board of Directors” after one and a half years. The company’s general counsel departed in November and three board members also resigned in 2022.
CEO of Fulcrum Therapeutics (NASDAQ: FULC — $485 million) departed after almost two years “to pursue other opportunities.” In October, the company’s President of Research and Development also departed after one and a half years and in July the company’s Chief Medical Officer resigned after a little over one year.
CFO of R1 RCM (NASDAQ: RCM — $5.18 billion) “stepped down” after two and a half years. The company’s CEO resigned on January 1 and the company’s Chief Solutions Officer departed in June.
CFO of Presto Automation (NASDAQ: PRST — $113 million) resigned after three and a half years “to accept an offer from another company.” Presto Automation is down ~75% since its September 2022 SPAC merger.
CEO of PagSeguro (NYSE: PAGS — $2.95 billion) “stepped down” after five years. Another board member also resigned “effective immediately” this week. In October 2021, Viceroy Research published on the Brazilian payment processing company and alleged it had ties to PAX Global Technology Limited, which was raided by the FBI. Viceroy wrote,
“We expect PagSeguro to be subject to significant regulatory action and scrutiny, with the clear possibility of legal action against the company by various counterparties.”
CFO of Hope Bancorp (NASDAQ: HOPE — $1.57 billion) resigned after five years “in order to pursue other opportunities.” The company is audited by Crowe LLP.
JoEllen Lyons Dillon was removed from the board of World Wrestling Entertainment (NYSE: WWE — $6.27 billion) after just four months by controlling shareholder Vince McMahon as he plans a comeback following a misconduct probe. A total of five WWE board members departed on Friday.
Chief Operating Officer of Digital Realty Trust (NYSE: DLR — $29.2 billion) was terminated after five years. The company’s CEO was “terminated without cause effective immediately” in December.

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

What to Read

“SEC Charges Former SPAC CFO for Orchestrating $5 Million Fraud Scheme” (SEC)

“The SEC’s complaint alleges that, from June 2021 through July 2022, Morgenthau embezzled money from African Gold and stole funds from another SPAC series called Strategic Metals Acquisition Corp. I and II to pay for his personal expenses and to trade in crypto assets and other securities.”

“Attorney General James and CFPB Sue Auto Lender for Cheating Thousands of New Yorkers” (NY AG)

“An investigation by the Office of the Attorney General (OAG) found that CAC’s lending practices were deceptive and left tens of thousands of New Yorkers with massive debt. The OAG’s investigation also found that CAC routinely pushed borrowers into purchasing vehicles that were worth far less than their loans. This predatory practice led many borrowers to lose their vehicles through repossession, while still owing thousands of dollars on the loans.”

“FTC Proposes Rule to Ban Noncompete Clauses, Which Hurt Workers and Harm Competition” (FTC)

“The Federal Trade Commission proposed a new rule that would ban employers from imposing noncompetes on their workers, a widespread and often exploitative practice that suppresses wages, hampers innovation, and blocks entrepreneurs from starting new businesses. By stopping this practice, the agency estimates that the new proposed rule could increase wages by nearly $300 billion per year and expand career opportunities for about 30 million Americans.”

“Joint Statement on Crypto-Asset Risks to Banking Organizations” (Federal Reserve, FDIC, and OCC)

“Further, the agencies have significant safety and soundness concerns with business models that are concentrated in crypto-asset-related activities or have concentrated exposures to the crypto-asset sector.”

Back in November, The Bear Cave wrote about the crypto ecosystem’s ties to some U.S. banks and warned of inadequate regulatory oversight. Read The Bear Cave’s past investigation here.