The Bear Cave #153

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

Jan 22, 2023

Welcome to The Bear Cave! Our last premium articles were “More Problems at Rumble (RUM)” published on January 5 and “Problems at Planet Fitness (PLNT)” published on January 19. The next premium investigation comes out Thursday, February 2. In addition, The Bear Cave is planning to release our annual list of the best free and paid research tools for investors this Thursday, January 26. Stay tuned!

New Activist Reports

Prolific short-seller Marc Cohodes spoke critically in a Hedgeye Interview about Helen of Troy Limited (NASDAQ: HELE — $2.57 billion), a roll-up of wellness, outdoor, and beauty products. The Hedgeye summary reads, in part,

“HELE is not in the game of running brands successfully, its game is to use a zero interest rate environment, lever up, buy mediocre brands with no synergies, and use creative accounting to manufacture non-cash, non-GAAP EPS that the Street takes hook, line and sinker. With a levered balance sheet, permanently higher interest rates, and floating rate debt, the game it plays is OVER.”

Iceberg Research published on BigBear AI Holdings (NYSE: BBAI — $246 million), an AI analytics and consulting company. Iceberg Research highlighted that the company soared 260% after issuing a press release concerning a purported $900 million deal with the U.S. Airforce. In reality, Iceberg found the deal is a competitive contract with 93 other firms and may result in de minimis revenue for BigBear AI. In addition, Iceberg noted that BigBear AI was formed when private equity firm AE Industrial merged two of its portfolio companies into a SPAC. Iceberg wrote, in part,

“Archived versions of these entities’ websites suggest the portfolio companies were mostly focused on data analytics and other IT consulting services, but for the SPAC merger, they were rebranded as AI-focused.”

Fiat Lux Partners, an anonymous group that “calls out weak short activism,” issued a rebuttal to GlassHouse research on Catalent Inc (NYSE: CTLT — $8.90 billion), a developer and distributor of biologics and consumer health products. Fiat Lux wrote that GlassHouse’s report, “represents a one-dimensional application of a boilerplate ‘forensic accounting’ checklist which, in many cases, ignores or fails to address important contextual information.”

Recent Resignations

Notable executive departures disclosed in the past week include:

CFO of Latham Group (NASDAQ: SWIM — $406 million) resigned after about eight months “for family reasons.” Last year, two board members resigned “effective immediately” and the company’s Chief Operating Officer resigned in September 2021 after just nine months “in order to pursue other opportunities.” The company is down ~85% since its April 2021 IPO.
CEO of Advantage Solutions (NASDAQ: ADV — $799 million) resigned after ten months “and has elected to pursue other business endeavors.” The company is down ~75% since its October 2020 SPAC merger.
CEO of Gulfport Energy (NYSE: GPOR — $1.53 billion) resigned after one and a half years. The stock is up ~25% since its May 2021 IPO.
CFO of Tim Brasil (NYSE: TIMB — $5.40 billion) resigned after one and a half years. The company is roughly flat since its October 2020 U.S. listing.
CFO of nCino Inc (NASDAQ: NCNO — $3.03 billion) “was terminated without cause” after a little over three years. The company is down ~65% since its July 2020 IPO.
CFO of Payoneer Global (NASDAQ: PAYO — $2.06 billion) departed after about twelve years. In May 2022, the company’s Chief Accounting Officer resigned, in February 2022 the company’s Chief Technology Officer resigned, and in December 2021 the company’s Chief Strategy Officer resigned. In July 2021, The Bear Cave published on Payoneer and wrote that “Payoneer appears to transact in the high-risk corners of the internet, despite explicit denials about doing so.”
Mark A. Ernst resigned from the board of Fidelity National Information Services (NYSE: FIS — $43.9 billion) after just three weeks “after a former employer of his asserted to Mr. Ernst that his service on the Board would violate certain non-competition agreements between him and his former employer.”
Chief Operating Officer of Olo Inc (NYSE: OLO — $1.22 billion) resigned after a little over one year. The company’s Chief Customer Officer resigned in June 2022 and the company is down ~75% since its March 2021 IPO.
Chief Banking Officer of F&M Bank (OTC: FMBM — $77 million) “separated employment” after two and a half years. In September 2022, the bank’s CFO also “separated employment” after nine years and the stock is down ~30% over the last twelve months.

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

What to Read

“These ‘Big Short’ Vets Were Up 169% Last Year” (Institutional Investor)

“At the year’s outset, we saw an opportunity to short what is probably the fifth generation of consumer lending companies disguising themselves as capital light technology stocks…”

“Corporate fraud is widespread - and largely undetected, study says” (Globe and Mail)

“There were more frauds that were revealed in the former Andersen clients in that time period than people that kept with the same auditors and didn’t have to switch out of Andersen. And so our interpretation of that is that when people looked harder, they saw a lot more stuff.”

“WWE’s Vince McMahon Settles With Ex-Wrestling Referee Who Accused Him of Rape” (WSJ)

“A New York law recently opened a one-year window that allows victims of sex crimes to file lawsuits that would otherwise be barred by the statute of limitations. Ms. Chatterton’s attorney sought $11.75 million damages in a legal demand letter sent to Mr. McMahon’s attorney in November, weeks before the window opened.”