The Bear Cave #165
New Activist Reports, Recent Resignations, and Tweets of the Week
Welcome to The Bear Cave! Our last premium articles were “More Problems at Coinbase (COIN)” and “Problems at Airbnb (ABNB)” and our next premium investigation comes out this Thursday, April 20.
New Activist Reports
Akram’s Razor published a follow-up article on Sprout Social (NASDAQ: SPT — $2.88 billion), a social media management software company. Last week, Akram’s Razor claimed Sprout Social’s recent growth largely comes from Salesforce’s decision to sunset its social media management software product, which has led to a large one-time migration of customers to Sprout Social. This week, Akram’s Razor raised concerns that competitor Sprinklr (NYSE: CXM) would eat into Sprout’s new market share by competing for Sprout’s small-business social media management customers with discounted software and generous trials.
Akram’s Razor concluded,
“My predictions for what will happen next are pretty clear in my mind…
1) Sprout has to immediately cut all pricing plans and match Sprinklr’s 90-day free trial term.
2) Sprout management will have to pull their long-term guide.
3) Sprout will update their risk factors to include a substantial Social Studio related disclosure ASAP.
I can’t see how this doesn’t happen, and very fast. Because at this point management’s hand has been forced. They have to immediately stop worrying about supporting what should have been a $30 stock before Sprinklr responded and start worrying about an existential and immediate assault on their entire business over the next 12 months which could send the stock to the single digits… Disclosure: I am Short Sprout (SPT) and Long Sprinklr (CXM).”
White Diamond Research published on Greenwich LifeSciences (NASDAQ: GLSI — $152 million), a clinical-stage biopharmaceutical company focused on preventing breast cancer recurrences. White Diamond highlighted that the company purchased a COVID-vaccine candidate drug from an LLC registered to the CEO’s home address and raised concerns about the company’s ongoing clinical trials and alleged data manipulation.
Recent Resignations
Notable executive departures disclosed in the past week include:
CFO of Skillz Inc (NYSE: SKLZ — $296 million) resigned “effective immediately” after less than two months. The company’s General Counsel also resigned after three years and the company’s Chief Accounting Officer “stepped down” last month. The company has had four CFO transitions in the last two years, was criticized by Wolfpack Research for spurious partnerships in March 2021, and was criticized by Eagle Eye Research for non-cash revenue recognition in April 2021. Skillz is down ~90% since its December 2020 SPAC merger.
CFO of Catalent Inc (NYSE: CTLT — $8.34 billion) departed with “immediate effect” after just two years. The predecessor CFO also departed after just three years and the company issued a profit warning on Friday. In December, GlassHouse Research called Catalent “a deteriorating company propped up with accounting gimmicks.”
CFO of Harley-Davidson (NYSE: HOG — $5.35 billion) stepped down “to pursue another opportunity” after two and a half years.
CFO of Ebix (NASDAQ: EBIX — $552 million) resigned “to pursue other opportunities” after three years. The company is audited by K G Somani & Co LLP and was criticized in June 2022 by Hindenburg Research for “a glaring fake revenue problem.”
CEO of Cutera Inc (NASDAQ: CUTR — $444 million) was terminated “effective immediately… with cause” after almost four years. The board also voted to terminate the company’s executive chairman “effective immediately.” The dismissals come amid reporting of disputes over succession planning.
Chief Operating Officer of Viridian Therapeutics (NASDAQ: VRDN — $1.08 billion) “ceased to serve” the company after ten months. In February, the company entered into “a general release and separation agreement” with its CEO after just two years.
Patricia Arvielo resigned from the board of Western Alliance Bancorporation (NYSE: WAL — $3.47 billion) after just ten months “to focus on existing commitments.”
Chief Accounting Officer of OFS Capital Corp (NASDAQ: OFS — $134 million) resigned after a little over a year.
Chief Accounting Officer of Splunk Inc (NASDAQ: SPLK — $15.1 billion) “ceased serving” after three and a half years. In October 2022 the company’s CFO resigned after three years, in June 2022 the company’s President of Products and Technology departed after just one year, and in March 2022 the company’s Chief Growth Officer departed after just eleven months. In addition, three board members have resigned in the last seven months.
Jeff Gardner retired from the board of Mercantile Bank Corp (NASDAQ: MBWM — $461 million) “effective March 23, 2023.” However, the company only disclosed the resignation in an 8-K filed on April 12, 2023.
Data for this section is provided by VerityData from VerityPlatform.com
What to Read
“Auditors Didn’t Flag Risks Building Up in Banks” (WSJ)
“‘The auditors failed to mention the fire in the basement or the box of dynamite on the first floor, but they did point out the peeling paint on the flower box,’ said Erik Gordon, a University of Michigan business professor. ‘How could they miss the interest-rate risk?’”
Letters from Elizabeth Warren and Alexandria Ocasio-Cortez to Large Silicon Valley Bank Depositors (Senator Warren)
“What benefits, including low-interest mortgages; other loans or lines of credit; trips, conferences, or other events; or any other perks did SVB, SVB Capital, or SVB Securities provide to Circle or its executives, board members, or investors? Please provide a detailed list of all such benefits.”
“Why a Secretive Short Seller Is Challenging Reports Made by Peers” (Institutional Investor)
“When Fiat Lux Partners burst onto the short selling scene in January with a scathing critique of an activist short seller report, rumors surged regarding the identity of the new outfit. Was it being financed by the companies targeted by short sellers? Was veteran short seller Marc Cohodes, a virulent critic of several activist short sellers and their tactics, behind it? Or was it, as one short seller suggested, simply ‘a bitter troll,’ possibly a former employee at a short selling fund?”
Tweets of the Week
Please pardon the screenshots, Tweets embeds have temporarily been disabled due to an issue between Twitter and Substack. To access the tweets please click the hyperlink under each screenshot.
Until Thursday,
The Bear Cave