The Bear Cave #169

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

May 14, 2023

Welcome to The Bear Cave! Our last premium articles were “Problems at Hercules Capital (HTGC)” and “Problems at TriplePoint Venture Growth BDC (TPVG)” and our next premium investigation comes out this Thursday, May 18.

New Activist Reports

Hindenburg Research published an update on Icahn Enterprises (NASDAQ: IEP — $12.5 billion), a conglomerate controlled by ~85% owner Carl Icahn. Hindenburg said the company’s latest disclosures “raise critical new questions about margin loans [and] continued portfolio losses.” In particular, Hindenburg raised concerns about Carl Icahn’s personal leverage and wrote,

“As of the most recent quarter-end, Carl has pledged ~65% of his personal holdings (i.e., ~55% of the company) for loans of unspecified size and unspecified terms, for unspecified purposes… Unitholders deserve this information in order to understand the risk of margin calls should IEP unit prices revert toward NAV, a reality we saw (and still see) as inevitable.”

Hindenburg also highlighted that IEP’s publicly traded long positions have recently fallen “by an estimated 13.8%, representing $1.03 billion in [additional] post quarter losses.”

White Diamond Research published on Rego Payment Architectures (OTC: RPMT — $152 million), a financial education and payments company. White Diamond alleged the company has no material operations, is involved in promotional activity, and “will have to massively dilute its shares” to meet a credit line expiring in 10 months.

Recent Resignations

Notable executive departures disclosed in the past week include:

CFO of Sachem Capital Corp (NYSE: SACH — $145 million) departed after nine months. In January, the company’s Chief Credit Officer “resigned to pursue retirement and other opportunities” after just two years.
CEO of JD Inc (NASDAQ: JD — $55 billion) retired “due to personal reasons” after just one year and is also leaving the board. The company’s prior CEO, Liu Qiangdong, departed in April 2022 following controversial allegations of personal misconduct.
CFO of Bally's Corp (NYSE: BALY — $672 million) departed “to pursue another opportunity” after a little over one year. In March, the company’s CEO also resigned after just one and a half years.
CFO of NVE Corp (NASDAQ: NVEC — $426 million) resigned after a little over one year. The company has had five different CFOs in the last three years and is audited by Boulay PLLP. The company is overseen by a five-person board and the board’s average age is 71.
CFO of Markforged Corp (NYSE: MKFG — $179 million) resigned after two years “by mutual decision.” The company is down ~90% since its July 2021 SPAC merger.
CFO of Bitdeer Technologies (NASDAQ: BTDR — $626 million) resigned after two years “to pursue other interests.” The company is down ~45% since its April 2023 SPAC merger.
CFO of Marriott Vacations Worldwide (NYSE: VAC — $4.54 billion) “notified the company of his intention to retire later this year” after two years on the job. The company’s CEO retired in December 2022, the company’s Chief Operating Officer retired in April 2022, and the company’s Chief Accounting Officer retired in March 2022.
CEO of AdaptHealth Corp (NASDAQ: AHCO — $1.42 billion) “mutually agreed” to depart after two and a half years. The company’s Chief Operating Officer resigned in March 2023 and the company’s Chief Accounting Officer resigned in May 2022. In June 2021, Jehoshaphat Research raised concerns about AdaptHealth’s accounting for acquisitions.
CFO of Driven Brands Holdings (NASDAQ: DRVN — $4.74 billion) resigned after three years. The company is roughly flat since its January 2021 IPO.
Chief Accounting Officer of NuVasive (NASDAQ: NUVA — $2.17 billion) resigned after one year “to pursue another opportunity outside the spine industry.” The company’s Chief Commercial Officer also resigned in August 2022 after just one year.
Chief Accounting Officer of DigitalOcean Holdings (NYSE: DOCN — $2.88 billion) resigned after one year. In March, the company’s Chief Product Officer resigned “to pursue other opportunities” after one and a half years and in January the company’s CFO retired.
Benno Dorer resigned from the board of Origin Materials (NASDAQ: ORGN — $678 million) after two years “due to his other professional commitments and demands on his time.” In March another board member resigned and the company is down ~50% since its June 2021 SPAC merger.
General Counsel of Astec Industries (NASDAQ: ASTE — $880 million) was “terminated” for “good reason” after two and a half years. In January the company’s CEO departed “effective immediately.”

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

What to Read

“Warren Buffett Has a History With Banks—as a Critic and Investor” (WSJ)

“‘The CEO gets the bank in trouble; both the CEO and the directors should suffer,’ he said last weekend at the annual meeting of Berkshire Hathaway, which Mr. Buffett runs.”

“Icahn, Under Federal Investigation, Blasts Short Seller” (WSJ)

“‘Hindenburg Research, founded by Nathan Anderson, would be more aptly named Blitzkrieg Research given its tactics of wantonly destroying property and harming innocent civilians,’ said a quote from Mr. Icahn in the company’s response to Hindenburg’s accusations.”