The Bear Cave #170
New Activist Reports, Recent Resignations, and Tweets of the Week
Welcome to The Bear Cave! Our last premium articles were “Problems at TriplePoint Venture Growth BDC (TPVG)” and “Problems at Allegro MicroSystems (ALGM)” and our next premium investigation comes out Thursday, June 1.
New Activist Reports
Muddy Waters Research published on Chinook Therapeutics (NASDAQ: KDNY — $1.43 billion), a drug development company focused on kidney diseases. Muddy Waters predicted that the company’s lead drug, atrasentan, “will never get FDA approval” because the drug is “inefficacious and increases cardiac and mortality risks.” Muddy Waters added,
“AbbVie and Chinook seem to have systemically manipulated research findings and presentation on atrasentan to obscure these trial results. Even if atrasentan were efficacious and safe, it would be unlikely to gain approval because a competing drug, sparsentan, has received accelerated and exclusive orphan drug approval by the US FDA…”
Viceroy Research published on Abalance (Tokyo: 3856 — 169 billion yen), a Japanese solar energy company. Viceroy highlighted that the company’s Vietnamese subsidiary, which accounts for roughly 90% of Abalance’s revenue, is facing “crippling trade restrictions in the USA from next year as a pass-through Chinese supplier.” In a follow-up report, Viceroy further alleged that management “[appears] to be embezzling assets and money from Abalance shareholders” through excessive related party transactions.
Bleecker Street Research published on ArcBest Corp (NASDAQ: ARCB — $2.07 billion), a trucking and logistics company. Bleecker Street said the company “benefitted massively from the pandemic” and now faces pricing pressure as well as huge potential liabilities connected to its under-funded pension plans.
Notable executive departures disclosed in the past week include:
CFO of Torrid Holdings (NYSE: CURV — $283 million) “resigned to pursue other opportunities” after eight months. This is the company’s third CFO resignation since its July 2021 IPO.
CEO of Blue Bird Corp (NASDAQ: BLBD — $867 million) “is leaving the company for personal reasons” after one and a half years and is also leaving the board. The company’s General Counsel also resigned in March 2022 and the company has had three CEO transitions and four CFO transitions since its February 2015 SPAC merger.
CFO of DXC Technology (NYSE: DXC — $5.56 billion) resigned after two and a half years “for personal reasons.” The company’s Principal Accounting Officer also resigned in June 2021.
CEO of WeWork (NYSE: WE — $453 million) resigned after a little over three years and is also leaving the board. In February, the company’s Chief Legal Officer also resigned and the company has fallen ~98% since its October 2021 SPAC merger.
CFO of Editas Medicine (NASDAQ: EDIT — $643 million) “stepped down” after three and a half years. The company’s Chief Scientific Officer also departed in March after two years and the company has had four CEOs and four CFOs in the last five years.
CFO of Replimune Group (NASDAQ: REPL — $1.11 billion) resigned after three and a half years “to pursue other opportunities.”
Chief Business and Country Officer of 3M Co (NYSE: MMM — $54.6 billion) was “terminated for cause due to inappropriate personal conduct” two weeks after being promoted into the position and after 30 years with the company. In February, the Wall Street Journal reported some major investors were raising concerns about 3M leadership.
Chief People Officer of Forrester Research (NASDAQ: FORR — $526 million) resigned after one year. In September 2022, the company’s Chief Sales Officer resigned “to pursue other opportunities.”
Chief People Officer of BlueLinx Holdings (NYSE: BXC — $774 million) resigned after a little over one year. In March, the company’s CEO resigned after less than two years.
Sam Zell, Founder and Chairman of Equity Residential (NYSE: EQR — $23.2 billion) and Equity LifeStyle Properties (NYSE: ELS — $12.1 billion), passed away at the age of 81. In comments reflecting on his career, Mr. Zell said, “an entrepreneur is someone who specializes in doing things that he or she didn’t know he couldn’t do.”
Data for this section is provided by VerityData from VerityPlatform.com
What to Read
“‘Rumours and misconceptions’ to blame for SVB failure, claims ex-CEO” (FT)
“Becker also appeared to direct some blame at the Federal Reserve and its incorrect prediction that a jump in inflation starting in 2020 would be ‘transitory’. Because of that ‘messaging’, SVB and other banks ‘invested in their securities portfolios’, he argued.
The former SVB chief took issue with an article in the Financial Times, published in February, that reported the bank was facing scrutiny over its decision to move assets into the securities portfolio, along with another lender called Silvergate. Silvergate decided to shut down on March 8, two days before the collapse of SVB.”
“Carl Icahn admits mistake with bearish bet that cost $9bn” (FT)
“Icahn’s bearish bets are the main reason his investment portfolio has lost money in every year since 2014. Over the roughly six-year period that he lost $9bn on the short bets, the portfolio made about $6bn from his activist wagers, leaving the vehicle with an overall investment loss of nearly $3bn.”
Tweets of the Week
Until next week,
The Bear Cave