The Bear Cave #171

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

May 28, 2023

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 this Thursday, June 1.

New Activist Reports

Spruce Point Capital published on Perion Network (NASDAQ: PERI — $1.45 billion), an Israeli digital advertising company. Spruce Point raised concerns about the “accuracy of [Perion’s] financial reporting, the efficacy of its product suite, and the sustainability of its growth.” Spruce Point specifically alleged that the company’s recent strong performance is fueled in part by three questionable acquisitions with accounting irregularities. Spruce Point also noted that the company’s CEO and audit chair previously worked at a company that was charged by the SEC for inflating revenue.

In June 2022, The Bear Cave also published on Perion Network and called the company “a roll-up of aggressive clickbait sites across the internet.”

Recent Resignations

Notable executive departures disclosed in the past week include:

CFO of WeWork (NYSE: WE — $396 million) resigned after one year. The company’s CEO and Chief Legal Officer both resigned earlier this year and the company is down ~98% since its October 2021 SPAC merger.
CFO of Vipshop Holdings (NYSE: VIPS — $8.46 billion) resigned after two and a half years “for personal reasons.”
CFO of Trex Company (NYSE: TREX — $5.76 billion) resigned after three years “to accept a position in a southern region state closer to family.”
Chief Operating Officer of Goldman Sachs BDC (NYSE: GSBD — $1.44 billion) resigned after a little over one year “to pursue a new professional opportunity.” The firm has also had four different CFOs in the last three years.
Chief Accounting Officer of CACI International (NYSE: CACI — $6.76 billion) resigned after a little less than two years. In August 2022, the company switched auditors from Ernst & Young to PricewaterhouseCoopers.
Jared Sperling resigned from the board of Blue Bird Corp (NASDAQ: BLBD — $842 million) “effective immediately” after almost three years. Last week, the company’s CEO resigned “for personal reasons” after one and a half years and also left 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.

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

What to Read

“US action on short-sellers likely in 'next few months' -DOJ official” (Reuters)

“But remarks on Wednesday by the chief of the Justice Department fraud section’s market integrity team was the first time that a DOJ official has talked openly about this relatively new area of focus. Short selling, including via options, is a priority for prosecutors, Avi Perry, the chief of the market integrity team, said at a Practicing Law Institute event in New York.
‘You’ll see some more activity from us involving short sellers sometime in the next few months,’ he said. Perry declined to comment further when Reuters asked for details on whether the agency expected to bring charges.”

“Record $279 Million Whistleblower Award Went to a Tipster on Ericsson” (WSJ)

“The record $279 million whistleblower award issued by the Securities and Exchange Commission earlier this month stemmed from a bribery case against telecommunications company Ericsson.
The award from the SEC’s cash-for-tips program was related to the $1.1 billion settlement the Swedish company reached with U.S. authorities in 2019 over allegations it conspired to make illegal payments to win business in five countries, in violation of U.S. antibribery laws, according to people familiar with the matter.”

“The Master of Destruction Rides Again” (The Information)

“As his Twitter handle attests, there is ‘No Greater Motivator Than Disrespect.’ Cohodes has a lifetime of experience to back that up. He was raised in a middle-class neighborhood of Chicago, the son of an alcoholic father who sold water coolers and abandoned the family when Marc was 10…”

“Quackonomics” (American Prospect)