The Bear Cave #174
New Activist Report, Recent Resignations, and Tweets of the Week
Welcome to The Bear Cave! Our last premium articles were “Problems at Palantir Technologies (PLTR)” and “The Bear Cave’s Ultimate Guide For Bears” and our next premium investigation comes out Thursday, July 6.
New Activist Report
Kerrisdale Capital published on Carvana (NYSE: CVNA — $4.79 billion), an online platform for buying and selling used cars. Kerrisdale said that “Carvana is insolvent [and] its equity is worthless” and called the company “nothing more than a poorly run auto retailer, [that] will never generate sustainable positive cash flow.” Kerrisdale highlighted that the company faces a much tougher operating environment, a high debt burden, and “multiple formidable competitors.” Kerrisdale also alleged the company’s recent ~500% run-up is “a last-ditch stock pump to pull off of a dilutive equity raise.”
Recent Resignations
Notable executive departures disclosed in the past week include:
CFO of Aurora Innovation (NASDAQ: AUR — $2.66 billion) resigned after one and a half years “to pursue other opportunities.” In March the company switched auditors from KPMG to PricewaterhouseCoopers and in June 2022 the company’s General Counsel resigned after just nine months. The company is down ~75% since its November 2021 SPAC merger.
CFO of Chico's FAS (NYSE: CHS — $637 million) resigned after a little less than two years “to accept a position at another company where he can be located closer to his family.” The company has had three different CEOs and four different CFOs in the last five years.
CFO of HealthEquity (NASDAQ: HQY — $5.34 billion) was terminated without cause after two and a half years. In August 2022, the company’s Chief Operating Officer also “ceased serving, effective immediately.”
CFO of Allogene Therapeutics (NASDAQ: ALLO — $707 million) resigned after five years “to spend more time with his family.” The company’s Chief Technology Officer, General Counsel, and President of Research and Development have also all departed in the last six months.
CEO of Illumina (NASDAQ: ILMN — $32.6 billion) resigned after seven years “effective immediately” and also departed the board. The resignation follows a proxy battle with Carl Icahn and allegations of misconduct raised by the NonGAAP substack.
CFO of Walt Disney (NYSE: DIS — $167 billion) “will be stepping down from her role and taking a family medical leave of absence” after eight years. In March, the company’s Chief Human Resources Officer was “terminated without cause” after almost two years. And in November 2022, Bob Iger returned as CEO after Bob Chapek was “terminated without cause” after two and a half years.
Chief Accounting Officer of Kaman Corporation (NYSE: KAMN — $629 million) resigned after three years “to pursue another professional opportunity.” In January, the company’s Chief Information Officer, Chief Operating Officer, and Chief Compliance Officer were all terminated “in connection with the cost-reduction and restructuring initiatives.”
Data for this section is provided by VerityData from VerityPlatform.com
What to Read
“‘Do You Even Want Us to Exist?’ A Bank Chief Fights to Survive.” (NYT)
“Every quarter for the past several years, Ken Vecchione printed out a spreadsheet comparing the growth of the bank he runs, Western Alliance, with its three principal competitors: First Republic, Signature Bank and Silicon Valley Bank.”
“SEC Charges Investment Adviser and Principal in Abusive Naked Short Selling Scheme” (SEC)
“The SEC’s complaint alleges that, from at least March 2017 through May 2019, Sabby and Mintz repeatedly circumvented trading rules to conduct unlawful trades in the stock of at least 10 public companies. Short selling is a legal practice where, generally, a trader borrows a security from a security holder and sells the security at one price, speculating that the trader can buy the security at a lower price in the future before it must be returned to its owner. As alleged in the complaint, for example, Sabby and Mintz engaged in illegal ‘naked short selling’ by intentionally and improperly placing short sales when they knew or were reckless in not knowing that they had not borrowed or located the shares, and then failed to make timely delivery of the shares. According to the SEC’s complaint, the purpose of Sabby and Mintz’s fraudulent scheme was to earn profits they could not have gained through legal trading.”
“Companies Quiet Diversity and Sustainability Talk Amid Culture War Boycotts” (WSJ)
“Companies’ mentions of green and social initiatives during earnings calls have fallen off sharply in recent quarters, reversing a more boastful approach taken over the past few years amid intensifying pressure from some investors and conservative activists.”
Tweets of the Week
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Until next week,
The Bear Cave